MARKET WRAPS
Watch For:
Durable Goods for December; Advance Estimate GDP for 4Q; New Home Sales for December; Weekly Jobless Claims; earnings from Blackstone, Comcast, Mastercard, Intel, Mondelez, Visa
Today's Headlines/Must Reads
- Fourth-Quarter GDP Report to Show Pace of U.S. Growth Late Last Year
- Gold Prices Rally To Start the Year
- Google Girds for Second Antitrust Battle as DOJ Targets Its Ads Business
- Why Tesla Is Still Gunning for Growth
- Companies Fight Back Against Premium Increases for Crucial Insurance
- New Russia Oil Ban Will Push Diesel Higher
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Opening Call:
Wall Street's ability to rebound after a selloff midweek has left investors in a mostly positive mood on Thursday as they awaited a chunk of economic data, while optimism over results from Tesla was set to boost the tech sector.
"There's increasing confidence the economy may not require a recession to tame the inflation beast, given the attendant view that the U.S. economy can handle higher rates after all," SPI Asset Management said.
Meantime, Fundstrat noted that the S&P 500's rebound looked good from a technical perspective.
"At current levels, prices are very close to a larger breakout in SPX along with NASDAQ, which already occurred on an equal-weighted basis on Value Line's Arithmetic index about two weeks ago."
In Europe, indexes were higher across the board, with the Stoxx 600 rising 0.6% in early trading. In Asia, Japan's Nikkei 225 edged down 0.1%, while in Hong Kong, the Hang Seng climbed 2.4%.
Markets in mainland China, Taiwan and Australia were closed for public holidays.
Stocks to Watch
Chevron stock was up 2.7% in premarket trading, following the announcement of a $75 billion stock-buyback program.
IBM shares were down nearly 2% premarket after the company reported flat revenue growth on Wednesday and announced 3,900 layoffs.
Las Vegas Sands reported an 11% boost to its fourth-quarter revenue and offered an optimistic view for 2023. Shares rose 4.2% in after-hours trading.
Levi Strauss said on Wednesday it expected revenue and earnings growth in 2023 after beating analysts expectations for the last quarter of 2022. Shares gained 6.4% in after-hours trading.
Magenta Therapeutics said it paused dosing in a clinical trial of MGTA-117 after a participant died in a possible connection to the treatment. The trial targeted blood and bone marrow tumors. The biotech's stock declined 25% in after-horus trading.
Ocuphire Pharma said its APX3330 treatment for the diabetic retinopathy eye disease didn't meet the primary endpoint in a recent study. Its shares fell 31% in after-hours trading.
Seagate Technology posted fiscal second-quarter results that beat analysts' expectations and guided for higher-than-anticipated revenue for the third quarter. Shares rose 7.6% in after-hours trading.
Tesla stock is advancing ahead of the opening bell, after [t reported a record quarterly profit of nearly $3.7 billion, up 59% on the year. Shares in Tesla recently stood 6.9% higher, echoing a rally in the aftermarket session Wednesday.
Read Intel's Earnings Guidance May Disappoint. Tune In After the Close.
Markets Insight
Markets and central banks are again at odds over the outlook for monetary policy, with markets pricing in interest rate cuts in 2023, although the Fed's forecasts assume that rates will rise and stay high for longer, Metzler said.
"The discrepancy appears to be due to the fact that many investors expect inflation in the U.S. to decline faster than the Fed currently forecasts."
Metzler said the lack of credibility of Fed forward guidance is reminiscent of 2021, when the central bank denied the risk of persistent inflation overshooting and adamantly fought the market's rate rise expectations.
Forex:
The DXY dollar index was flat after hitting a near eight-month low of 101.504 earlier in the European session and while Thursday's gross domestic product data may be stronger than expected, it's unlikely to materially move the dollar, Commerzbank said.
The data are backwards looking so probably won't alter expectations that the Fed will downshift to a 25 basis points interest rate rise on Feb. 1, Commerzbank added.
However, if more current data including initial jobless claims confirm that monetary policy tightening is increasingly having an impact on the real economy, "things will remain tough for the dollar."
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The euro should remain supported by expectations for the European Central Bank to deliver more aggressive interest rate rises but gains could prove limited in the near term, ING said.
"Investors may struggle to push EUR/USD through the 1.0950-1.1000 area ahead of next week's Fed and ECB risk events, though it looks like EUR/USD will stay bid," ING said.
Energy:
Oil prices edged higher as positive sentiment, especially about Asian demand, continued to grow. Analysts are looking to Asia with buying expected to rise after the Lunar New Year.
"Asia is thirsty for crude, but India and China are consuming huge import volumes of Urals for their massive refining systems, leaving more Middle East barrels on the market," SPI Asset Management said.
"But given the bullish signals, one can only conclude that investors are waiting for the indisputable proof in the pudding before backing the truck up in the oil markets."
Read Diesel Prices Are Headed Higher. It's Europe's New Ban on Russian Oil.
Metals:
Base metals and gold were little changed in London trading, despite equities and energy prices moving higher, supported by a more bullish sentiment over the global economy.
Read Gold Prices Buoyed by Rally as Investors Get on Board
TODAY'S TOP HEADLINES
Google Girds for Second Antitrust Battle as DOJ Targets Its Ads Business
The latest U.S. lawsuit against Google compounds the legal issues the company faces worldwide while broadening the scope of the government's allegations around the tech giant's online advertising business.
The suit also comes as Google faces one of the most competitive environments for its core business in recent memory, with the rise of apps such as TikTok and emerging artificial-intelligence programs fracturing the attention of internet users. Last week, Google completed its largest layoffs in company history, signaling it feels pressure to cut costs.
Why Tesla Is Still Gunning for Growth
While tech companies are cutting jobs, Tesla is unapologetically still gunning for growth. This might be the only route it can take.
The electric-vehicle maker gave a target of 1.8 million vehicles for the year when it reported quarterly results late Wednesday, without specifying whether it was for deliveries or production. Assuming it meant deliveries, the number would be up about 37% on last year, but below a longer-term ambition of expanding by 50% a year. This signals a more cautious approach to managing expectations after the company spent last year fruitlessly chasing the target, raising concerns about demand.
Companies Fight Back Against Premium Increases for Crucial Insurance
Insurance rates are up for cars, homes and commercial property. Some of the biggest increases have been for policies that protect a company's directors and top executives.
Some large businesses have struck back.
Intel's Earnings Guidance May Disappoint. Tune In After the Close.
Intel will be first major computer-chip maker to report fourth-quarter earnings after the market closes. Wall Street has low expectations.
According to FactSet, the analyst consensus estimate is that Intel (ticker: INTC) will report adjusted earnings per share of 21 cents on revenue of $14.49 billion for the December quarter. Analysts' estimate for the current quarter is earnings per share of 25 cents on revenue of $13.93 billion.
FAA Suspends Access for Contract Personnel Involved in Flight Disruption
A contractor's personnel directly involved in a Federal Aviation Administration outage earlier this month have lost access to agency facilities and systems while the matter is being investigated, the air-safety regulator told congressional officials.
The FAA system outage resulted in widespread disruptions to U.S. air travel on Jan. 11, including a nearly two-hour halt to domestic departures.
Meta Pays BuzzFeed Millions to Generate Creator Content for Facebook and Instagram
Facebook parent Meta Platforms Inc. is paying BuzzFeed Inc. millions of dollars as part of an effort to bring more creators to the social-media giant's platforms, according to people familiar with the situation.
The partnership comes as both companies are embracing the creator economy, in which individuals build large social-media audiences by posting videos and other content, and often make money on advertising or brand sponsorships.
Chevron's Higher Dividend Yield Now Tops Exxon's
Chevron raised its dividend, and announced a new round of buybacks valued at up to $75 billion late on Wednesday, sending shares 2.6% higher in after-hours trading.
The energy giant boosted the quarterly dividend by 6% to $1.51 per share. At Wednesday's closing price of $179.08, that would give Chevron (ticker: CVX) stock a 3.4% dividend yield, besting Exxon Mobil's (XOM) 3.2% yield.
IBM to Cut 3,900 Jobs Amid Broader Tech Slowdown
International Business Machines Corp. on Wednesday joined the wave of companies making layoffs, saying it would cut about 3,900 jobs.
The cuts will stem from Kyndryl Holdings Inc., the IT services business that IBM spun off last year, and its healthcare divestiture, from which the company will incur about a $300 million charge, a spokesman confirmed.
Fourth-Quarter GDP Report to Show Pace of U.S. Growth Late Last Year
The U.S. fourth-quarter gross domestic product report will offer a snapshot of the economy at the end of a year in which consumers and businesses faced the highest inflation in four decades and a fast rise in interest rates.
(MORE TO FOLLOW) Dow Jones Newswires
01-26-23 0620ET
