The primary U.S index futures are hinting at a minor dip in the stock market this Tuesday, following a significant growth during the previous session. It's anticipated that traders may take advantage of Monday's late rally which catapulted the Dow and S&P 500 to unprecedented closing highs.
An air of uncertainty looming about the Federal Reserve's impending monetary policy announcement on Wednesday could prompt some traders to secure profits. It's largely predicted that the interest rates will remain stable, yet the statement could greatly shape the future outlook for these rates. Hopes for a March rate cut have recently dwindled, with many economists proposing a May initiation.
The stock market may feel the impact of a sharp decrease in UPS shares, currently experiencing a 6.2% drop in pre-market trading, driven by below-par fourth-quarter revenues and unimpressive 2024 guidance. Conversely, General Motors (GM) shares are experiencing a 7.5% surge in pre-market trading on the back of exceeded fourth quarter expectations and a confident 2024 profit outlook.
Later today, Google's parent company, Alphabet (GOOGL), and tech giant Microsoft (MSFT) are set to report their quarterly results. The Dow and the S&P 500 achieved new record closing highs on Monday, while Nasdaq hit its best closing level in two years.
The late-session rally was prompted by a significant pullback by treasury yields, and was further fueled by the Treasury Department's reduction in its first quarter borrowing estimates. Despite the dip in yields, the Treasury expects to borrow $760 billion in the first quarter, resulting from an increase in net fiscal flows and a higher beginning-of-quarter cash balance.
Market participants await several key events this week, including the Federal Reserve's monetary policy announcement on Wednesday. While unchanged interest rates are anticipated, traders will be scouting for indications about potential rate cuts at upcoming meetings.
Economic data trends have led many market analysts to deem a March rate cut unlikely, negating previous trader assumptions. Essential releases set for this week include the Labor Department's monthly jobs report, along with data on initial jobless claims, labor productivity and costs, and manufacturing activity.
Gold stocks also performed well due to a minor increase in gold prices. Conversely, airline stocks saw a notable drop, pulling down the NYSE Arca Airline Index by 2.2%.
In the commodity and currency markets, crude oil futures have dropped while gold futures have seen a climb. The U.S. dollar is holding steady against the yen and the euro.
In Asia, shares were mixed on Tuesday with significant drops in the Chinese and Hong Kong markets due to issues in China's property sector. The global market is eying the interest rate decisions by the Federal Reserve and Bank of England later in the week.During Asian trading, gold's trajectory remained uncertain, while oil experienced a slight increase as markets awaited a U.S. response to the lethal attack on American troops in Jordan.
Saudi Arabian Oil Co., also known as Saudi Aramco, announced that the Saudi government has instructed them to maintain their oil production capacity at 12 million barrels a day.
In China, the Shanghai Composite Index fell 1.8 percent to 2,830.53 as the court-mandated closure of property behemoth China Evergrande put pressure on regulators to lower rates in the world's second-largest economy. In Hong Kong, the Hang Seng Index fell 2.3 percent to 15,703.45, primarily due to property developers. Evergrande shares, valued at more than $300 billion in liabilities, remained non-tradeable.
Shares of China Evergrande New Energy Vehicle Group jumped 4.4 percent as trading resumed. Japanese markets closed somewhat higher, with the Nikkei 225 Index up 0.1 percent to 36,065.86 and the broader Topix Index settling 0.1 percent lower at 2,526.93.
Chip-related shares gained, with Advantest, Renesas Electronics, and Shin-Etsu Chemical showing an increase of 2-3 percent. In contrast, automakers such as Honda, Toyota and Isuzu declined 1-3 percent as the yen gained a positive trajectory against the US dollar in simultaneous trading sessions.
Tsuruha Holdings plummeted nearly 9 percent after Aeon announced it was in talks to buy activist Oasis' 13 percent stake in the company. On the economic front, Japan's unemployment rate fell to 2.4 percent in December from the previous month.
In South Korea, the Kospi closed marginally lower at 2,498.81, losing all of its initial gains ahead of the Federal Reserve's interest rate decision. In contrast, Australia saw modest stock market gains despite retail sales falling more than expected in December. New Zealand's benchmark index also ended the day slightly higher.
European stock markets showed a mixed picture as investors assessed regional data and looked ahead to key meetings of the Federal Reserve and the Bank of England for future course of action. Among the highlights were share price gains by Spanish bank BBVA and advertising agency WPP, offset by loses for spirits manufacturer Diageo and German food delivery service Delivery Hero.
German GDP fell 0.3 percent in the Q4 of 2023, confirming earlier estimates, while France barely avoided recession, with nil growth in Q4. Inflation in UK retail prices slowed to 2.9 percent in January, the lowest rate since May 2022.Standard & Poor's is set to publish a report on housing prices across significant metropolitan areas, due in November, at 9 am Eastern Time.
The Conference Board plans to share its findings about consumer confidence for January at 10 am ET. The anticipation is that the consumer confidence index will climb to 112.5 from 110.7 in December.
Simultaneously, at 10 am ET, the Labor Department intends to bring out its findings on job openings in December. The forecast shows a slight decline in job openings, settling to 8.75 million from 8.79 million the previous month.
Turning our attention to the stock exchange, Super Micro Computer's shares are trending upwards in pre-market trading, following a more than expected fiscal second quarter results that also influenced an elevation in its full-year revenue forecast.
Likewise, Sanmina, a manufacturing services provider, is experiencing prominent pre-market strength after announcing first-quarter results that eclipsed analyst projections and offering an optimistic forecast for the upcoming quarter.
On the other hand, Whirlpool stocks might face some downward pressure after the home appliance manufacturer announced a better than expected fourth quarter earnings but projected full-year results below analyst expectations.
Finally, JetBlue Airways might also face a downward trend after reporting a lower than anticipated loss in the fourth quarter, but predicting higher costs and lower revenues in the first quarter.
