Stock Index Futures Mixed as Investors Await More Corporate Earnings and Fed Speak

Oleksandr Pylypenko - Barchart - Tue Feb 6, 4:32AM CST

March S&P 500 E-Mini futures (ESH24)are down -0.03%, and March Nasdaq 100 E-Mini futures (NQH24) are up +0.07% this morning as market participants geared up for a fresh batch of earnings reports while also awaiting remarks from Fed officials.

In Monday’s trading session, Wall Street’s major indexes ended lower. Air Products and Chemicals Inc (APD) plunged over -15% and was the top percentage loser on the S&P 500 after the industrial gas manufacturer reported downbeat Q1 results and cut its FY24 adjusted EPS guidance. Also, GlobalFoundries Inc (GFS) slumped more than -6% and was the top percentage loser on the Nasdaq 100 after JPMorgan downgraded the stock to Neutral from Overweight. In addition, McDonald’s Corporation (MCD) fell over -3% and was the top percentage loser on the Dow after reporting weaker-than-expected Q4 global comparable sales. On the bullish side, Estee Lauder Companies Inc (EL) surged more than +12% and was the top percentage gainer on the S&P 500 after the beauty products maker’s announcement of job cuts outweighed a below-consensus FY24 adjusted EPS forecast. Also, NVIDIA Corporation (NVDA) climbed over +4% after Goldman Sachs raised its price target on the stock to $800 from $625.

Economic data on Monday showed that the U.S. ISM services index rose to a 4-month high of 53.4 in January, stronger than expectations of 52.0. Also, the U.S. January ISM services prices paid sub-index unexpectedly surged to an 11-month high of 64.0, stronger than expectations of 56.5.

“The Fed is going to keep rates where they are for longer than the market expects, barring some significant change in the economic data that we’re getting,” said Nicholas Brown, partner at Granite Harbor Advisors.

Meanwhile, Minneapolis Fed President Neel Kashkari said Monday that policymakers have time to assess incoming data before considering a reduction in interest rates, pointing to shifts in the post-pandemic economy. “It is possible, at least during the post-pandemic recovery period, that the policy stance that represents neutral has increased. It gives the FOMC time to assess upcoming economic data before starting to lower the federal funds rate, with less risk that too-tight policy is going to derail the economic recovery,” Kashkari wrote in an essay published on his bank’s website. Also, Chicago Fed President Austan Goolsbee reiterated his desire to observe more of the favorable inflation data seen in the past several months before considering interest rate cuts. “If we just keep getting more data like we’ve gotten … we should be well on the path to normalization,” Goolsbee said in an interview on Bloomberg Television.

U.S. rate futures have priced in a 16.5% chance of a 25 basis point rate cut at the March FOMC meeting and a 55.2% chance of a 25 basis point rate cut at the May meeting.

In other news, the Federal Reserve’s Senior Loan Officer Opinion Survey released on Monday indicated that U.S. banks, on balance, tightened lending standards across most loan categories in the fourth quarter. However, the net share of U.S. banks that tightened standards on commercial and industrial loans for medium and large businesses decreased to 14.5%, down from 33.9% in the third quarter.

Fourth-quarter earnings season continues, and investors anticipate new reports from notable companies today, including Eli Lilly (LLY), Amgen (AMGN), Gilead (GILD), Ford Motor (F), Spotify Tech (SPOT), Centene (CNC), Snap (SNAP), and e.l.f. Beauty (ELF).

The U.S. economic data slate is mainly empty on Tuesday. However, investors will likely focus on speeches from Cleveland Fed President Loretta Mester, Minneapolis Fed President Neel Kashkari, and Philadelphia Fed President Patrick Harker for fresh insights on the Fed’s monetary policy trajectory.

In the bond markets, United States 10-year rates are at 4.148%, down -0.38%.

The Euro Stoxx 50 futures are up +0.26% this morning, bolstered by upbeat results from oil giant BP Plc, with sentiment further buoyed by indications of fresh stimulus for China’s struggling financial markets. Gains in energy stocks are leading the overall market higher, with BP Plc (BP-.LN) climbing over +5% after reporting better-than-expected Q4 earnings and accelerating the pace of its share repurchases. The Federal Statistics Office said Tuesday that German industrial orders unexpectedly soared in December, fueled by robust aircraft purchases. Separately, figures from European Union statistics agency Eurostat showed Tuesday that Eurozone retail sales fell in the last month of 2023. In other corporate news, Infineon Technologies Ag (IFX.D.DX) dropped more than -1% after the German chipmaker cut its full-year revenue guidance. Also, UBS Group Ag (UBSG.Z.IX) slid over -2% after the bank posted a weaker-than-expected pre-tax profit from the key wealth management unit for the three months to December.

Germany’s Factory Orders and Eurozone’s Retail Sales data were released today.

The German December Factory Orders arrived at +8.9% m/m, stronger than expectations of -0.1% m/m.

Eurozone December Retail Sales came in at -1.1% m/m and -0.8% y/y, compared to expectations of -0.9% m/m and -0.9% y/y.

Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed up +3.23%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.53%.

China’s Shanghai Composite Index closed sharply higher today, snapping a six-day losing streak, propelled by backing from state funds, measures to restrict short-selling, and a report that President Xi Jinping will discuss the stock market with financial regulators. Healthcare, artificial intelligence, and new energy stocks led the gains on Tuesday. Tech giants and mainland developers listed in Hong Kong also surged. Sentiment turned positive on Tuesday after Central Huijin Investment Ltd., the unit that holds Chinese government stakes in big financial institutions, said it will continue to increase holdings of exchange-traded funds. In addition, China’s securities regulator announced its decision to suspend brokerages from borrowing shares for lending and limit the size of what is known as securities refinancing. Meanwhile, Bloomberg News reported on Tuesday, citing sources familiar with the matter, that China President Xi Jinping is scheduled to discuss the country’s stock market 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 as early as Tuesday. In other news, foreign investors bought a net 12.6 billion yuan ($1.75 billion) worth of Chinese shares through the Stock Connect on Tuesday, marking the largest daily net buying this year.

Japan’s Nikkei 225 Stock Index closed lower today as investors opted to lock in profits. Data released on Tuesday indicated that Japanese workers’ real wages declined for the 21st consecutive month in December, albeit at a slower rate. Separately, data revealed that Japanese household spending dropped in December from a year earlier, marking the 10th consecutive month of decline. Meanwhile, Bank of Japan Governor Kazuo Ueda stated on Tuesday that the central bank would examine whether to persist with its purchases of risky assets once the sustained achievement of its 2% inflation target comes into sight. In other news, Japan’s annual wage negotiations have commenced in earnest, garnering heightened interest as the Bank of Japan seeks indications of a virtuous wage-price cycle that would allow it to exit from the world’s last negative rate regime. In corporate news, Toyota Motor Corp climbed over +4% after the Japanese carmaker reported solid Q3 net profit and lifted its full-year operating profit forecast by about 9%. Also, Dexerials Corp soared more than +15% after the company disclosed that the board authorized the repurchase of up to 1.8 million shares for no more than 6 billion yen between February 6th and March 19th. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -1.45% to 19.68.

The Japanese December Average Cash Earnings stood at +1.0% y/y, weaker than expectations of +1.3% y/y.

The Japanese December Household Spending came in at -0.9% m/m and -2.5% y/y, weaker than expectations of +0.2% m/m and -2.0% y/y.

Pre-Market U.S. Stock Movers

Palantir Technologies Inc (PLTR) surged about +18% in pre-market trading after the enterprise software company reported better-than-expected Q4 revenue and issued solid FY24 revenue guidance.

NXP Semiconductors NV (NXPI) gained over +3% in pre-market trading after the Dutch semiconductor designer and manufacturer posted upbeat Q4 results.

FMC Corporation (FMC) tumbled more than -15% in pre-market trading after reporting downbeat Q4 results and cutting its FY24 revenue forecast.

Chegg Inc (CHGG) plunged over -8% in pre-market trading after the company issued a below-consensus Q1 revenue forecast.

Li Auto Inc (LI) climbed more than +8% in pre-market trading after Deutsche Bank upgraded the stock to Buy from Hold with a price target of $41.

United Parcel Service Inc (UPS) rose over +2% in pre-market trading after UBS upgraded the stock to Buy from Neutral with a price target of $175.

Tesla Inc (TSLA) slid more than -2% in pre-market trading after Daiwa downgraded the stock to Neutral from Outperform with a price target of $195.

You can see more pre-market stock movershere

Today’s U.S. Earnings Spotlight: Tuesday - February 6th

Eli Lilly (LLY), Amgen (AMGN), Gilead (GILD), Fiserv (FI), KKR & Co (KKR), Chipotle Mexican Grill (CMG), Edwards Lifesciences (EW), Fortinet (FTNT), Ford Motor (F), Spotify Tech (SPOT), Centene (CNC), Ametek (AME), Prudential Financial (PRU), Gartner (IT), Cummins (CMI), Xylem (XYL), Snap (SNAP), DuPont De Nemours (DD), Willis Towers Watson (WTW), Tradeweb Markets (TW), Waters (WAT), Veralto (VLTO), Check Point Software (CHKP), Omnicom (OMC), Cincinnati Financial (CINF), Jacobs Engineering (J), Atmos Energy (ATO), IDEX (IEX), Essex Property (ESS), Carlisle (CSL), Yum China Holdings (YUMC), Enphase (ENPH), UDR (UDR), Aspen (AZPN), Jack Henry&Associates (JKHY), Axa Equitable (EQH), Amdocs (DOX), nVent Electric (NVT), American Financial (AFG), Qiagen (QGEN), ELF Beauty (ELF), AGCO (AGCO), Assurant (AIZ), TIM Participacoes (TIMB), Lear (LEA), Aramark Holdings (ARMK), MicroStrategy (MSTR), FirstService (FSV), Voya Financial Inc (VOYA), Ingredion (INGR), H&R Block (HRB), Exelixis (EXEL), Freshworks (FRSH), Hamilton Lane (HLNE), VF (VFC), Inspire Medical Systems (INSP), Weatherford (WFRD), Azek Company (AZEK), Sensata Tech (ST), Tenable (TENB), Zurn Water Solutions (ZWS), Kyndryl Holdings (KD), Valvoline (VVV), Western Union (WU), Enact Holdings (ACT), Madison Square Garden Sports (MSGS), Cirrus (CRUS), PJT Partners Inc (PJT), NewJersey Resources (NJR), Advanced Energy (AEIS), Arrowhead Pharma (ARWR), AllianceBernstein Holding LP (AB), Diodes (DIOD), Spirit Aerosystems (SPR), Intapp (INTA), ArcBest Corp (ARCB), CNO Financial (CNO), Autohome ADR (ATHM), Consol Energy (CEIX), Hertz Global Holdings (HTZ), Douglas Emmett (DEI), Premier Inc (PINC), Werner (WERN), Highwoods Properties (HIW), Energizer (ENR), O-I Glass (OI), Silicon Motion (SIMO), INTL FCStone (SNEX), ePlus (PLUS), Sonos (SONO), Mercury (MRCY), DHT Holdings Inc (DHT), American Assets (AAT), Apollo Commercial RE Finance (ARI), Lumen Technologies (LUMN), CTS Corp (CTS), Frontier Group Holdings (ULCC), Deciphera Pharma (DCPH), Ichor Holdings (ICHR), Model N Inc (MODN), Himax (HIMX).

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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.