March S&P 500 futures (ESH23) are trending up +0.08% this morning after three major U.S. benchmark indices finished the regular session mixed as market participants digested more corporate earnings reports ahead of crucial U.S. PPI and retail sales data. The Dow and S&P 500 indices were weighed down primarily by losses in the Telecoms, Basic Materials, and Consumer Services sectors, while the NASDAQ Composite ended in the green mainly due to gains in the Consumer Goods, Technology, and Oil & Gas sectors.
In Tuesday’s trading session, the Dow dropped over -1% as Goldman Sachs (GS) weighed the most on the index after the Wall Street banking giant declared its worst earnings miss in a decade, while gains in Tesla (TSLA) limited losses on the S&P 500 index and helped the NASDAQ close in the green. At the same time, Morgan Stanley (MS) jumped about +6% after it topped analysts’ consensus for fourth-quarter profit and reported record revenue in its wealth management business.
“Earnings expectations for Q4 went down quite a bit. It may have set the bar low enough for some upside surprises. Morgan Stanley obviously beat expectations, but then Goldman didn't. So it's kind of a mixed bag,” said Randy Frederick, a managing director of trading and derivatives at Charles Schwab in Austin, Texas.
Analysts expect corporate earnings from S&P 500 companies to drop 2.4% for the quarter, compared with an expected decline of 1.6% at the start of the year.
Data on Tuesday showed New York state manufacturing unexpectedly dropped to a 2-1/2 year low of -32.9 in January, weaker than expectations of -8.7, as orders collapsed and employment growth stalled.
Today, all eyes are focused on the U.S. PPI data in a couple of hours. Economists, on average, forecast that December U.S. PPI will stand at -0.1% m/m, compared to the previous value of +0.3% m/m.
Also, investors are likely to focus on the U.S. Retail Sales data, which was at -0.6% m/m in November. Economists foresee the new figure to be -0.8% m/m.
U.S. Core Retail Sales data will be reported today. Economists foresee this figure to stand at -0.4% m/m in December, compared to the previous number of -0.2% m/m.
U.S. Core PPI data will come in today. Economists expect December’s figure to be +0.1% m/m, compared to the previous number of +0.4% m/m.
U.S. Industrial Production data will be reported today as well. Economists estimate this figure to be -0.1% m/m in December, compared to the previous value of -0.2% m/m.
In addition, market participants will be looking toward a batch of speeches from Fed officials Bostic, Logan, and Harker for further clues on the outlook for rates.
In the bond markets, United States 10-Year rates are at 3.496%, down -1.11%.
The Euro Stoxx 50 futures are up +0.12% this morning as investors digested fresh U.K. and Eurozone inflation data and dovish signals from the Bank of Japan. U.K. CPI fell to a three-month low of 10.5% y/y in December, in line with expectations, moving further away from the 41-year high of 11.1% y/y hit in October. Forecasts made in November by the Bank of England suggest that headline CPI will drop to around 5% by the end of 2023, but the BoE warned that a tight labor market and other factors could exert upward pressure on inflation. Also, European stocks have received a positive handover from Asia after the Bank of Japan stuck to its ultra-easy monetary policy.
U.K. Core CPI, Eurozone CPI, and Eurozone Core CPI data were also released today.
U.K. December Core CPI stood at +0.5% m/m and +6.3% y/y, stronger than expectations of +0.4% m/m and +6.2% y/y.
Eurozone December CPI has been reported at -0.4% m/m and +9.2% y/y, compared to expectations of -0.3% m/m and +9.2% y/y.
Eurozone December Core CPI came in at +0.6% m/m and +5.2% y/y, in line with expectations.
Asian stock markets today settled in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.01%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +2.50%.
China’s Shanghai Composite today closed slightly higher as investors continue to assess the country’s reopening. However, uncertainty over a full recovery persisted as the country grapples with its worst-yet COVID-19 outbreak. At the World Economic Forum in Davos on Tuesday, China’s Vice Premier Liu He welcomed foreign investment and declared his country open to the world after three years of pandemic isolation.
At the same time, Japan’s Nikkei 225 Stock Index today surged to a near one-month high after the Bank of Japan maintained its current range of yield curve control, defying market expectations for more widening in the bank’s policy. The central bank kept interest rates at record-low levels and said it would maintain policy accommodative, implying affirmative liquidity conditions for regional stocks. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down 3.14% to 19.15.
Pre-Market U.S. Stock Movers
Aterian Inc (ATER) climbed about +7% in pre-market trading, extending yesterday’s gains after the consumer product platform guided for Q4 revenue of $54M-$55M compared to a consensus of $48.27M.
Moderna Inc (MRNA) rose over +5% in pre-market trading after the company announced positive topline data from its ConquerRSV Phase 3 pivotal efficacy trial of mRNA-1345.
United Airlines Holdings Inc (UAL) soared about +3% in pre-market trading after the company reported upbeat Q4 results.
Arcimoto Inc (FUV) plunged about -41% in pre-market trading after the company announced its plans to offer and sell shares of its common stock and warrants to purchase shares of common stock in a public offering.
Natera Inc (NTRA) gained over +2% in pre-market trading after Raymond James upgraded the stock to outperform from market perform.
Seagate Technology PLC (STX) rose more than +2% in pre-market trading after Morgan Stanley upgraded the stock to overweight from equal weight.
International Business Machines (IBM) dropped about -2% in pre-market trading after Morgan Stanley downgraded the stock to equal weight from overweight with a price target of $148, down from $152.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Wednesday - January 18th
Charles Schwab (SCHW), Prologis (PLD), PNC Financial (PNC), Kinder Morgan (KMI), Discover (DFS), JB Hunt (JBHT), First Horizon National (FHN), Burberry Group Plc (BURBY), Alcoa (AA), Wintrust (WTFC), H B Fuller (FUL), Texas Capital (TCBI), Eagle (EGBN), Preferred Bank (PFBC), Community Trust (CTBI), Karooooo (KARO), PAM (PTSI), NVE Corporation (NVEC), First Bancorp Inc (FNLC), Plumas (PLBC).
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On 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 solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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