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02.03.2022 03:07 PM
US premarket on March 2, 2022

US stock futures advanced on Wednesday thanks to rising oil prices, which continue to push new highs after surpassing $100. The second round of negotiations between Russia and Ukraine, which is set to begin in the near future, has also given some optimism to market players. Dow Jones futures added 233 points or 0.7%, similar to S&P 500 and Nasdaq 100 futures. WTI and Brent futures added 4%, with West Texas Intermediate and Brent trading at $107.50 and $109.51 per barrel, respectively.

Shares of Exxon and Chevron gained 2% during the premarket on rising oil prices. Ford increased by 4.6% in premarket trading after the company announced it would create two separate divisions for producing gas-powered cars and electric vehicles. The yield of the benchmark 10-year US treasury bond has risen by 3.5 basis points and is now 1.75%. Yesterday, the yield fell below 1.7%.

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On Tuesday, the Dow Jones decreased by 597 points or 1.76%. The S&P 500 and the Nasdaq Composite lost 1.55% and 1.59% respectively.

Fighting in Ukraine shows no signs of stopping. Russian forces have entered the Ukrainian city of Kherson and claim they have surrounded Mariupol. Tensions in the market are likely to remain high due to the ongoing fighting, leading to high volatility.

Traders await the statement by Fed chairman Jerome Powell. The war in Ukraine has sent oil prices skyward, which could result in high inflation and weigh down on the US economy. This would seriously affect the Federal Reserve's policies. Jerome Powell will present his biannual report on monetary policy to the US Congress. Wall Street, wary of the Russian invasion's impact on the markets, now have low expectations of a rate hike by the Federal Reserve. The Fed chairman is expected to announce more hawkish policy measures against inflation. At the same time, the markets see Powell's statements to be more reserved. These expectations have prevented a major sell-off of the US stock indexes.

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ADP payroll data is due later today. Economists expect that 400,000 new jobs were created in February, up from 301,000 in January. Furthermore, Okta, Pure Storage, and C3 AI are set to release their earnings data.

On the technical side, the S&P 500 remains under pressure. At the same time, investors are opening new long positions, motivated by the positive news. Bullish traders are likely to attempt steering the index above $4,341. If the S&P 500 fails to settle above this level, increased pressure would send it back into the $4,292 area. A break below $4,292 would resume the downtrend, opening the way towards the lows at $4,233 and $4,175. If the S&P 500 settles above $4,341, the market could eventually recover. However, today's session could go either way. An upward movement of the index would allow opening short positions near $4,383 and $4,433. The developments in Ukraine and possible talks between Zelensky and Putin would determine the index's trajectory.

Jakub Novak,
Analytical expert of InstaForex
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