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Stocks Slip Before the Open as Investors Await Earnings Reports, Disney Climbs on Strong Results
March S&P 500 E-Mini futures (ESH24)are down -0.18%, and March Nasdaq 100 E-Mini futures (NQH24) are down -0.16% this morning as market participants braced for the next round of quarterly results.
Walt Disney Company (DIS) climbed over +6% in pre-market trading after the entertainment giant reported stronger-than-expected Q1 earnings, boosted its cash dividend by 50%, and issued an upbeat profit outlook for the year.
In Wednesday’s trading session, Wall Street’s major averages ended higher, with the benchmark S&P 500 and tech-heavy Nasdaq 100 notching new record highs. Emerson Electric Company (EMR) surged over +10% after the maker of electrical equipment reported upbeat Q1 results and raised its FY24 adjusted EPS forecast. Also, Chipotle Mexican Grill Inc (CMG) climbed more than +7% after the restaurant chain posted stronger-than-expected Q4 results. In addition, Ford Motor Company (F) advanced over +6% after the carmaker reported better-than-expected Q4 results and gave an upbeat outlook for 2024. On the bearish side, VF Corporation (VFC) plunged more than -9% and was the top percentage loser on the S&P 500 after the Vans sneaker maker posted downbeat Q3 results. Also, Snap Inc (SNAP) tumbled over -34% after reporting weaker-than-expected Q4 revenue.
Economic data on Wednesday showed that the U.S. December trade deficit widened to -$62.20B, a larger deficit than expectations of -$62.00B. Also, U.S. consumer credit increased by +$1.56B in December, weaker than expectations of +$14.90B.
Fed Governor Adriana Kugler said Wednesday that although inflation is displaying clear indications of deceleration, she is not prepared yet to start lowering interest rates. “At some point, the continued cooling of inflation and labor markets may make it appropriate to reduce the target range for the federal funds rate,” Kugler said. Also, Minneapolis Fed President Neel Kashkari said that officials prefer to observe “a few more months” of inflation data before cutting interest rates, expressing his view that two to three cuts will probably be appropriate for 2024. “We’re not looking for better inflation data, we’re just looking for additional inflation data that is also at around this 2% level,” Kashkari said on CNBC. In addition, Boston Fed President Susan Collins emphasized the need for additional evidence indicating a return of inflation to the Fed’s 2% target before contemplating interest rate cuts, yet she suggested that such cuts might occur “later this year.” “Seeing sustained, broadening signs of progress should provide the necessary confidence I would need to begin a methodical adjustment to our policy stance,” Collins said.
“Our base case is still for a soft landing where growth slows throughout the year but remains healthy overall, while inflation does not prove to be overly sticky. And we do believe this environment will allow the Federal Reserve to start cutting rates by May and by 100 basis points through year-end,” said Solita Marcelli at UBS Global Wealth Management.
Meanwhile, U.S. rate futures have priced in an 18.5% probability of a 25 basis point rate cut at the March FOMC meeting and a 63.4% chance of at least a 25 basis point rate cut at May’s monetary policy meeting.
On the earnings front, notable companies like ConocoPhillips (COP), Philip Morris (PM), Duke Energy (DUK), Expedia (EXPE), Take-Two Interactive (TTWO), Capri Holdings (CPRI), Tapestry (TPR), Pinterest (PINS), and Kenvue (KVUE) are set to report their quarterly figures today.
On the economic data front, all eyes are focused on U.S. Initial Jobless Claims data in a couple of hours. Economists, on average, forecast that Initial Jobless Claims will come in at 221K, compared to last week’s value of 224K.
Also, investors will likely focus on U.S. Wholesale Inventories data, which stood at -0.2% m/m in November. Economists foresee the December figure to be +0.4% m/m.
In addition, market participants will be looking toward a speech from Richmond Fed President Thomas Barkin.
In the bond markets, United States 10-year rates are at 4.110%, up +0.24%.
The Euro Stoxx 50 futures are up +0.38% this morning as investors digested a fresh inflow of quarterly earnings. Household and personal care stocks outperformed on Thursday, while healthcare and energy stocks lost ground. Meanwhile, market participants await remarks from European Central Bank board members, including ECB chief economist Philip Lane, later in the day. In corporate news, Unilever Plc (ULVR.L.EB) rose over +3% after the Dove soap maker reported better-than-expected Q4 sales growth and launched a 1.5 billion euro share buyback program. Also, Adyen (ADYEN.NA) surged about +22% after topping full-year earnings expectations. At the same time, AstraZeneca Plc (AZN.LN) fell more than -2% after the British drugmaker posted a lower-than-expected quarterly profit. In addition, Ap Moller Maersk A/S (MAERB.C.DX) tumbled over -13% after the shipping giant reported weaker-than-expected Q4 profit and suspended its share buyback program amid Red Sea disruptions and industry overcapacity.
The European economic data slate is empty on Thursday.
Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +1.28%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +2.06%.
China’s Shanghai Composite Index closed higher today after the country replaced the head of its securities regulator, while fresh inflation data heightened expectations for additional monetary easing. Real estate, defense security, and information technology stocks led the gains on Thursday. China’s cabinet has appointed Wu Qing, a banking and regulation veteran known for taking decisive measures, as the new chairman of the China Securities Regulatory Commission, replacing Yi Huiman. Meanwhile, data from the National Bureau of Statistics showed on Thursday that China’s consumer prices in January experienced the most rapid decline since the global financial crisis, while producer prices marked their 16th consecutive month of decline in January. In corporate news, Alibaba Group Holding Ltd plunged over -6% after the Chinese e-commerce giant reported weaker-than-expected Q3 revenue.
The Chinese January CPI came in at +0.3% m/m and -0.8% y/y, weaker than expectations of +0.4% m/m and -0.5% y/y.
The Chinese January PPI arrived at -2.5% y/y, stronger than expectations of -2.6% y/y.
Japan’s Nikkei 225 Stock Index closed sharply higher today, hitting a 34-year high following indications from a high-ranking Bank of Japan official suggesting that any policy tightening would occur gradually. Healthcare and technology stocks outperformed on Thursday. Export-heavy automobile stocks also gained ground as the yen weakened, with Toyota Motor Corp rising over +2% and Honda Motor Co Ltd advancing more than +1%. The Japanese currency slid against major peers following comments from Bank of Japan Deputy Governor Shinichi Uchida, who indicated that the bank would likely maintain accommodative financial conditions instead of aggressively raising rates even after ending its negative interest rate policy. Meanwhile, Ministry of Finance data showed on Thursday that Japan’s current account surplus grew for an 11th consecutive month in December as the trade balance swung to a surplus. In corporate news, SoftBank Group Corp climbed about +11% after Arm Holdings Plc provided a better-than-anticipated outlook. The Japanese technology investment company held onto a stake of about 90% in Arm as the chip designer went public last year. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +2.11% to 19.80.
The Japanese December Current Account n.s.a. stood at 0.744T yen, weaker than expectations of 1.018T yen.
Pre-Market U.S. Stock Movers
Walt Disney Company (DIS) climbed over +6% in pre-market trading after the entertainment giant reported stronger-than-expected Q1 earnings, boosted its cash dividend by 50%, and issued an upbeat profit outlook for the year.
Arm Holdings (ARM) surged about +24% in pre-market trading after the British chip design firm posted upbeat Q3 results and raised its FY24 forecast.
PayPal Holdings Inc (PYPL) plunged more than -8% in pre-market trading after the payment tech company provided weaker-than-expected FY24 adjusted EPS guidance.
American Express Company (AXP) fell over -1% in pre-market trading after Morgan Stanley downgraded the stock to Equal Weight from Overweight.
Ally Financial Inc (ALLY) gained more than +2% in pre-market trading after Morgan Stanley upgraded the stock to Overweight from Equal Weight.
ZoomInfo Technologies Inc (ZI) slid over -3% in pre-market trading after Citi downgraded the stock to Sell from Neutral with a price target of $13.
You can see more pre-market stock movershere
Today’s U.S. Earnings Spotlight: Thursday - February 8th
S&P Global (SPGI), Philip Morris (PM), ConocoPhillips (COP), Duke Energy (DUK), ICE (ICE), Transdigm (TDG), Motorola (MSI), DexCom (DXCM), Hershey Co (HSY), Ares Management (ARES), Kenvue (KVUE), BCE Inc (BCE), Take-Two (TTWO), Cloudflare (NET), Pinterest (PINS), Zimmer Biomet (ZBH), Mettler-Toledo (MTD), T Rowe (TROW), Illumina (ILMN), DTE Energy (DTE), Expedia (EXPE), Cameco (CCJ), FirstEnergy (FE), VeriSign (VRSN), Baxter (BAX), Warner Music (WMG), Kellanova (K), Dynatrace Inc (DT), Shinhan (SHG), Masco (MAS), Snap-On (SNA), Kimco Realty (KIM), Affirm Holdings (AFRM), IPG (IPG), Credicorp (BAP), Regency Centers (REG), ADS (WMS), ITT (ITT), Healthpeak Properties (PEAK), Cyberark Software (CYBR), Ralph Lauren A (RL), Paylocity Holdng (PCTY), Tapestry (TPR), Tenet Healthcare (THC), Tempur Sealy International (TPX), AptarGroup (ATR), Wex (WEX), BorgWarner (BWA), RBC Bearings (RBC), Bill Com (BILL), Onto Innovation (ONTO), Axalta Coating Systems (AXTA), Mohawk Industries (MHK), SPS Commerce (SPSC), Genpact (G), Boyd Gaming (BYD), Arrow Electronics (ARW), Capri Holdings (CPRI), Colliers International (CIGI), Doximity (DOCS), Apartment (AIRC), Flowers Foods (FLO), Harley-Davidson (HOG), Phillips Edison Co (PECO), Lincoln National (LNC), Asbury Automotive (ABG), Power Integrations (POWI), Terex (TEX), Insperity (NSP), Synaptics (SYNA), MDU Resources (MDU), Lumentum Holdings Inc (LITE), Haemonetics (HAE), Stepstone (STEP), Gates Industrial Corp (GTES), Under Armour (UA), Peabody Energy (BTU), Prestige Consumer Health (PBH), Leggett&Platt (LEG), Lightspeed Commerce (LSPD), Impinj (PI), Spectrum Brands (SPB), Liveramp (RAMP), ESCO Technologies (ESE), COPT Defense Properties (CDP), RXO Inc (RXO), Caretrust Inc (CTRE), TFI Intl (TFII), Prospect Capital (PSEC), Patrick (PATK), Victory Capital (VCTR), Mueller Water Products (MWA), SolarWinds Corp (SWI), CleanSpark (CLSK), PROS (PRO), Omnicell (OMCL), Ladder Capital A (LADR), Perella Weinberg Partners (PWP).
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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.
