Here are the most important news, trends and analysis that investors need to start their trading day:
- Wall Street looks steady ahead of expected Fed pivot
- November retail sales' advance much smaller than estimates
- Fed's anticipated faster taper could pave way for rate hike
- Biden expected to sign debt ceiling increase ahead of deadline
- CDC says delta still dominant but omicron spreading quickly
1. Wall Street looks steady ahead of expected Fed pivot
U.S. stocks futures pointed to a steady open ahead of the Federal Reserve's widely expected Wednesday afternoon announcement of a faster tapering of its bond purchases. Tech stocks once again led Wall Street lower Tuesday, with the Nasdaq dropping another 1.1% after a nearly 1.4% decline Monday. The S&P 500 and the Dow Jones Industrial Average fell for the second straight session Tuesday after the government said November producer prices year over year rose at the fastest clip on record. November consumer prices, out last week, showed their biggest year-over-year jump in nearly 40 years.
2. November retail sales' advance much smaller than estimates
The government said before-the-bell Wednesday that November retail sales rose just 0.3% from the prior month, only about a third of the expected advance. The slowing sales growth came against the backdrop of higher prices and reports of earlier holiday shopping. The October increase was revised slightly higher to a 1.8% increase. Total retails sales from September through November were up 16.2% compared to the same period one year ago.
3. Fed's anticipated faster taper could pave way for rate hike
Retail sales are the last major economic report as central bankers on Wednesday head into the final day of their two-day December meeting. The Fed's expected accelerated tapering could set the stage for its first hike in Covid-era near-zero interest rates. The central bank is also likely to provide a new description of how it views inflation, acknowledging it no longer sees inflation as transitory. The market will also be watching for any hints about when the Fed might start shrinking its $8.7 trillion balance sheet.
4. Biden expected to sign debt ceiling increase ahead of deadline
House Democrats passed a debt ceiling increase with one Republican vote, sending the measure to President Joe Biden early Wednesday. He's expected to sign it just hours before the Treasury Department forecasts it would exhaust its tools to pay the government's bills, an outcome that would upend the U.S. economy. The Senate, also controlled by Democrats, approved the increase to the nation's borrowing limit along party lines Tuesday afternoon. Once signed, the resolution would raise the debt ceiling by $2.5 trillion, probably enough to get through next year's midterm election.
5. CDC says delta still dominant but omicron spreading quickly
The Covid omicron variant, first detected in southern Africa about a month ago, now makes up about 3% of cases sequenced in the U.S., according to data from the Centers for Disease Control and Prevention. While delta remains the dominant strain in the U.S., the CDC said that the highly mutated omicron variant is spreading quickly. Responding to a Washington Post report about a possible "massive wave" of omicron infections as soon as January, the CDC said in a statement that the scenario described was among several discussed at a regularly scheduled meeting with public health officials.
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