Wall St eyes higher open on China optimism, easing rate hike worries

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Wall St eyes higher open on China optimism, easing rate hike worries
  • Alibaba steps in as Ant Group’s Jack Ma to cede control
  • Macy’s, Lululemon fall on holiday quarter alerts
  • Futures on: Dow 0.30%, S&P 0.41%, Nasdaq 0.51%

Jan 9 (Reuters) – Wall Street’s main indexes were set to open higher on Monday on optimism around China reopening its borders, while signs of a cooling labor market boosted bets of a slower pace of rate hikes by the Federal Reserve.

After the benchmark S&P 500 (.SPX) and Nasdaq (.IXIC) were hammered by rapid rate hikes in 2022, Friday broke a four-week slide after a moderation in wage increases and a decline in U.S. services activity in December pinned hopes on a less hawkish stance from the Fed.

“Job creation is slowing down and wages are starting to moderate. Both are important for inflation to come under control without necessarily leading the U.S. economy into recession,” said Art Hogan, chief market strategist at B. Riley Financial. .

The long-awaited US Labor Department inflation report on Thursday is expected to show some moderation in year-over-year consumer prices in December.

Money market bets show a 75% chance of a 25 basis point hike in the Fed’s February policy meeting, with the terminal rate expected to be just under 5% by June.

Other economic data such as weekly jobless claims and the University of Michigan’s report on consumer sentiment will also be in focus this week as major US banks kick off quarterly earnings season on Friday.

A host of Fed officials, including Chairman Jerome Powell, will speak this week, with investors analyzing their comments for more clues about the rate hike trajectory.

US-listed shares of Alibaba Group Holding Ltd rose 5.0% in pre-market trading on news that Ant Group founder Jack Ma will relinquish control of the Chinese fintech giant in a shake-up.

Shares of other Chinese firms such as Baidu Inc and Pinduoduo Inc ( PDD.O ) rose 1.5% and 2.9% respectively, as a full reopening of China’s borders since the start of the pandemic added to bets of a strong recovery in the world’s second largest economy.

By 8 a.m. ET, Dow e-minis were up 103 points or 0.30%, S&P 500 e-minis were up 16 points or 0.41%, and Nasdaq 100 e-minis were up 56.75 points or 0.51%.

Tesla Inc ( TSLA.O ) climbed 3.3% as the electric vehicle maker signaled longer wait times for potential buyers of some versions of the Model Y in China, indicating that recently announced price cuts are dampening demand in the company’s second-largest market can stimulate .

Macy’s Inc ( MN ) and Lululemon Athletica Inc ( LULU.O ) fell 4.7% and 10%, respectively, following tough holiday quarter forecasts from both retailers.

Reporting by Shubham Batra, Amruta Khandekar and Ankika Biswas in Bengaluru; Editing by Shounak Dasgupta

Our Standards: The Thomson Reuters Trust Principles.

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