Wall Street seems set to pause for breath today after that upbeat start to the week. The improvement in Chinese data yesterday certainly gave some cause for cheer, but the equally robust ISM prints from the US do again make it difficult to justify arguments in favour of a quick rate cut by the Fed. With the prospect of a return of cheap money being pushed a little further out, this is going to take some of the heat out of equities as a result.
The mood could however be susceptible to change in the wake of US Durable Goods Orders for February, which are due for release ahead of the opening bell.
A month-on-month contraction is expected here and weakness here could counter some of the inertia over action from the Fed. Critically however there’s a need to avoid any kind of inflationary bubble, so data points later in the week, including Friday’s average wage data, will likely also be key in forming a better picture as to when any shift in monetary policy – beyond the termination of quantitative tightening – will be seen.
Ahead of the open we’re calling the Dow down 38 at 26220 and the S&P 500 down 5 at 2862.