By Bansari Mayur Kamdar and Amruta Khandekar
(Reuters) -U.S. stock indexes were set to open flat on Monday as oil prices fell and investors awaited more updates on Ukraine-Russia peace talks in Istanbul, while Tesla shares rose after the company said it would seek investor approval for a stock split.
The electric-car maker jumped 5.5% in premarket trading and was set to boost the S&P 500 and the Nasdaq indexes after the market open.
Apple Inc fell 1.6% after a report that the company was planning to cut iPhone and AirPod output as rising inflation starts to weigh on demand for consumer electronics.
Strong economic data and gains in beaten-down growth stocks despite the crisis in Ukraine and hawkish comments from Federal Reserve policymakers powered all the three major indexes to record two straight weeks of gains.
“Those two factors got priced into the market and there was some level of certainty produced, particularly by the Fed meeting, that resulted in a pretty significant rally,” said Jay Hatfield, chief investment officer at Infrastructure Capital Management in New York.
Ukraine and Russia said their delegations would arrive in Turkey on Monday for the first face-to-face peace talks in more than two weeks that are expected to take place on Tuesday.
Oil majors Exxon and Chevron fell over 2% each as crude prices tumbled more than $5 as fears over weaker fuel demand in China grew after financial hub Shanghai’s lockdown efforts to curb a surge in COVID-19 infections. [O/R]
At 08:48 a.m. ET, Dow e-minis were down 30 points, or 0.09%, S&P 500 e-minis were down 2.25 points, or 0.05%, and Nasdaq 100 e-minis were up 5.25 points, or 0.04%.
Financial shares gained on expectations that the Fed could push harder and faster to tame inflation running at four-decade highs again.
Bank of America, JPMorgan Chase and Wells Fargo rose between 0.2% and 0.6%, tracking the benchmark 10-year yield which climbed above 2.5%. [US/]
One measure of the U.S. bond yield curve – the gap between five and 30-year Treasury yields – inverted for the first time since 2006 signaling rising concerns over economic growth. [MKTS/GLOB]
Inversions are considered a harbinger of eventual recession. But the signal right now is not clear.
“We’re far away from what we consider to be the critical inversion, which is fed funds over the 10-year, but if we did get to that level, which would be towards the end of the year, that would be bad for all cyclical (stocks),” said Hatfield.
“But that’s kind of a 2023 event, so that’s why we don’t really see recession fears.”
Meanwhile, U.S. President Joe Biden is expected to ask Congress for record peacetime military spending while raising taxes for billionaires and projecting lower government deficits.
Audio and video products maker Poly soared 48.6% after HP Inc announced it would buy the company for $1.7 billion in cash. HP declined 2.1%.
Beyond Meat Inc fell 6.4% after Piper Sandler downgraded the plant-based meat maker to “underweight”.
(Reporting by Bansari Mayur Kamdar and Amruta Khandekar in Bengaluru; Editing by Sriraj Kalluvila and Arun Koyyur)