S&P 500; US Indexes Fundamental Forecast – February 21, 2017

U.S. equity index futures picked up where they left off last week with another run into new record highs on Monday. Buyers continued to come into the market demand risky assets despite the holiday-thinned markets and key economic reports and information form the Fed later this week.

The cash market was closed for the Presidents Day holiday on Monday and trading in the U.S. stock futures ended early.

Forecast

On Tuesday, investors will get the opportunity to react to the latest Markit flash manufacturing PMI and services PMI surveys for February at 1445 GMT.

FOMC Member Patrick Harker is also scheduled to speak. He is a noted hawk.

Last week, Harker said that three interest-rate hikes in 2017 is likely to be the appropriate path for U.S. Federal Reserve policy, assuming the economy stays on track.

“The overall economy is in pretty good shape,” Harker said in a speech at an outlook conference sponsored by La Salle University.

He also added that inflation has been stubbornly low but should rise to the Fed’s 2% target sometime this year or next. The economy has reached the “natural rate” of unemployment, he said.

Harker also said that policies to grow the economy faster than a 2% rate depend on policies outside the Fed’s purview.

Stock investors should also keep an eye and an ear out for anything from President Trump regarding his tax reform plan, his economic agenda and any new plans to reduce government regulation. Trader may react bullishly to anything from Trump regarding these three topics. However, there will come a time in the futures when investors will just stop listening to Trump until he starts delivering concrete plans for accomplishing these “campaign promises.”