Stocks Higher Following Long Holiday Weekend

U.S. stocks are rising in pre-market action in the first trading session of the week following the long holiday weekend. The markets are reacting to a host of economic data that was released, as home prices decreased on a seasonally adjusted basis, the trade deficit narrowed much more than expected, and wholesale inventories increased. After the opening bell, we will get a report on Dallas’ manufacturing activity. Equity news is light following the long holiday as shares of Southwest Airlines are declining after the U.S. Department of Transportation said that it would examine the mass flight cancellations and delays. Treasury yields are rising, and the U.S. dollar is mostly unchanged, while crude oil and gold prices are gaining ground. Asian equities increased, led by mainland Chinese stocks, after the Chinese government announced that it would put an end to quarantine restrictions for inbound travelers effective early January. Markets in Europe are also advancing following improved market sentiment amid this news.

As of 9:04 a.m. ET, the March S&P 500 Index future is 23 points above fair value, the Nasdaq Index future is 41 points north of fair value, and the DJIA future is 188 points ahead of fair value. WTI crude oil is increasing $0.18 to $79.74 per barrel, and Brent crude oil is gaining $0.19 to $84.69 per barrel. The gold spot price is rising $10.90 to $1,815.10 per ounce. Elsewhere, the Dollar Index is mostly unchanged at 104.27.

Shares of Southwest Airlines Company (LUV $36) are declining after the U.S. Department of Transportation (USDOT) said that it would examine mass flight cancellations and delays by the airline. This came amid a powerful winter storm that resulted in airlines cancelling thousands of flights over the three-day holiday weekend. The Transportation Department stated that they are “concerned by Southwest's unacceptable rate of cancellations and delays and reports of lack of prompt customer service. The Department will examine whether cancellations were controllable and if Southwest is complying with its customer service plan.”

The equity markets have been volatile as of late, with the S&P 500 and the Nasdaq posting a third-straight week of losses. The uncertainty comes amid worries over the economic impact of aggressive monetary policy tightening from the Fed, which has caused recession worries and volatility in the markets to ratchet higher. The Schwab Center for Financial Research discusses the recent volatility in the latest article, Stock Market Volatility: Fed Concerns to the Fore. Additionally, Schwab's Chief Investment Strategist Liz Ann Sonders discusses in her article, U.S. Outlook: How Many More Times, Fed?, how Powell, among other Fed officials, has seemingly shifted his attention from the rear-view mirror to the windshield. She points out how inflation is a lagging indicator, but the impact of monetary policy changes is in the future.