Investors are turning cautious ahead of key economic data releases and corporate earnings reports. U.S. stock futures are mixed; S&P 500 Index futures fell 0.1%, Dow Jones Industrial Average futures was flat, and Nasdaq futures dropped 0.5%. Investors were particularly focused on today's weekly jobless claims report, which was released at 8:30 am ET. The report showed that U.S. initial jobless claims rose to 223,000 for the week ended January 18, exceeding expectations of 220,000. This increase from the previous week's 217,000 suggests a slight weakening in the labor market.
Yesterday, the US S&P 500 index hit a new high, closing at 6,100 points. Europe, not wanting to be left out, is tagging along. The allure of artificial intelligence has once again taken center stage, overshadowing inflation concerns, at least for now.
Donald Trump, having previously boosted Tesla by teaming up with Elon Musk and sent Microstrategy soaring with his cryptocurrency endorsements, is now diving headfirst into artificial intelligence. This latest move has lifted a variety of stocks, from Nvidia, which jumped 5%, to semiconductor companies like ASML and Monolithic, and even data center equipment suppliers like Vertiv and Schneider Electric.
Trump's new mantra, "Build Baby, Build," is aimed at companies needing AI infrastructure. AI enthusiasm dominated yesterday's trading session. Apple, once the darling of Wall Street, has seen its stock drop over 10% since January 1, while its peers have risen between 3% and 10%. Despite Tim Cook's prominent presence at the presidential inauguration, Apple is struggling with sluggish iPhone sales and lagging in AI compared to other tech giants. It's not a Nokia-level crisis, but Apple is clearly in a rough patch, now playing catch-up rather than leading the charge. Trump's AI initiative, dubbed Project Stargate, has its skeptics.
Some industry insiders argue it's not as groundbreaking as it appears, especially compared to the investments by major tech platforms in recent years. Elon Musk has publicly questioned the project's funding security. Sam Altman, CEO of OpenAI, one of the key players in Stargate, retorted on social media, suggesting Musk prioritize national interests over corporate ones. Altman's comment, though blunt, echoes a sentiment many share about Musk.
Meanwhile, speculation is rife about OpenAI's involvement in Stargate signaling a rift with Microsoft, its main backer. Nonetheless, Microsoft shares rose 4% yesterday, nearly matching Apple's market cap, which could soon see Apple slip from first to third place globally, with Nvidia already claiming the top spot this week.
In other developments, Trump issued a stern warning to Vladimir Putin, urging a resolution to the Ukraine conflict or face new US sanctions. In China, regulators have directed insurers and asset managers to invest in stocks, allocating 100 billion yuan in the first half of the year. Initially, Chinese markets reacted positively, but soon returned to their usual state of malaise, as investors realized this sum is a mere 0.1% of China's total market capitalization. Beijing's support measures often feel like perpetual online sales—always available, yet somehow underwhelming.
In the Asia-Pacific region, Japan continued its upward trend, gaining 1% ahead of an anticipated BOJ rate hike. Mainland China saw modest gains, but less than earlier in the session, while Hong Kong ended down 0.4%. South Korea and Australia lost ground, while India edged up 0.2%. In Europe, most indices were in the green, with the Stoxx Europe 600 inching up 0.1%.
Today's economic highlights:
US weekly jobless claims and US oil inventories are on the calendar today.
Dollar: EUR 0.9608 GBP 0.8118
Ounce of gold: USD 2738
Brent crude: USD 79.02 WTI: USD 75.40
10-year US bond: 4.63
Bitcoin: USD 102,000
In corporate news:
- Electronic Arts plunges 11.5% after its quarterly results.
- Plexus plunges 10% after its quarterly results.
- Amazon abandons its Quebec operations and cuts around 1,700 jobs.
- GE Aerospace reported strong quarterly revenue and earnings, surpassing estimates, announced a $7 billion stock buyback and a 30% dividend increase for 2025, and projected an optimistic profit outlook driven by robust demand for parts and services.
- Kinder Morgan reported lower-than-expected Q4 earnings and revenue.
- Elevance Health forecasts higher revenue and profit for 2025, driven by growth in premium yields and product revenue.
- Blackstone seeks to sell its Hotel Investment Partners unit, valued at 6.7 billion euros, and plans to float Mobile.de in Germany.
- Tesla to significantly raise prices of all its cars in Canada.
- Arrowhead Pharmaceuticals to replace Barnes Group in S&P Smallcap 600.
Today's top earnings reports: Intuitive Surgical, GE Aerospace, Texas Instrument, Union Pacific, Elevance Health, CSX, Freeport-McMoRan, Fair Isaac, McCormick...
Analysts recommendations:
- Apa Corporation: Zacks upgrades to neutral from underperform with a target price raised from USD 20 to USD 27.
- Aptiv Plc: Piper Sandler & Co upgrades to neutral from underweight with a price target raised from USD 53 to USD 65.
- Dentsply Sirona Inc.: Jefferies downgrades to hold from buy with a target price reduced from USD 30 to USD 20.
- Electronic Arts Inc.: Raymond James downgrades to market perform from outperform.
- Firstenergy Corp.: Wolfe Research downgrades to peerperform from outperform.
- Netflix, Inc.: Arete Research upgrades to neutral from sell with a price target raised from USD 597 to USD 833.
- Option Care Health, Inc.: Jefferies upgrades to buy from hold with a price target raised from USD 26 to USD 35.
- The Boston Beer Company, Inc.: Piper Sandler & Co downgrades to neutral from overweight with a target price reduced from USD 370 to USD 275.
- Veeva Systems Inc.: Goldman Sachs downgrades to sell from buy with a target price reduced from USD 261 to USD 200.
- Block, Inc.: TD Cowen maintains its buy recommendation and raises the target price from USD 95 to USD 115.
- Celsius Holdings, Inc.: Piper Sandler & Co maintains its overweight recommendation and reduces the target price from 47 to USD 33.
- Ge Vernova Inc.: Citigroup remains neutral recommendation with a price target raised from USD 361 to USD 437.
- Kinder Morgan, Inc.: Truist Securities maintains its hold recommendation with a price target raised from 25 to USD 31.
- Noble Corporation Plc: Arctic Securities maintains its buy recommendation and reduces the target price from USD 56 to USD 40.
- Rli Corp.: Jefferies maintains its buy recommendation and reduces the target price from USD 190 to USD 95.
- Auto Trader Group Plc: Citi upgrades to buy from neutral with a target price raised from GBP 8.81 to GBP 9.46.
- Firstgroup Plc: HSBC upgrades to buy from hold with a target price raised from GBP 1.80 to GBP 1.90.
- Inchcape Plc: JP Morgan downgrades to neutral from overweight with a target price reduced from GBP 10.50 to GBP 8.
- Ithaca Energy Plc: Goldman Sachs downgrades to neutral from buy with a target price of GBX 160.