Benzinga - by Shanthi Rexaline, Benzinga Editor.
With the Fed decision now in the rearview mirror, sentiment appears to have taken a turn for the better on the hopes of receiving strong earnings reports from some high-profile tech companies such as Meta Platforms, Inc. (NASDAQ:META), Amazon, Inc. (NASDAQ:AMZN) and Apple, Inc. (NASDAQ:AAPL). Given the Federal Reserve’s data-dependent stance, a couple of manufacturing activity data and the routine jobless claims data due for the day could draw traders’ attention.
Cues From Wednesday's Trading:
U.S. stocks fell on Wednesday, stung by the double-whammy of earnings disappointments and a hawkish Fed. Traders reacted negatively to earnings from Alphabet, Inc. (NASDAQ:GOOGL) (NASDAQ:GOOG), Microsoft Corp. (NASDAQ:MSFT), and Advanced Micro Devices, Inc. (NASDAQ:AMD), all of which have significant weightings in the S&P 500 Index.
The major indices started the session lower and moved roughly sideways until the Fed decision. The Dow was seen moving in and out of the unchanged line as it received support from a strong upward move in Boeing Co.’s (NYSE:BA) shares. The Nasdaq Composite and the S&P 500 indices languished in negative territory.
Following the rate decision, the indices either moved above the flat line or trimmed their losses. Jerome Powell disappointed traders by offering no clear signal toward a rate-cut schedule, so they dumped stocks in late afternoon trading.
The S&P 500 Index pulled further away from its record close, with the broader gauge and the Nasdaq Composite settling at the lowest levels in about two weeks.
The market witnessed a broad-based sell-off, with communications stocks being the worst hit. IT, consumer discretionary, and energy stocks also saw marked weakness.
US Index Performance On Wednesday
| Index | Performance (+/-) | Value |
| Nasdaq Composite | -2.23% | 15,164.01 |
| S&P 500 Index | -1.61% | 4,845.65 |
| Dow Industrials | -0.82% | 38,150.30 |
| Russell 2000 | -2.45% | 1,947.34 |
For January, the Nasdaq Composite, S&P 500, and Dow have gained 1.02%, 1.59%, and 1.22%, respectively, while the R2K has slipped 3.93%.
Analyst Color:
Fund Strat pointed to “January barometer” that offers hope of sustained uptrend in the market this year. If the annual return of the prior year is over 15% and January is positive, then the probability of stocks rising is 92%, and the average gain of the S&P 500 under the scenario is 16.2%, the firm pointed out.
FUNDSTRAT: ".. January on track for >3% gain, solidifying 2024 to be positive (>92% probability) and suggests our 5,200 target might be low. .. If the January barometer is right, the upside to our $SPX target is possibly as high as 5,500 or more."Futures Today:– @fundstrat pic.twitter.com/VfIHNyJTj5
— Carl Quintanilla (@carlquintanilla) January 31, 2024
Futures Performance On Thursday
| Futures | Performance (+/-) |
| Nasdaq 100 | +0.69% |
| S&P 500 | +0.41% |
| Dow | +0.18% |
| R2K | +1.05% |
In premarket trading on Thursday, the SPDR S&P 500 ETF Trust (NYSE:SPY) rose 0.53% to $485.43, and the Invesco QQQ ETF (NASDAQ:QQQ) gained 0.71% to $419.91, according to Benzinga Pro data.
Upcoming Economic Data:
The Labor Department is scheduled to release its weekly jobless claims report at 8:30 a.m. ET. Economists, on average, expect the number of individuals claiming unemployment benefits for the week ending January 24 to come in at 213,000, almost flat with the previous week’s 214,000.
The Labor Department will also release its preliminary fourth-quarter non-farm productivity and costs report at 8:30 a.m. ET. The quarter-over-quarter non-farm productivity growth may have slowed from 5.2% in the third quarter to 2.4% in the fourth quarter. Economists expect a 1.3% sequential increase in fourth-quarter unit labor costs compared to a 1.2% drop in the third quarter.
S&P Global will release its final manufacturing purchasing managers’ index for January at 9:45 a.m. ET. The consensus estimate is 50.3.
The Institute of Supply Management will release its manufacturing purchasing managers’ index for January at 10 a.m. ET. The index is expected to come in at 47.2, suggesting continued sector contraction.
The Commerce Department’s construction spending report for December is due at 10 a.m. ET is expected to show a 0.5% month-over-month increase in spending compared to 0.4% growth in the previous month.
The Treasury will auction four- and eight-week bills at 11:30 a.m. ET.
See also: Best Futures Trading Software
Stocks In Focus:
- Qorvo, Inc. (NASDAQ:QRVO) climbed over 5% in premarket trading following the release of the company’s quarterly results.
- C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) and Wolfspeed, Inc. (NYSE:WOLF) shed over 6% each following their results announcements; Qualcomm, Inc. (NASDAQ:QCOM) fell over 1.70%, while Align Technology, Inc. (NASDAQ:ALGN) jumped nearly 13%
- Altria Group, Inc. (NYSE:MO), Barrick Gold Corporation (NYSE:GOLD), Cardinal Health, Inc. (NYSE:CAH), Ferrari N.V. (NYSE:RACE), Honeywell International, Inc. (NASDAQ:HON), Merck & Co., Inc. (NYSE:MRK), Royal Caribbean Cruises Ltd. (NYSE:RCL), Sanofi (NASDAQ:SNY) and Sirius XM Holdings Inc. (NASDAQ:SIRI) are among the companies reporting their quarterly results before the market open.
- Those reporting after the close include Amazon, Meta, Apple, Atlassian Corporation (NASDAQ:TEAM), Beazer Homes USA, Inc. (NYSE:BZH), and Clorox Company (NYSE:CLX).
- Plug Power, Inc. (NASDAQ:PLUG) climbed over 11%, extending its recent momentum.
- Lucid Group, Inc. (NASDAQ:LCID) rose more than 3%.
Crude oil futures gained 0.71% to $76.39 in early European session on Thursday following Wednesday's 2.53% slide.
The benchmark 10-year Treasury note fell 0.023 percentage points to 3.942% on Thursday.
Elsewhere, global markets showed lackluster sentiment. The Asian markets ended mixed, with South Korea’s Kospi advancing strongly and the Hong Kong, Taiwanese, and New Zealand markets rising moderately. On the other hand, the Chinese, Japanese, and Australian markets retreated.
European stocks traded almost flat, with a negative bias, as traders in the region digested domestic earnings reports and considered Wednesday’s Fed rate decision.
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