March S&P 500 E-Mini futures (ESH24) up +0.05%, and March Nasdaq 100 E-Mini futures (NQH24) is up +0.08% this morning, as market participants previewed the next round of corporate earnings, with attention on results from US streaming leader Netflix.
In Monday’s trading session, Wall Street’s main indexes ended in the green, with the benchmark S&P 500, the blue-chip Dow, and the tech-heavy Nasdaq 100 notching new record highs. Western Digital Corporation (WDC) climbed more than +4% after Morgan Stanley designated the stock as a top pick among US semiconductor stocks and raised its price target on the stock to $73 from $52. Also, SolarEdge Technologies Inc (BUT) rose about +4% following a report from Calcalist stating that the company intends to lay off 900 employees, representing about 16% of its total workforce, including 550 workers in Israel. In addition, NuStar Energy LP (NS) soared more than +18% after Sunoco agreed to acquire the company in an all-stock deal valued at about $7.3 billion, including assumed debt. On the bearish side, Gilead Sciences Inc (GOLD) fell more than -10% and was the top percentage loser on the Nasdaq 100 after the biopharma company’s announcement of disappointing results from a late-stage trial for Trodelvy, a drug used to treat metastatic non-small cell lung cancer. Also, Advanced Micro Devices (AMD) slipped over -3% after Northland Securities downgraded the stock to Market Perform from Outperform.
“The stock rally that we’re seeing is based on the soft landing scenario that’s being priced in. If the economy is doing well, why would you sell stocks? And the counterfactual for stock markets is that if things go down, they’re going to get rates,” said Charles Diebel at Mediolanum International Funds.
Economic data on Monday showed that the US leading economic index fell -0.1% m/m in December, a smaller decline than expectations of -0.3% m/m.
Meanwhile, US rates were priced in a 2.6% chance of a 25 basis point rate cut at the next central bank meeting in January and a 42.4% chance of a 25 basis point rate cut at the March FOMC meeting.
The fourth quarter earnings season is gathering pace, with investors awaiting fresh reports from major global companies today, including Netflix (NFLX), J&J (JNJ), Procter&Gamble (PG), Texas Instruments (TXN), Lockheed Martin (LMT), and 3M (MMM).
In the economic data, investors are likely to focus on the US Richmond Index of Manufacturing, due later in the day. Economists estimate the January figure to be -7, compared to the previous number of -11.
In the bond markets, US 10-year yields are at 4.132%, up +0.86%.
Euro Stoxx 50 futures are down -0.27% this morning as investors remain cautious ahead of the European Central Bank’s policy meeting later this week. Healthcare and real estate stocks underperformed on Tuesday, while mining stocks gained ground. Meanwhile, investors await the European Central Bank’s monetary policy decision on Thursday to get information on the timing of possible interest rate hikes. While a pause in interest rate hikes is almost priced in for the next meeting, traders expect cuts of around 130 basis points this year, with an almost 97% probability of the first reduction occurring in June. In corporate news, Swatch Group Ag/The (UHR.Z.IX) fell more than -2% after the world’s largest watchmaker reported weaker-than-expected 2023 results. At the same time, Schindler Holding Ag (SCHP.Z.IX) gained more than +2% after Jefferies upgraded the stock to Buy from Hold.
The European economic data is mostly empty on Tuesday.
Asian stock markets closed mixed today. China’s Shanghai Composite Index (SHCOMP) closed up +0.53%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.08%.
China’s Shanghai Composite Index closed higher today on news of a new market rescue package. New energy supplies topped on Tuesday. Tech giants and mainland developers listed in Hong Kong also increased. Premier Li Qiang chaired a cabinet meeting on Monday, during which officials signaled their intention to implement stronger and more effective measures to stabilize market confidence. Bloomberg News reported on Tuesday that Chinese authorities aim to mobilize about 2 trillion yuan ($278 billion), mainly from the overseas accounts of Chinese state-owned enterprises, as part of a stabilization fund to buy shares onshore through the Hong Kong exchange link. Chinese officials have also allocated a minimum of 300 billion yuan of local funds to invest in onshore stocks through China Securities Finance Corp. or Central Huijin Investment Ltd., as reported by individuals familiar with the matter. Meanwhile, China’s gaming regulator, as indicated by checks conducted by Reuters on Tuesday, has removed rules it proposed last month from its website that were intended to limit spending and rewards that encourage playing video games. Based on this, NetEase Inc climbed around +6%, and Tencent Holdings Ltd increased by +3%. In other news, Bloomberg News reported Tuesday that China is expanding its ban on pure equity sales by major mutual funds to some insurers. In corporate news, Hangzhou Oxygen Plant Group Co Ltd gained more than +3% after revealing its intention to invest 110 million yuan in a new air separation unit in China’s Shanxi province.
Japan’s Nikkei 225 Stock Index closed slightly lower today, erasing early gains, as investors booked profits following the Bank of Japan’s widely expected decision to keep interest rates on hold. Utilities and technology stocks led decliners on Tuesday, while health care and financial stocks outperformed. The BOJ kept its short-term rate at -0.1% and left its yield curve control parameters unchanged at the end of a two-day meeting. Also, the central bank cut its inflation forecast for the fiscal year starting in April, lowering it from 2.8% to 2.4% in a quarterly outlook report, attributing the adjustment to recent declines in oil prices. Meanwhile, the yen extended its advance following BOJ governor Kazuo Ueda’s remarks at a press conference, where he said the certainty of reaching its projections is gradually increasing, and he will consider ending negative rates if the price target comes in sight. That language is consistent with the prevailing expectation among economists that the BOJ will raise rates sometime in the first part of this year. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed -3.84% to 21.06.
Premarket US stock transferors
Vroom (VRM) fell about -42% in pre-market trading after the company announced that it was shutting down its electronics operations and shutting down its commercial trading vehicle to preserve liquidity.
United Airlines Holdings Inc (UAL) climbed more than +5% in premarket trading after the Chicago-based airline reported upbeat Q4 results and issued solid FY24 adjusted EPS guidance.
B. Riley Financial Inc (RILY) fell more than -5% in premarket trading following a Bloomberg report that Brian Kahn is stepping down as CEO of Franchise Group, a few months after B. Riley helped in a leveraged buyout of the company. A separate Bloomberg report over the weekend indicated that the SEC was probing B. Riley over his ties to Kahn.
Coinbase Global Inc (MONEY) slipped more than -4% in premarket trading after JPMorgan downgraded the stock to Underweight from Neutral with an unchanged price target of $80.
Sirius XM Holding Inc (SIRI) fell more than -3% in premarket trading after Wells Fargo downgraded the stock to Underweight from Equal Weight with a price target of $4.50.
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Today’s US Earnings Spotlight: Tuesday – January 23
J&J (JNJ), Procter&Gamble (PG), Netflix (NFLX), Verizon (VZ), Texas Instruments (TXN), General Electric (GE), Intuitive Surgical (ISRG), Rtx Corp (RTX), Lockheed Martin (LMT), Canadian National Railway (CNI), 3M (MMM), DR Horton (DHI), PACCAR (PCAR), Baker Hughes (BKR), Halliburton (HAL), Steel Dynamics (STLD), Synchrony Financial (SYF), Logitech (LOGI) , New Oriental Education&Tech (EDU), East West Bancorp (EWBC), Webster Financial (WBS), Invesco (IVZ), MakeMyTrip (MMYT), Old National Bancorp (ONB), GATX (GATX), Community Bank System (CBU), Atlantic Union (AUB), Stride (LRN), NBT Bancorp (NBTB), Renasant (RNST), Triumph Bancorp (TFIN), WesBanco (WSBC), Forestar (FOR), Trustmark (TRMK), First Busey (BUSO), National Bank Holdings (NBHC), Veritex Holdings Inc (VBTX), Peoples Bancorp (PEBO), QCR (QCRH), Premier Financial (PFC), Covenant (CVLG), Business First (BFST), Hanmi (HAFC).
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As of the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. For more information, please see Barchart’s Disclosure Policy here.
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