By Peter Nurse
Investing.com - U.S. stocks are seen opening higher Monday, continuing the recovery from the hefty Omicron-induced selloff ahead of this week’s eagerly-awaited Federal Reserve meeting.
At 7 AM ET (1200 GMT), the Dow Futures contract was up 60 points, or 0.2%, S&P 500 Futures traded 12 points, or 0.3%, higher and Nasdaq 100 Futures climbed 60 points, or 0.4%.
The major averages posted strong gains last week, regaining ground lost after the discovery of the new Covid-19 variant sparked fears of another substantial hit to the global economy. Optimism that the Omicron variant will not be as dangerous and that current vaccines, with boosters, will be effective in treating it has prompted the change in tone.
The Dow Jones Industrial Average gained 4% last week, its best weekly performance since March, and the S&P 500 and the Nasdaq Composite jumped 3.8% and 3.6%, respectively, last week, both posting their best weekly performance since early February.
However, Covid-19 remains a threat, with U.K. Prime Minister Boris Johnson warning of a “tidal wave” of cases and the World Health Organization stating that the Omicron coronavirus variant poses a "very high" global risk.
Investors’ main focus this week is likely to be the plethora of central bank meetings, and the Federal Reserve’s two-day gathering, ending on Wednesday, in particular.
The Fed is widely expected to discuss accelerating the wind-down of its $120 billion a month asset purchase program, especially after data on Friday showed that consumer prices rose at their fastest rate in almost four decades last month.
“Against the background of a broadening rise in inflation, consumer goods spending that has sky-rocketed, subdued labor supply and rising wage growth, the Fed will likely remove accommodation at a faster rate,” said analysts at ABN Amro, in a note.
In the corporate sector, Intel (NASDAQ:INTC) is likely to be in the spotlight with the chip manufacturer set to invest over $7 billion in a new state-of-the-art facility in Malaysia, according to local authorities.
Both Pfizer (NYSE:PFE) and BioNTech are likely to gain Monday after an Israeli study showed their Covid-19 vaccine booster provides good protection against severe illness from the Omicron variant. Additionally, Pfizer has agreed to acquire Arena Pharmaceuticals in a $6.7 billion all-cash deal to expand its cancer and inflammatory disease treatment pipeline.
Oil prices dropped Monday, handing back some of the recent gains on optimism that vaccine boosters will be able to limit the Omicron variant's spread to a degree that doesn't hit global crude demand too badly.
By 7 AM ET, U.S. crude futures traded 0.5% lower at $71.28 a barrel, while the Brent contract fell 0.4% to $74.82. Both benchmarks rose around 8% last week, their first weekly gain in seven.
Additionally, gold futures edged 0.2% higher to $1,788.75/oz, while EUR/USD traded 0.3% lower at 1.1274.