S&P 500 futures rebound after two days of selling as Apple and Amazon earnings loom

U.S. stock futures rose early Thursday ahead of earnings from three of the Magnificent 7: Apple, Amazon.com and Meta Platforms.

How stock index futures are traded

  • Futures S&P 500 ES00,
    rose 14 points, or 0.3%, to 4884

  • Futures Dow Jones Industrial Average YM00,
    added 32 points, or 0.1%, to 38312

  • Futures Nasdaq 100 NQ00,
    rose 86 points, or 0.5%, to 17,328

On Wednesday, the Dow Jones Industrial Average DJIA fell 317 points, or 0.82%, to 38150, the S&P 500 SPX fell 79 points, or 1.61%, to 4846, and the Nasdaq Composite COMP was fell 346 points, or 2.23%, to 15164. .

What drives the markets

The S&P 500 has fallen 1.7% over the past two sessions as investors expressed disappointment over big tech’s earnings and the trajectory of monetary policy.

Both factors are very likely to continue to drive sentiment for the rest of the week.

After last Tuesday’s earnings from Microsoft MSFT,
GOOG Alphabet,
and Advanced Micro Devices AMD,
failed to match the AI-driven optimism that pushed the market to a record high this week, it’s the turn of three more big tech beasts to present their numbers, with Apple AAPL,
When when,
and Amazon.com AMZN,
announcing the results after the close on Thursday.

“[M]Most investors have been waiting in ambush for the slightest misstep to take advantage of the sell-off of the faltering tech rally,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

The results of Apple, Amazon and Meta “better leave investors speechless. Otherwise, the tech sell-off is poised to gain momentum,” she warned.

Apple options prices indicate that traders see a move of about plus or minus 3% for the stock by the end of the week, according to MarketWatch calculations.

Other companies that will reveal results on Thursday include Altria MO,
Peloton Interactive PTON,
Merck MRK,
and Honeywell International HON,
before the opening bell rings on Wall Street, followed after closing by Atlassian TEAM,
American steel
and Skechers SKX,

Traders will also keep an eye on the regional banking sector after shares of New York Community Bancorp NYCB,
it collapsed as the lender highlighted difficulties in the commercial real estate sector.

A Japanese bank, Aozora 8304,
issued a profit warning as it slashed the value of its U.S. office portfolio and racked up losses on U.S. and European bonds.

Meanwhile, investors continue to consider the timetable for when the Federal Reserve might begin reducing borrowing costs. In his post-meeting press conference on Wednesday, Fed Chair Jay Powell said a rate cut in March was “not the most likely case nor the base case.”

Stocks have expressed disappointment at this push back, but fixed income futures markets now see even greater certainty of a rate cut at the next Fed meeting in May, and indeed traders still expect cuts of around 150 basis points this year.

“At this point it’s more of a delayed train, not a canceled one,” said Steve Clayton, head of equity funds at Hargreaves Lansdown. “But investors will likely be less forgiving if we see data emerge that suggests the economy still has room to stave off inflation,” he added.

To that end, the market will be eager to see the nonfarm payrolls report on Friday, hoping for signs that wage growth is not accelerating.

Before that, U.S. economic updates due Thursday include the initial weekly jobless claims report, along with fourth-quarter 2023 productivity, due at 8:30 a.m. Oriental. The final reading of the S&P Manufacturing PMI survey for January will be released at 9:45 am. The January ISM manufacturing report will be expected at 10am, along with December construction spending.

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