S&P Futures Tick Higher Ahead of More Fed Speak, Disney Earnings on Tap

Oleksandr Pylypenko - Barchart - Wed Feb 7, 4:33AM CST

March S&P 500 E-Mini futures (ESH24)are trending up +0.23% this morning as investors looked ahead to the latest signals regarding interest rates from Fed officials while also awaiting an earnings report from Disney.

In Tuesday’s trading session, Wall Street’s major indices closed in the green. GE Healthcare Technologies (GEHC) surged over +11% and was the top percentage gainer on the S&P 500 and Nasdaq 100 after the company reported upbeat Q4 results and provided solid FY24 adjusted EPS guidance. Also, Palantir Technologies Inc (PLTR) soared more than +30% after the enterprise software company posted stronger-than-expected Q4 revenue and gave an upbeat annual profit outlook. In addition, Dupont De Nemours Inc (DD) climbed over +7% after topping Q4 profit estimates, announcing a new $1 billion share buyback program, and raising its dividend. On the bearish side, FMC Corporation (FMC) plunged more than -11% and was the top percentage loser on the S&P 500 after the company posted downbeat Q4 results and cut its FY24 revenue forecast.

Cleveland Fed President Loretta Mester said Tuesday that she’s not in a hurry to start reducing interest rates, mentioning that policymakers will likely gain confidence to cut rates “later this year” if the economy evolves as anticipated. “It would be a mistake to move rates down too soon or too quickly without sufficient evidence that inflation was on a sustainable and timely path back to 2%,” Mester said in prepared remarks for an event in Columbus, Ohio. Also, Minneapolis Fed President Neel Kashkari celebrated the recent pullback in inflation, albeit highlighting that the central bank hasn’t achieved its target yet. “We’re not all the way there yet, but we’ve made a lot of progress on inflation,” Kashkari said at an event in Mankato, Minnesota.

“The Fed expects to cut this year, but not right away,” said Chris Low at FHN Financial.

Meanwhile, U.S. rate futures have priced in a 21.5% chance of a 25 basis point rate cut at the next FOMC meeting in March and a 53.0% chance of a 25 basis point rate cut at the conclusion of the Fed’s May meeting.

Fourth-quarter earnings season continues to roll on, with investors awaiting fresh reports from notable companies today, including Disney (DIS), Uber Technologies (UBER), CVS Health (CVS), Fox Corporation (FOXA), McKesson (MCK), and PayPal (PYPL).

On the economic data front, investors will likely focus on U.S. Trade Balance data due later in the day. Economists, on average, forecast that the December Trade Balance will stand at -$62.00B, compared to the previous value of -$63.20B.

U.S. Crude Oil Inventories data will be reported today as well. Economists estimate this figure to be 1.700M, compared to last week’s value of 1.234M.

In addition, market participants will be looking toward a batch of speeches from Fed officials Collins, Barkin, Kugler, and Bowman.

In the bond markets, United States 10-year rates are at 4.106%, up +0.29%.

The Euro Stoxx 50 futures are down -0.06% this morning as investors digested the latest batch of corporate earnings as well as cautious remarks from Fed and ECB officials. The Federal Statistics Office reported Wednesday that German industrial production experienced a larger-than-anticipated decline in December, marking the seventh consecutive monthly decrease. Meanwhile, European Central Bank board member Isabel Schnabel told the Financial Times that the central bank needs to exercise patience regarding interest rate cuts, highlighting concerns that inflation could resurge, and recent data reaffirm apprehensions that the “last mile” of reducing price growth will be the hardest. In corporate news, Teamviewer Se (TMV.D.DX) soared over +7% after the German software developer posted upbeat Q4 results. Also, Vestas Wind Systems A/S (VWS.C.DX) rose more than +5% after the Danish wind turbine maker reported better-than-expected Q4 operating earnings. At the same time, DHL Group (DHL.D.DX) fell over -3% following Germany’s state-owned KfW bank’s sale of 50 million shares in the group for 2.17 billion euros.

U.K.’s Halifax House Price Index, Germany’s Industrial Production, and Italy’s Retail Sales data were released today.

U.K. January Halifax House Price Index has been reported at +1.3% m/m, stronger than expectations of +0.8% m/m.

The German December Industrial Production stood at -1.6% m/m, weaker than expectations of -0.4% m/m.

The Italian December Retail Sales arrived at -0.1% m/m, weaker than expectations of +0.2% m/m.

Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed up +1.44%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.11%.

China’s Shanghai Composite Index closed higher today as investors continued to welcome Beijing’s efforts to support the sagging equities market. Healthcare stocks outperformed on Wednesday, with Wuxi AppTec climbing over +5% following an update to a U.S. draft bill targeting Chinese biotech giants, which showed a decrease in the number of co-sponsors from 6 to 0. Meanwhile, investor confidence continued to be buoyed by a Bloomberg report on Tuesday, which indicated President Xi Jinping’s intention to address stock market challenges with financial regulators. The report stated that regulators, led by the China Securities Regulatory Commission, intend to brief top leadership on market conditions and the latest policy initiatives. The report on the Xi meeting followed a string of supportive announcements earlier in the day, such as restrictions on short selling and Central Huijin Investment’s pledge to increase its purchases of exchange-traded funds. In corporate news, Yum China Holdings Inc. surged over +14% after the fast-food operator reported stronger-than-expected Q4 comparable sales. At the same time, Semiconductor Manufacturing International Corp. plunged more than -7% after executives warned of further pressure on its profitability. Investor focus is now squarely on Chinese inflation data for January, scheduled for release on Thursday.

Japan’s Nikkei 225 Stock Index closed slightly lower today. Losses in heavyweight technology stocks led the overall market lower. Meanwhile, Japanese government bond yields declined on Wednesday after solid 30-year bond auction results. In corporate news, Mitsubishi Corp surged over +9% after the Japanese trading house posted better-than-expected quarterly earnings and said it would spend 500 billion yen ($3.4 billion) to buy back up to 10% of its shares. Also, Toyota Motor Corp rose about +4%, extending the previous day’s gains after the carmaker lifted its annual operating profit guidance. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -1.47% to 19.39.

“Investors were taking profits in outperformers and buying cheaper shares as seen in today’s chip-related stocks, which tracked losses in the U.S. chip shares index. But overall, the market sentiment was firm because there were more rising stocks than falling ones,” said Naoki Fujiwara, a senior fund manager at Shinkin Asset Management.

Pre-Market U.S. Stock Movers

Fortinet Inc (FTNT) soared over +8% in pre-market trading after the cybersecurity company reported better-than-expected Q4 results.

Ford Motor Company (F) climbed more than +6% in pre-market trading after the carmaker posted stronger-than-expected Q4 results and gave an upbeat outlook for 2024.

Snap Inc (SNAP) plummeted about -31% in pre-market trading after reporting weaker-than-expected Q4 revenue.

Gilead Sciences Inc (GILD) fell over -1% in pre-market trading after the drugmaker missed Q4 profit estimates and issued a below-consensus FY24 sales forecast.

ELF Beauty Inc (ELF) gained more than +4% in pre-market trading after reporting better-than-expected Q3 results and raising its FY24 guidance.

New York Community Bancorp Inc (NYCB) slumped over -7% in pre-market trading after Moody’s Investors Service downgraded the regional bank’s credit rating by two notches to “junk” status.

You can see more pre-market stock movershere

Today’s U.S. Earnings Spotlight: Wednesday - February 7th

Walt Disney (DIS), Uber Tech (UBER), CVS Health Corp (CVS), Arm (ARM), McKesson (MCK), PayPal (PYPL), O’Reilly Automotive (ORLY), Emerson (EMR), Hilton Worldwide (HLT), Allstate (ALL), Yum! Brands (YUM), CDW Corp (CDW), Sun Life Financial (SLF), Monolithic (MPWR), Equifax (EFX), Roblox (RBLX), News Corp (NWS), Orix (IX), STERIS (STE), Molina Healthcare (MOH), FleetCor (FLT), KB Financial (KB), Everest (EG), Fox Corporation (FOXA), Mid-America Apartment (MAA), Carlyle Group (CG), Neurocrine (NBIX), Bunge (BG), U-Haul Holding (UHAL), Performance Food Group Co (PFGC), Paycom Soft (PAYC), Globe Life (GL), XPO (XPO), Ares Capital (ARCC), Wynn Resorts (WYNN), Coty Inc (COTY), Dayforce (DAY), Penske Automotive (PAG), Regal Beloit (RRX), EastGroup Properties (EGP), NewYork Times (NYT), Murphy USA Inc (MUSA), Berry Global (BERY), MKS Instruments (MKSI), Confluent (CFLT), Encompass Health (EHC), Omega Healthcare (OHI), First Industrial RT (FR), Mattel (MAT), First American (FAF), Reynolds (REYN), Red Rock Resorts (RRR), OneMain Holdings (OMF), Brookfield Asset Management Reinsurance Partners (BNRE), Rithm Capital (RITM), Maximus (MMS), Euronet (EEFT), ASGN (ASGN), Radian (RDN), Axcelis (ACLS), National Fuel Gas (NFG), Envista Holdings (NVST), Copa (CPA), Enersys (ENS), Moelis & Co (MC), Silicon Labs (SLAB), Macerich (MAC), Azenta (AZTA), Paycor HCM (PYCR), Rapid7 Inc (RPD), Black Hills (BKH), Cousins Properties (CUZ), Fluence Energy (FLNC), Adient (ADNT), Oscar Health (OSCR), Scotts Miracle-Gro (SMG), Griffon (GFF), FormFactor (FORM), Vishay Intertechnology (VSH), Vestis (VSTS), Central Garden&Pet (CENT), Viking Therapeutics Inc (VKTX), Inter and Co A (INTR), Kennametal (KMT), Edgewell Personal Care (EPC), Stewart Info Services (STC), CoreCivic (CXW), Knowles Cor (KN), TTM (TTMI), Perion Network (PERI), CSG Systems (CSGS), Green Plains Energy (GPRE), Triumph (TGI), Costamare (CMRE), Madison Square Garden Entertainment (MSGE), The Hain Celestial (HAIN), Blue Bird (BLBD), TechTarget (TTGT), Compass Minerals (CMP), Piedmont Office (PDM).

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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.