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Day Ahead: Top 3 Things to Watch

Published 01/09/2019, 03:19 PM
Updated 01/09/2019, 04:58 PM
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Investing.com - Here’s a preview of the top 3 things that could rock markets tomorrow.

1. Powell Speaks and the Markets Will Listen

Federal Reserve Chairman Jerome Powell will speak tomorrow and investors will be looking at every word.

It only took one word -- “patient” -- at Powell’s last public appearance to send the market soaring.

Powell will speak at an event at the Economic Club of Washington, D.C. The lunch and program portion is scheduled to start at 12:00 PM ET (17:00 GMT), but the Federal Reserve says Powell’s remarks will likely start around 12:45 PM.

Bulls will be hoping for more of the same from a kinder, gentler Powell, who said the FOMC is prepared to wait on interest rate hikes, depending on economic data, and could also alter its balance sheet plans as needed.

Currently the markets are pricing in the Fed keeping rates steady through its October meeting, according to Investing.com’s Fed Rate Monitor Tool.

Also on the Fed calendar, Richmond Fed President Tom Barkin will speak at the Greater Raleigh Chamber of Commerce on “Ensuring Long-Term Growth” at 8:35 AM ET.

And St. Louis Fed President James Bullard will give a speech on monetary policy at the Little Rock Chamber of Commerce at 12:30 PM ET.

In an interview with The Wall Street Journal published today, Bullard said the FOMC is bordering on going too far with rate hikes and could push the economy into a recession.

2. Jobless Claims Expected to Dip

Labor market data continue to arrive despite the partial shutdown of the federal government.

Weekly initial jobless claims will be released tomorrow at 8:30 AM ET (13:30 GMT) and may have an outsized impact on trading given the dearth of other numbers.

On average, economists expect that claims for first-time unemployment benefits dropped slightly to 225,000.

The Labor Department reported a gain in December nonfarm payrolls last week that beat expectations by a wide margin, while the latest JOLTS report showed job openings fell in November.

3. Energy Sector Looks for Oil Rally to Continue

The broader stock market is suddenly getting a lift from a beaten-down sector, as energy stocks follow oil prices higher.

The bulls look to be back in control of crude, which jumped 5% today, shrugging a smaller than expected drawdown in U.S. oil inventories and a large buildup in products.

If optimism that U.S. and China trade talks are headed to a resolution continues, energy could be a bulwark for January.

But analysts expressed skepticism.

"The products build is crazy," Tariq Zahir of the oil-focused Tyche Capital Advisors in New York said.

"This rally over the last several days is beyond its last legs in my opinion," added Zahir, who typically has a bearish outlook on crude.

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