MARKET WRAPS
Watch For:
Weekly Jobless Claims; Preliminary 4Q Productivity & Costs; Earnings from Merck, Starbucks, Alphabet, Apple, Ford, Amazon.com; CVS Investor Day
Today's Top Headlines/Must Reads:
- Apple Sales Are Expected to Show First Decline in Nearly Four Years
- Amazon Poised to Post Slowest Sales Growth in Decades
- Stock, Bond and Crypto Investors Call Fed's Bluff on Interest Rates
- Meta Gets Back to Reality
- North Korea Accuses U.S. of Raising Tensions
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Opening Call:
Futures were mostly gaining on Thursday, putting stocks on pace to extend yesterday's post-Fed bounce. Strong results from Meta Platforms sent its stock flying in off-hours trading, in turn buoying Nasdaq futures.
Thursday brings more central-bank action, from the Fed's counterparts in London and Frankfurt.
Read Barron's ECB and Bank of England Set to Top Fed With Bigger Rate Hikes
Stocks to Watch
Align Technology gained 12.5% after it reported fourth-quarter earnings that beat Wall Street estimates.
Bed Bath & Beyond's shares gained more than 3% in premarket trading, even after it missed interest payments on its bonds.
Carvana's shares soared 25% in off-hours trading, as bets on lower benchmark interest rates helped boost speculative stocks.
Deutsche Bank reported rising net profit , aided by higher interest rates and a tax gain, but its shares fell nearly 3% in Frankfurt, after it missed analysts' expectations.
Meta Platforms shares rose 19% in premarket trade as revenue came in ahead of estimates , guided to a revenue range slightly above expectations, and announced a $40 billion stock buyback.
ProSomnus reported a double-digit boost to its full-year revenue. Shares increased 17% in after-hours trading.
Qorvo was down 3.1% after the chip company issued a fiscal fourth-quarter earnings outlook came in well shy of analysts' forecasts.
Tenax Therapeutics said it received a notice of allowance from the U.S. Patent and Trademark Office for its patent application. Shares surged 81% in after-hours trading.
ADRs of Shell rose 2% after the oil giant posted a record annual profit in 2022, getting a boost from soaring energy prices.
Forex:
The dollar fell as Jerome Powell struggled to sound convincing about the Fed's resolve to fight inflation at yesterday's policy meeting, Commerzbank said.
Currency traders seized every suggestion that the Fed was relaxing its stance, Commerzbank added.
"It made little difference that the Fed chair repeated over and over again that there would be further rate hikes and that there would probably be no rate cuts this year."
Fed-induced dollar volatility is likely to continue for some time as the Fed and markets disagree over the timing of rate cuts, Commerzbank said.
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Sterling could weaken as the Bank of England is likely to raise interest rates by less than the market expects in a policy decision later, Unicredit Research said.
"Sterling is exposed to downside risks, even against the weaker USD, if the U.K. central bank underdelivers as we expect, by hiking the base rate by only 25 basis points to 3.75% compared to market expectations of a straight 50bp move to 4.00%."
Meanwhile the euro looks set to rise as the ECB is expected to raise interest rates by 50 basis points and signal further rate increases at today's meeting, Unicredit Research said.
ECB President Christine Lagarde could sound "hawkish" again, reiterating the need for more policy tightening to curb inflation even as data on Wednesday showed inflation eased in January, it added.
"Tones of this type are set to convince investors to break further above [EUR/USD] 1.10, with 1.12 the next target on charts as a medium-term reference."
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EUR/USD may breach resistance at 1.1120, based on technical charts, UOB's Global Economics & Markets Research said.
On Wednesday, the currency pair broke above its prior resistance level of 1.0930 and rose beyond the top of its weekly Ichimoku cloud for the first time since June 2021, it said.
EUR/USD's movements have improved its technical outlook further, with UOB continuing to expect the currency pair to advance.
However, it remains to be seen whether the 2022 high of 1.1495 is within reach over the next few months, UOB added.
Energy:
Oil prices were up about 0.7% in Europe helped by a weaker dollar, and after a sharp slump in the previous session following a strong build in U.S. crude inventories.
Metals:
Metals prices in London were up around 1% as the dollar extended its losses following the Fed meeting.
Silver vs Gold
Silver has sharply outpaced gold's gains in the past three months, and its classification as both an industrial and precious metal may lead it on a path to even higher prices.
From Oct. 31 to Jan. 31, Comex silver futures climbed nearly 25%, outpacing gold's almost 19% climb, a "statistically unusual amount that shows the precious metals market is bullish on global economic growth in 2023," DataTrek Research said.
Read more here
TODAY'S TOP HEADLINES
Apple Sales Are Expected to Show First Decline in Nearly Four Years
Apple Inc.'s three-year streak of pandemic-induced sales and profit records might be coming to an end.
The iPhone maker, which is scheduled to report its December quarter after markets close on Thursday, is expected to announce its first revenue decline in nearly four years as manufacturing disruptions in China curbed its ability to deliver premium iPhones.
Amazon Poised to Post Slowest Sales Growth in Decades
Amazon.com Inc. is expected to report its slowest sales growth in more than two decades, with the company's e-commerce services and cloud-computing business feeling the sting from recession concerns that are denting consumer and enterprise spending.
The company after the closing bell Thursday is expected to post sales of $145.7 billion, which would represent 6% growth from the year-ago period, according to analysts surveyed by FactSet. Wall Street is forecasting that revenue for the company's online-stores segment, which includes product sales primarily on its flagship site and digital media content, will contract by little over a 1%.
Meta Gets Back to Reality
Hindsight is always 20/20 but, looking back, it was all there in not-so-fine print.
Facebook-parent Meta Platforms' surged 18% in after hours trading Wednesday following an earnings report that included a first quarter outlook that was better than feared. It came just one day after social media competitor Snap, Inc. painted an ominous picture of its own near-term business prospects, noting revenue was down about 7% quarter to date year on year.
TikTok Dealt Another Hit as Democratic Senator Joins Calls for Banning the App
WASHINGTON-Another prominent Democrat has joined Republicans seeking to hobble TikTok, with Sen. Michael Bennet (D., Colo.) calling on Apple Inc. and Google to bar the Chinese-owned video platform from their app stores.
Republicans have been the most outspoken critics of TikTok, but in recent weeks, Democrat Rep. Raja Krishnamoorthi of Illinois joined with Republicans to sponsor legislation to ban TikTok outright.
Bed Bath & Beyond Misses Interest Payments as It Weighs Chapter 11
Bed Bath & Beyond Inc. missed interest payments on its bonds, a week after its bank lenders sent the company a default notice because it was overdrawn on its credit lines.
The home-goods retailer failed to pay more than $28 million on three tranches of notes totaling roughly $1.2 billion due on Feb. 1, a spokeswoman for the company confirmed Wednesday.
Deutsche Bank Profit Rises on Booming Lending Business
Deutsche Bank AG's net profit rose in the fourth quarter on the back of higher interest rates and a tax gain, driving the lender to post its strongest year since 2007.
However, the fourth-quarter pretax results missed analysts' expectations as the investment-banking performance disappointed. Deutsche Bank shares fell as much as 4% Thursday in German trading, though remained up around 40% over the past six months.
Shell Posts $42 Billion Profit, Adding to Industry's Record Haul
LONDON-Shell PLC became the latest oil giant to post a record annual profit last year, joining American peers in surging back from early pandemic losses on soaring energy prices.
Shell's $41.6 billion full-year profit surpassed the London-based company's previous record of $31.4 billion in 2008, measured on a net current-cost-of-supplies basis-a figure similar to the net income that U.S. oil companies report.
Beneath the Surface, Fed Sees No Letup in Inflation Pressure
Recent readings on wages and prices have markets increasingly optimistic inflation can be brought down without a recession.
The Federal Reserve would love to agree, but it can't. Not yet, anyway. In its quarter-percentage-point rate increase Wednesday, the accompanying statement and Chair Jerome Powell's press conference, the central bank made it clear its views had not changed. Inflation is still too high and won't return to its 2% target without higher interest rates and a weaker labor market.
ECB and Bank of England Set to Top Fed With Bigger Rate Hikes
Europe's major central banks are set to increase interest rates by more than the Federal Reserve's move on Wednesday.
The European Central Bank and the Bank of England are both expected to lift their benchmarks by a half point, compared with the Fed's quarter-point rise yesterday.
Stock, Bond and Crypto Investors Call Fed's Bluff on Interest Rates
The market's big comeback in January is indicative of one thing: Investors don't believe the Federal Reserve is going to keep interest rates high for long.
Stock and bond prices have jumped to start the year. Particularly risky assets have run up even faster.
Silver Is Outpacing Gold. That's a Good Sign for the Global Economy.
(MORE TO FOLLOW) Dow Jones Newswires
02-02-23 0620ET
