Markets Today: Stocks Slip Ahead of Big Tech Earnings and FOMC Meeting

Morning Markets

March E-Mini S&P 500 futures (ESH24) are down -0.23%, and March Nasdaq 100 E-Mini futures (NQH24) are down -0.24%. 

Stock index futures this morning are moderately lower ahead of megacap technology stock earnings and the results of the 2-day FOMC meeting that begins today.  The markets are awaiting earnings reports from Apple, Alphabet, Amazon.com, and Microsoft this week. 

There is mixed corporate news today on stocks.   United Parcel Service is down more than -6% in pre-market trading after forecasting 2024 revenue below consensus.  Also, Whirlpool is down more than -4% after forecasting full-year revenue below consensus.  On the positive side, General Motors is up more than +6% in pre-market trading after reporting stronger-than-expected Q4 adjusted EPS and forecasting 2024 adjusted EPS above consensus.  Also, Tesla is up more than +2%, adding to Monday’s +4% gain, after ETFs run by Cathie Wood’s Ark Investment Management bought $141 million of Tesla shares this month. 

The Federal Reserve is expected to hold monetary policy steady after the conclusion of the 2-day FOMC meeting.  However, investors will scour post-FOMC meeting comments on Wednesday from Fed Chair Powell for clues on the Fed’s policy outlook. 

The markets are discounting the chances for a -25 bp rate cut at 2% at this week’s FOMC meeting and 48% for that same -25 bp rate cut for the following meeting on March 19-20.

U.S. and European government bond yields today are mixed.  The 10-year T-note yield fell to a 2-week low of 4.034% and is down -0.4 bp at 4.070%. The 10-year German bund yield fell to a 2-week low of 2.199% but rebounded and is up +3.3 bp at 2.268%. The 10-year UK gilt yield fell to a 2-week low of 3.849% but rebounded and is up +0.3 bp at 3.879%.  

Overseas stock markets are mixed.  The Euro Stoxx 50 is up +0.31%.  China’s Shanghai Composite Index closed down -1.83%.  Japan’s Nikkei Stock Index closed up +0.11%.

The Euro Stoxx 50 climbed to a new 23-year high and is moderately higher.  Today's better-than-expected economic news is boosting European stocks after Q4 Eurozone GDP was revised upward and Eurozone Dec economic confidence came in stronger than expected.   On the negative side, the 10-year German bund yield rebounded from a 2-week low and moved higher after Spanish consumer prices unexpectedly strengthened in January. 

Eurozone Q4 GDP was revised upward to unchanged q/q and +0.1% y/y from the previously reported -0.1% q/q and +0.1% y/y.

The Eurozone Dec economic confidence indicator fell -0.1 to 96.2, slightly stronger than expectations of 96.1.

Spain's Jan CPI (EU harmonized) unexpectedly strengthened to +3.5% y/y from +3.3% y/y in Dec, stronger than expectations of an easing to +3.0% y/y.

Swaps are pricing in the chances for a -25 bp rate cut by the ECB at 22% for its next meeting on March 7 and at 93% at the following meeting on April 11.

China’s Shanghai Composite Index today closed moderately lower for a third day.  The gloom over China’s economy has deepened after the liquidation of debt-ridden China Evergrande Group, once China’s largest property developer.  Chinese stock prices have come under pressure again this week after a brief rally last week when the PBOC cut the reserve requirement ratio for banks.  Property developers sold off today for a second day. Electric vehicle makers and their suppliers retreated today after BYD Co, the world’s biggest seller of electric cars, reported preliminary full-year net income that missed estimates. 

Japan’s Nikkei Stock Index today closed moderately higher.  Japanese stocks had carryover support today from Monday’s rally in U.S. stocks as the S&P 500 rose to a new record high.  Today’s economic news supported Japanese stocks after Japan’s jobless rate unexpectedly fell to an 11-month low in December, a sign of strength in the labor market.  Also, some positive corporate news lifted stocks after JR Central boosted its full-year operating income forecast and Nippon Gear Co reported better-than-expected 9-month cumulative quarterly unconsolidated earnings.

The Japan Dec jobless rate unexpectedly fell -0.1 to an 11-month low of 2.4%, showing a stronger labor market than expectations of no change at 2.5%.

Swaps are pricing in the chances for a +10 bp rate increase by the BOJ at 29% for its next meeting on March 19 and at 73% for the following meeting on April 26.

Pre-market U.S. Stock Movers

United Parcel Service (UPS) tumbled more than -6% in pre-market trading after forecasting 2024 revenue of $92.0 billion-$94.5 billion, below the consensus of $95.66 billion. 

Danaher (DHR) fell more than -2% in pre-market trading after forecasting full-year 2024 core sales to be down low-single digits year-over-year. 

Johnson Controls International (JCI) dropped more than -2% in pre-market trading after cutting its full-year adjusted EPS forecast to $3.60-$3.75 from a prior estimate of $3.65-$3.80. 

Calix (CALX) plunged more than -18% in pre-market trading after reporting a Q4 net loss of -$4.14 million versus the consensus of a profit of $12 million and forecasting Q1 adjusted EPS of 17 cents-23 cents, well below the consensus of 38 cents.   

Whirlpool (WHR) fell more than -4% in pre-market trading after forecasting full-year revenue of $16.90 billion, below the consensus of $17.68 billion. 

Cleveland-Cliffs (CLF) slid more than -2% in pre-market trading after reporting Q4 revenue of $5.11 billion, below the consensus of $5.13 billion. 

Tesla (TSLA) climbed more than +2% in pre-market trading, adding to Monday’s 4% gain after ETFs run by Cathie Wood’s Ark Investment Management bought $141 million of Tesla shares this month. 

General Motors (GM) jumped more than +6% in pre-market trading after reporting Q4 adjusted EPS of $1.24, better than the consensus of $1.16, and forecast 2024 adjusted EPS of $8.50-$9.50, well above the consensus of $7.70. 

Super Micro Computer (SMCI) rallied more than +12% in pre-market trading after reporting Q2 net sales of $3.66 billion, stronger than the consensus of $3.42 billion, and raised its full-year revenue forecast to $14.3 billion-$14.7 billion from a previous forecast of $10 billion-$11 billion.

MSCI Inc (MSCI) climbed more than +3% in pre-market trading after reporting Q4 adjusted EPS of $3.68, above the consensus of $3.29. 

F5 Inc (FFIV) jumped more than +8% in pre-market trading after reporting Q1 net revenue of $692.6 million, stronger than the consensus of $684.8 million. 

Woodward (WWD) climbed more than +4% in pre-market trading after reporting Q1 net sales of $786.7 million, above the consensus of $743.8 million, and raising its full-year net sales forecast to $3.15 billion-$3.30 billion from a previous forecast of $3.10 billion-$3.25 billion, stronger than the consensus of $3.20 billion.   

Earnings Reports (1/30/2024)

A O Smith Corp (AOS), Advanced Micro Devices Inc (AMD), Alphabet Inc (GOOGL), Boston Properties Inc (BXP), Chubb Ltd (CB), Corning Inc (GLW), Danaher Corp (DHR), Electronic Arts Inc (EA), Equity Residential (EQR), General Motors Co (GM), HCA Healthcare Inc (HCA), Hubbell Inc (HUBB), Johnson Controls International (JCI), Juniper Networks Inc (JNPR), Marathon Petroleum Corp (MPC), Match Group Inc (MTCH), Microsoft Corp (MSFT), Mondelez International Inc (MDLZ), MSCI Inc (MSCI), NVR Inc (NVR), Pentair PLC (PNR), Pfizer Inc (PFE), PulteGroup Inc (PHM), Robert Half Inc (RHI), Skyworks Solutions Inc (SWKS), Starbucks Corp (SBUX), Stryker Corp (SYK), Sysco Corp (SYY), Teradyne Inc (TER), United Parcel Service Inc UPS).

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