S&P Futures Tick Lower Ahead of FOMC Meeting, Microsoft and Alphabet Earnings on Tap

March S&P 500 E-Mini futures (ESH24) are trending down -0.15% this morning as investors looked ahead to the first Federal Reserve monetary policy committee meeting of the year and quarterly reports from heavyweight names.

In Monday’s trading session, Wall Street’s major averages ended higher, with the benchmark S&P 500 and blue-chip Dow rising to new record highs. SoFi Technologies Inc. (SOFI) surged over +20% after the digital financial services provider reached profitability in the fourth quarter for the first time since going public in 2021 and issued strong FY24 guidance. Also, Archer-Daniels-Midland Company (ADM) climbed more than +5% and was the top percentage gainer on the S&P 500 after saying the investigation of intersegment sales would extend the time required to finalize its financial results but would “not materially impact our overall results.” In addition, Meta Platforms Inc (META) rose over +1% after Jefferies raised its price target on the stock to $455 from $425. On the bearish side, iRobot Corporation (IRBT) plunged more than -8% after Amazon and the robot vacuum maker mutually agreed to terminate the planned $1.4 billion sale to Amazon. 

“This week could be key. If the market is going to sustain its latest breakout, it may need to avoid earnings disappointments from this week’s big-tech lineup, get encouraging news from the Fed on interest rates, and see jobs numbers that are solid, but not too hot,” said Chris Larkin at E*Trade from Morgan Stanley.

The Federal Reserve kicks off its two-day meeting later in the day, with investors widely anticipating the central bank to keep rates unchanged on Wednesday. Also, market participants will closely monitor Fed Chair Jerome Powell’s post-decision press conference for clues on interest rate cuts.

Fourth-quarter corporate earnings season continues in full force, with investors awaiting fresh reports from major companies today, including Microsoft (MSFT), Alphabet (GOOGL), AMD (AMD), Pfizer (PFE), United Parcel Service (UPS), and Starbucks (SBUX).

On the economic data front, all eyes are focused on U.S. JOLTs Job Openings data in a couple of hours. Economists, on average, forecast that December JOLTs Job Openings will come in at 8.750M, compared to the previous figure of 8.790M.

Also, investors will likely focus on U.S. CB Consumer Confidence data, which stood at 110.7 in December. Economists foresee the January figure to be 115.0.

U.S. S&P/CS HPI Composite - 20 n.s.a. will be reported today as well. Economists expect November’s figure to be +5.8% y/y, compared to the previous number of +4.9% y/y.

In the bond markets, United States 10-year rates are at 4.057%, down -0.86%.

The Euro Stoxx 50 futures are up +0.41% this morning as investors digested Eurozone growth data and positive earnings reports, with the focus shifting to the start of the Federal Reserve’s first meeting of the year and earnings from some of the biggest U.S. tech heavyweights. Gains in bank and media stocks are leading the overall market higher. A preliminary estimate from the European Union’s statistics office Eurostat said the Eurozone unexpectedly avoided a technical recession in the last three months of 2023 despite a contraction in Germany’s output, primarily due to robust growth in Spain and Portugal, coupled with a modest increase in Italy. In corporate news, Kesko Oyj (KESKB.H.DX) climbed over +8% after the Finnish retailer topped Q4 profit estimates. Also, Ambu A/S (AMBUB.C.DX) gained more than +6% after the Danish medical equipment maker posted stronger-than-expected Q1 earnings. At the same time, Diageo Plc (DGE.LN) slid over -3% after the U.K. spirits manufacturer missed first-half sales and profit expectations.

France’s GDP (preliminary), Spain’s CPI (preliminary), Spain’s GDP (preliminary), Italy’s GDP (preliminary), Germany’s GDP (preliminary), Eurozone’s GDP (preliminary), and Eurozone’s Consumer Confidence data were released today.

The French GDP has been reported at 0.0% q/q in the fourth quarter, in line with expectations.

The Spanish January CPI came in at +0.1% m/m and +3.4% y/y, stronger than expectations of -0.2% m/m and +3.1% y/y.

The Spanish GDP arrived at +0.6% q/q and +2.0% y/y in the fourth quarter, stronger than expectations of +0.2% q/q and +1.5% y/y.

The Italian GDP stood at +0.2% q/q and +0.5% y/y in the fourth quarter, stronger than expectations of 0.0% q/q and +0.3% y/y.

The German GDP came in at -0.3% q/q and -0.2% y/y in the fourth quarter, in line with expectations.

Eurozone GDP has been reported at 0.0% q/q and +0.1% y/y in the fourth quarter, stronger than expectations of -0.1% q/q and 0.0% y/y.

Eurozone January Consumer Confidence was at -16.1, in line with expectations.

Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed down -1.83% and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.11%.

China’s Shanghai Composite Index closed sharply lower today as the recent court order forcing troubled property developer China Evergrande Group into liquidation weighed on sentiment. Property stocks led the declines on Tuesday, with Cinda Real Estate Co Ltd slumping over -4% and Gemdale Corp falling more than -3%. Meanwhile, China’s 10-year government bond yield dropped to its lowest level in almost 22 years, fueled by growing expectations for additional monetary easing. In other news, Hong Kong’s leader affirmed on Tuesday his plans to pass new national security laws soon, building upon the sweeping legislation imposed by Beijing on the city in 2020. Some business people, diplomats, and academics are closely monitoring the developments, expressing that the prospect of new laws addressing espionage, state secrets, and foreign influence, referred to as Article 23, might profoundly impact the global financial hub. In corporate news, BYD Co Ltd slid over -4% after the electric vehicle maker reported weaker-than-expected preliminary 2023 net income. Investors are now eagerly anticipating the release of January’s purchasing managers’ index readings, scheduled for Wednesday, to obtain additional insights into business activity at the start of the new year.

Japan’s Nikkei 225 Stock Index closed slightly higher today as investors digested the country’s latest unemployment report, although caution ahead of the Federal Reserve’s decision limited gains. Technology and basic materials stocks outperformed on Tuesday, while energy and real estate stocks were laggards. Government data released on Tuesday indicated that Japan’s unemployment rate dropped to 2.4% in December from the previous month, marking the lowest level since January 2023. Separate data from the labor ministry revealed that the jobs-to-applicants ratio declined to 1.27 in December, aligning with the level observed in June 2022. In corporate news, Japan Aviation Electronics Industry Ltd tumbled over -17% in the wake of disappointing quarterly results and news that its parent company intends to reduce its stake in the electronics maker. Also, Tsuruha Holdings Inc. plunged more than -8% after retail giant Aeon Co. disclosed that it had entered into exclusive talks with Oasis Management to acquire the shares held by the Hong Kong-based activist investor in the drugstore chain. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -4.90% to 18.84.

“Investors wanted to see comments from the Federal Reserve Chair Jerome Powell. Also, they wanted to wait for corporate outlook as the earnings season just started,” said Naoki Fujiwara, senior fund manager at Shinkin Asset Management.

The Japanese December Jobs/applications ratio stood at 1.27, weaker than expectations of 1.28.

The Japanese December Unemployment Rate was at 2.4%, stronger than expectations of 2.5%.

Pre-Market U.S. Stock Movers

Super Micro Computer Inc (SMCI) soared over +10% in pre-market trading after the company reported upbeat Q2 results, provided above-consensus Q3 guidance, and raised its FY24 revenue guidance.

F5 Networks Inc (FFIV) climbed more than +10% in pre-market trading after the company posted better-than-expected Q1 results and issued strong Q2 revenue guidance.

Arcus Biosciences Inc (RCUS) surged about +16% in pre-market trading following news that partner Gilead Sciences boosted its stake in the company to 33%, aiming to expedite their collaborative development programs.

Calix Inc (CALX) plummeted over -21% in pre-market trading after providing a downbeat Q1 forecast.

Whirlpool Corporation (WHR) slid more than -4% in pre-market trading after the company issued weaker-than-expected FY24 guidance.

Advanced Micro Devices Inc (AMD) fell about -0.5% in pre-market trading after Raymond James downgraded the stock to Outperform from Strong Buy with a price target of $195.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Tuesday - January 30th

Microsoft (MSFT), Alphabet (GOOGL), AMD (AMD), Danaher (DHR), Pfizer (PFE), United Parcel Service (UPS), Stryker (SYK), Starbucks (SBUX), Mondelez (MDLZ), Chubb (CB), HCA (HCA), General Motors (GM), MSCI (MSCI), Johnson Controls (JCI), Sysco (SYY), Electronic Arts (EA), Chunghwa Telecom (CHT), Corning (GLW), Equity Residential (EQR), PulteGroup (PHM), Hubbell (HUBB), Skyworks (SWKS), Teradyne (TER), Manhattan Associates (MANH), Boston Properties (BXP), AO Smith (AOS), Pentair (PNR), Juniper (JNPR), RenaissanceRe (RNR), Match Group (MTCH), Fortune Brands (FBIN), Unum (UNM), Robert Half (RHI), Oshkosh (OSK), Littelfuse (LFUS), Polaris Industries (PII), MDC (MDC), Ashland Global (ASH), UMB Financial (UMBF), ManpowerGroup (MAN), CommVault (CVLT), Modine Manufacturing (MOD), Axos Financial (AX), First Interstate BancSystem (FIBK), JetBlue (JBLU), Enova International Inc (ENVA), First Commonwealth Financial (FCF), Hope Bancorp (HOPE), Malibu Boats Inc (MBUU), LendingClub Corp (LC), Powell Industries (POWL), Hawaiian (HA), Cambridge Bancorp (CATC).

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