The U.S. index futures are pointing to a potential drop in stocks on Wednesday following a mixed performance previously. Technology stocks may continue their decline, as indicated by a 1% fall in Nasdaq 100 futures.
Alphabet, Google's parent company, likely to negatively impact the tech sector as its shares dropped 5.5% in pre-market trading due to lower-than-expected ad revenue, despite its overall positive Q4 results. Similarly, chipmaker Advanced Micro Devices (AMD) could face pressure following a disappointing Q1 guidance, despite meeting earnings estimates for Q4.
Shares of Microsoft are also expected to fall during pre-market trading, despite better than expected Q2 fiscal results, due to a lower Q3 revenue forecast. Meanwhile, Boeing is forecast to perform well, following a lesser than expected Q4 loss.
The Federal Reserve's monetary policy announcement is a key event that traders are anticipating. While it's widely believed that interest rates will remain unchanged, the statement could potentially impact future rates. The initial optimism for a rate cut in March has faded, with experts suggesting that it will likely take place in May.
Tuesday saw a mixed performance for major U.S. stock indexes. Despite a significant setback for Nasdaq, the Dow Jones managed to reach a new record closing high. This was due to traders cashing in on the tech sector's recent strength in anticipation of Alphabet and Microsoft’s quarterly results.
Big tech firms like Apple, Amazon, and Meta Platforms are also slated to announce their quarterly results soon. Anticipation of the Federal Reserve's policy announcement on Wednesday may have caused traders to secure tech-sector profits.
The Dow's rise can be attributed to robust gains by financial giants JPMorgan Chase and Goldman Sachs.
The U.S. Labor Department's report indicated an unexpected increase in December's job openings, rising to 9.03 million from November's 8.93 million. It was anticipated that job openings would fall to 8.75 million from the 8.79 million reported for November.
The Conference Board reported an improvement in U.S. consumer confidence for January. The consumer confidence index, 114.8, rose for the third consecutive month, marking its highest level since December 2021.
Airline stocks saw a significant fall, as evidenced by the NYSE Arca Airline Index's 2.6% drop. JetBlue Airways reported a lower-than-expected Q4 loss but projected lower revenues and higher costs in Q1, leading to a severe decline in their stock.
Oil service stocks also experienced a fall, despite an increase in crude oil prices, leading to a 1.9% drop in the Philadelphia Oil Service Index. Semiconductor and networking stocks also suffered considerable losses, affecting Nasdaq. Conversely, oil producer stocks experienced a significant rise in line with the price of crude oil.
Crude oil futures are down $0.93 to $76.89 a barrel following Tuesday’s $1.04 rise to $77.82 a barrel. Gold is trading at $2,056 an ounce, up $5.10 from its previous close. On Tuesday, gold increased by $6.30.
In currency markets, the U.S. dollar is trading at 147.56 yen, slightly lower than Tuesday's closing figure of 147.61 yen. Against the euro, the dollar is trading at $1.0851, compared to Tuesday’s $1.0845.Asia
On Wednesday, Asian stocks exhibited a decline following a discouraging performance in Chinese manufacturing. With the Federal Reserve's interest-rate decision being anticipated, most investors chose to tread with caution. Despite an expectation that the U.S. central bank will maintain rates, the post-meeting press conference by Fed Chair Jerome Powell may hold clues for possible future rate easing.
The Australian dollar dropped in light of an unexpected dip in inflation data. Meanwhile, Japanese bond yields, along with the yen, saw upward movement as the Bank of Japan seems closer to increasing its interest rate for the first time since 2007. This movement came about amid concerns of slower Chinese growth potentially impacting global demand, leading to a fall in oil prices in the Asian market.
China's manufacturing sector experienced its fourth consecutive month of contraction in January, indicating that stimulus efforts are yet to make an impact. As a result, Chinese markets sharply declined. Housing policies eased in two of China's major cities, however, it could not prevent the benchmark Shanghai Composite Index from falling 1.5 percent. Similarly, Hong Kong's Hang Seng Index experienced a 1.4 percent decrease.
Japanese shares, on the other hand, rose notably as the Bank of Japan demonstrated a stronger focus on a potential rate hike. Major sectors such as construction and automaking saw considerable gains.
South Korea's Kospi ended slightly lower after a volatile session. Interestingly, despite a 34 percent drop in Samsung Electronics’ annual operating profit for Q4, Korean industrial production experienced 1.1 percent growth in December of 2023.
In Australia, market gains were extended into the eighth continuous session as consumer price inflation hit a two-year low in Q4. This trend strengthened the belief that the central bank would not hike its key interest rate in the near future.
Europe
European markets saw moderate growth on Wednesday as investors assessed regional data and anticipated interest rate decisions from the U.S. Federal Reserve and the Bank of England. However, disappointing financial results from major companies like Microsoft, Alphabet, and Advanced Micro Devices slightly offset these gains.
Pharmaceutical group, Novo Nordisk, and Spanish bank, Banco Santander, registered share growths after predicting further sales and profitability growth. The Swedish retailer, H&M drastically plunged despite appointing a new CEO.
The German retail sector unexpectedly faced a 1.6 percent decline in December, prompting speculations of a potential recession and a European Central Bank rate cut in April. French consumer price inflation was reported to be lower than expected, registering 3.1 percent growth.
The Nationwide Building Society has reported that UK house prices increased by 0.7% in January, a significant rise following a flat progression in December and surpassing economists' 0.1% expected growth.
In contrast, job growth within the US private sector was lower than anticipated throughout January, according to a report from payroll processing company, ADP. The report detailed an increase of 107,000 jobs, lower than the initially predicted 145,000, marking a downward revision from December's 158,000 job rise.
Despite the decelerated growth in employment, ADP's chief economist, Nela Richardson, offered an optimistic perspective, highlighting improvement in inflation-adjusted wages over the last six months and predicting an economic "soft landing" for both the US and the global economy.
A business activity report from MNI Indicators is due, focusing on Chicago-area businesses in January. While the business barometer is predicted to rise slightly to 48.0 from December's 46.9, a reading under 50 would still signify economic contraction.
Meanwhile, the Energy Information Administration is set to release an oil inventory report for the week ending on January 26th. Predictions indicate a minor decrease of 0.9 million barrels, following a significant drop of 9.2 million barrels the previous week.
The Federal Reserve will announce its latest monetary policy decision, followed by a press conference from Fed Chair, Jerome Powell.
In stock news, despite exceeding analyst expectations in their fourth-quarter earnings, shares of snack company, Mondelez International, are trending downward in pre-market trading. SoFi Technologies, the online personal finance company, could also face losses following a stock rating downgrade by Morgan Stanley. Conversely, media company Paramount Global is experiencing substantial pre-market boosts following lucrative acquisition offers from entrepreneur Byron Allen.
