March S&P 500 E-Mini futures (ESH24) are up +0.38%, and March Nasdaq 100 E-Mini futures (NQH24) are up +0.57% this morning as investors looked ahead to a new round of U.S. economic data and earnings reports from tech behemoths Apple, Amazon, and Meta Platforms.
As widely expected, the Federal Reserve kept its federal funds rate target range unchanged at 5.25%-5.50% for the fourth straight meeting on Wednesday. Although the Federal Open Market Committee removed its tightening bias from its statement, it’s in no rush to reduce rates. “The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%,” the Fed said in its monetary policy statement on Wednesday. In addition, Fed Chair Jerome Powell said he doesn’t expect the Fed to deliver its first interest-rate cut in March, emphasizing the need for the central bank to proceed “carefully.” “I don’t think it’s likely that the committee will reach a level of confidence by the time of the March meeting to identify March as the time to [cut], but that’s to be seen,” Powell said during the post-meeting press conference.
“Although the Fed softened some of its hawkish language, they also suggested it wasn’t yet clear that inflation was entirely under control. As usual, they said they’d let the economic data dictate their course. For a while, the debate has been about whether the market is too optimistic about a March rate cut. Inflation has been a little stickier than expected lately, and the labor market has mostly continued to surprise to the upside,” said Chris Larkin at E*Trade from Morgan Stanley.
In Wednesday’s trading session, Wall Street’s major indices ended in the red, with the benchmark S&P 500 falling to a 1-week low and the tech-heavy Nasdaq 100 dropping to a 1-1/2 week low. Rockwell Automation Inc (ROK) tumbled over -17% after the industrial technology company posted downbeat Q1 results and lowered its full-year EPS outlook. Also, Alphabet Inc (GOOGL) slumped more than -7% and was the top percentage loser on the Nasdaq 100 after the Google parent reported weaker-than-expected Q4 ad revenue and projected higher AI-related spending. In addition, Advanced Micro Devices Inc (AMD) fell over -2% after the U.S. chip designer issued below-consensus Q1 revenue guidance. On the bullish side, Boeing Co (BA) climbed more than +5% and was the top percentage gainer on the Dow after reporting a narrower-than-anticipated quarterly loss.
The ADP National Employment report on Wednesday showed private payrolls rose by 107K jobs in January, lower than the consensus figure of 145K and moderating from the 158K reading in December. Also, the U.S. Q4 employment cost index came in at +0.9% q/q, weaker than expectations of +1.0% q/q and the smallest pace of increase in 2-1/2 years. In addition, the U.S. Chicago PMI unexpectedly edged down to 46.0 in January, weaker than expectations of 48.0.
Meanwhile, U.S. rate futures have priced in a 35.5% chance of a 25 basis point rate cut at the next central bank meeting in March and a 93.6% chance of at least a 25 basis point rate cut at the conclusion of the Fed’s May meeting.
Fourth-quarter earnings season continues in full flow, and investors await new reports from big-name companies today, including Apple (AAPL), Amazon.com (AMZN), and Meta Platforms (META). Analysts estimate aggregate S&P 500 earnings to grow 6.1% year-over-year in Q4, compared with an expected rise of 4.7% at the end of the quarter, per LSEG.
On the economic data front, all eyes are focused on the U.S. ISM Manufacturing PMI in a couple of hours. Economists, on average, forecast that January ISM Manufacturing PMI will stand at 47.2, compared to the previous value of 47.4.
Also, investors will likely focus on the U.S. S&P Global Manufacturing PMI, which came in at 47.9 in December. Economists foresee the January figure to be 50.3.
U.S. Construction Spending data will come in today. Economists expect December’s figure to be +0.5% m/m, compared to the previous number of +0.4% m/m.
U.S. Unit Labor Costs and Nonfarm Productivity preliminary data will also be closely watched today. Economists forecast Q4 Unit Labor Costs to be at +1.3% q/q and Q4 Nonfarm Productivity to stand at +2.4% q/q.
U.S. Initial Jobless Claims data will be reported today as well. Economists estimate this figure to be 213K, compared to last week’s value of 214K.
In the bond markets, United States 10-year rates are at 3.949%, down -0.38%.
The Euro Stoxx 50 futures are down -0.24% this morning as investors digested a raft of economic data and corporate earnings while awaiting the Bank of England’s latest monetary policy decision. A survey indicated on Thursday that the Eurozone’s factory downturn eased for the third consecutive month in January. Separately, data released by Eurostat on Thursday revealed that Eurozone headline inflation eased in line with expectations last month, but underlying price pressures declined less than anticipated. Meanwhile, the focus now shifts to the interest rate decision from the BOE due later in the session. The BOE is anticipated to maintain the bank rate at 5.25%, with attention centered on indications about the potential timing of future interest-rate cuts. In corporate news, Adidas Ag (ADS.D.DX) slumped over -5% after the German sportswear maker provided weaker-than-expected full-year profit guidance. Also, BNP Paribas Sa (BNP.P.DX) slid more than -8% after the French banking giant posted a surprise drop in Q4 income and lowered its performance targets for 2025. At the same time, Deutsche Bank Ag (DBK.D.DX) climbed over +4% after the German lender reported better-than-expected Q4 net profit and announced plans to hike share buybacks and dividends by 50%.
Spain’s Manufacturing PMI, Italy’s Manufacturing PMI, France’s Manufacturing PMI, Germany’s Manufacturing PMI, Eurozone’s Manufacturing PMI, Italy’s CPI (preliminary), Eurozone’s CPI (preliminary), Eurozone’s Core CPI (preliminary), and Eurozone’s Unemployment Rate were released today.
The Spanish January Manufacturing PMI came in at 49.2, stronger than expectations of 47.9.
The Italian January Manufacturing PMI stood at 48.5, stronger than expectations of 47.0.
The French January Manufacturing PMI was at 43.1, weaker than expectations of 43.2.
The German January Manufacturing PMI has been reported at 45.5, stronger than expectations of 45.4.
Eurozone January Manufacturing PMI arrived at 46.6, in line with expectations.
The Italian January CPI came in at +0.3% m/m and +0.8% y/y, weaker than expectations of +0.5% m/m and +1.1% y/y.
Eurozone January CPI has been reported at -0.4% m/m and +2.8% y/y, in line with expectations.
Eurozone January Core CPI stood at +3.3% y/y, stronger than expectations of +3.2% y/y.
Eurozone December Unemployment Rate was at 6.4%, in line with expectations.
Asian stock markets today closed in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.64% and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.76%.
China’s Shanghai Composite Index closed lower today due to continued concerns about the country’s economic outlook. Losses in real estate stocks led the overall market lower. A private-sector survey revealed on Thursday that China’s factory activity expanded in January, driven by steady output growth, improved logistics, and the first increase in new export orders since June. Separately, as indicated by a survey published on Thursday, new home prices in China experienced their most rapid monthly increase since August 2021, propelled by a slew of government support measures. Average prices in 100 cities increased for the fifth consecutive month, with the month-on-month gain in January reaching 0.15%, surpassing the 0.1% increase recorded in December. Meanwhile, China pledged to maintain the “necessary intensity” for government spending this year, including utilizing the central budget to bolster investment. “Fiscal expenditure in 2024 will keep up the necessary intensity,” said Li Xianzhong, head of the Treasury Department at the Ministry of Finance, during a briefing in Beijing on Thursday. The government will set a “reasonable” size for investment, said Vice Finance Minister Wang Dongwei at the same briefing. In corporate news, Shandong Oriental Ocean Sci-Tech Co Ltd dropped over -2% after the Chinese marine aquaculture company recognized a write-off of 325 million yuan in unrecoverable accounts receivable.
The Chinese January Caixin Manufacturing PMI stood at 50.8, in line with expectations.
Japan’s Nikkei 225 Stock Index closed lower today, tracking overnight losses on Wall Street after disappointing U.S. earnings reports and pushback from the Fed. All sectors of the Nikkei 225 ended in the red, with real estate and utilities stocks experiencing the largest declines. Meanwhile, a private-sector survey revealed on Thursday that Japan’s factory activity contracted for the eighth consecutive month in January as output and new orders declined. In corporate news, Aozora Bank Ltd. tumbled over -21% following its announcement of losses linked to U.S. commercial property. The bank said that it anticipates posting a net loss of 28 billion yen ($191 million) for the fiscal year, compared with its initial projection of a 24 billion yen profit. Also, M3 Inc. slumped more than -12% after posting a lower nine-month attributable net income, with declines observed in all its business segments. At the same time, Nomura Holdings Inc. climbed over +5% after Japan’s largest brokerage and investment bank company reported record net revenue from its investment banking division, coupled with plans to repurchase up to 4% of its own shares. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +0.64% to 18.96.
The Japanese January au Jibun Bank Japan Manufacturing PMI arrived at 48.0, in line with expectations.
Pre-Market U.S. Stock Movers
Nextracker Inc (NXT) surged about +20% in pre-market trading after reporting stronger-than-expected Q3 results and raising its FY24 guidance.
Align Technology Inc (ALGN) climbed over +12% in pre-market trading after the company reported upbeat Q4 results and issued better-than-expected full-year guidance.
MaxLinear Inc (MXL) plunged more than -13% in pre-market trading after the company posted mixed Q4 results and provided below-consensus Q1 revenue guidance.
MetLife Inc (MET) fell over -1% in pre-market trading after the company reported mixed Q4 results.
Target Corporation (TGT) rose more than +1% in pre-market trading after Goldman Sachs upgraded the stock to Conviction Buy from Buy with a $176 price target.
ZoomInfo Technologies Inc (ZI) slid over -3% in pre-market trading after Morgan Stanley downgraded the stock to Equal Weight from Overweight with a price target of $20.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Thursday - February 1st
Apple (AAPL), Amazon.com (AMZN), Meta Platforms (META), Merck&Co (MRK), Honeywell (HON), Eaton (ETN), Illinois Tool Works (ITW), Altria (MO), Becton Dickinson (BDX), Atlassian Corp Plc (TEAM), Parker-Hannifin (PH), Trane Technologies (TT), Microchip (MCHP), Royal Caribbean Cruises (RCL), Cardinal Health (CAH), Hartford (HIG), WEC Energy (WEC), Rogers Communications (RCI), Tractor Supply (TSCO), Broadridge (BR), Dover (DOV), Sirius XM (SIRI), Deckers Outdoor (DECK), LPL Financial (LPLA), Clorox (CLX), Ball (BALL), Hologic (HOLX), CMS Energy (CMS), Gen Digital (GEN), Stanley Black Decker (SWK), Quest Diagnostics (DGX), Revvity (RVTY), International Paper (IP), Open Text (OTEX), Reinsurance of America (RGA), United States Steel (X), WestRock Co (WRK), Huntington Ingalls Industries (HII), Camden Property (CPT), Eastman Chemical (EMN), Skechers (SKX), Houlihan Lokey Inc (HLI), Dolby Labs (DLB), Nov (NOV), Atkore Intl (ATKR), Post (POST), Brunswick (BC), ATI Inc (ATI), Lancaster Colony (LANC), Allegro (ALGM), Columbia Sportswear (COLM), Janus Henderson (JHG), Kirby (KEX), Exponent (EXPO), PennyMac Financial (PFSI), DXC Technology (DXC), Schneider National (SNDR), Kemper (KMPR), Euronav (EURN), CSW Industrials Inc (CSWI), Spire (SR), Coursera (COUR), Hub Group (HUBG), Cavco (CVCO), SkyWest (SKYW), Viavi Solutions (VIAV), Minerals Technologies (MTX), Peloton Interactive (PTON), Standex (SXI), Dorian LPG Ltd (LPG), Sally Beauty (SBH), Leslies (LESL), PennyMac Mortgage (PMT), Canada Goose (GOOS), Wabash National (WNC), Thermon (THR), Matthews (MATW), Beazer Homes USA (BZH), Brightsphere Investment Group (BSIG), SunCoke Energy (SXC), Deluxe (DLX), Pitney Bowes (PBI), SurModics (SRDX), Onewater Marine (ONEW), Orchid Island Capital (ORC), Clearfield (CLFD), MiX Telematics (MIXT), Evans Bancorp Inc (EVBN).
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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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