Stocks Pull Back Ahead Of Long Weekend

Traders Wait For Additional Catalysts

According to recent reports, U.S. President Joe Biden will soon meet with a group of governors and mayors to discuss his $1.9 trillion coronavirus aid package proposal.

The market continued to move higher this week on expectations that the new round of stimulus would be delivered soon. At this point, it looks like the ultimate size of the aid bill be will be equal or close to Biden’s $1.9 trillion proposal which is bullish for stocks.

Interestingly, U.S. government bond yields continued to gain ground after a brief downside move that was triggered by a weaker-than-expected inflation report which was released on Wednesday.

The rise in yields indicates that the market expects that the new coronavirus aid package will be able to push prices higher. It remains to be seen whether rising yields will have any impact on stocks.

Today, S&P 500 futures are losing ground in premarket trading as traders wait for additional catalysts that could push stocks to new highs. Markets will be closed on Monday, February 15, in observance of President’s Day, which is reducing traders’ desire to initiate new bets near all-time high levels.

OPEC Cuts Its Oil Demand Forecast

OPEC has recently released its Monthly Oil Market Report which contained its new oil demand estimates for 2021. According to OPEC, global oil demand will grow by 5.8 million barrels per day (bpd) in 2021 and average 96.1 million bpd. The estimate was revised down by about 0.1 million bpd from last month’s forecast.

OPEC stated that extended lockdowns, as well as partial lockdowns, put additional pressure on oil demand. At the same time, it should be noted that the oil market is supported by Saudi Arabia’s decision to cut production by 1 million bpd in February and March, and crude oil inventories are trending down.

In this light, it remains to be seen whether the new downside revision of OPEC’s oil demand forecast for 2021 will put any pressure on oil and oil-related equities.

All Eyes On Consumer Confidence Report

Soon after the market open, U.S. will provide Consumer Confidence report for February. Analysts expect that Consumer Confidence increased from 79 in January to 80.8 in February as the situation on the virus front improved.

The U.S. economy is heavily dependent on consumer activity, so a better-than-expected Consumer Confidence report may provide material support to stocks.

For a look at all of today’s economic events, check out our economic calendar.