- Stock futures edge higher as markets switch focus from inflation to earnings.
- S&P 500 profits are forecast to rise 22.4% from last year to $431.8 billion in the fourth quarter; JPMorgan, Citigroup and Wells Fargo report Friday.
- Boeing stock surges after Bloomberg reports its 737 MAX will return to service in China later this month.
- Delta Air Lines tops Q4 profit forecast, lifts rival carriers in pre-market trading.
- Intel, Nvidia and AMD see gains after Taiwan Semi forecasts “multi-year industry megatrend”.
U.S. equity futures edged higher Thursday as investors looked past yesterday’s inflation surge, the highest in four decades, and re-grouped to focus on the start of the fourth quarter earnings season later this week.
The Dow was given an early Thursday boost, as well, from reports that suggested that Boeing (BA) – Get Boeing Company Report, the benchmark’s heavyweight, will bring its 737 MAX jet back into service in China later this moth.
More broadly, however, stocks are still echoing from yesterday’s inflation data, which showed the headline consumer price index rose 7% from last year, marking the fastest rate of inflation since June of 1982 and effectively cementing the case for a March rate hike – the first of at least three policy moves anticipated by the Federal Reserve before the end of the year.
The CME Group’s FedWatch tool, in fact, is pricing in an 80% chance of a March hike, up from around 31.2% in mid-December.
However, with both the headline and core readings largely meeting Street forecasts, and economists pointing to data suggesting an easing of price pressures over the first half of the year, markets were able to plough through the inflation concern and into a strong finish on Wall Street.
Earnings will take center-stage in the days and weeks ahead, however, as will today’s reading on jobless claims (and its knock-on effect on wage growth) and the December reading for factory gate inflation at 8:30 am Eastern time, which provides some evidence as to how and if companies and pass on price increases to the broader market.
S&P 500 earnings are expected to grow 22.4% from last year to a collective $431.8 billion, lead by energy, materials and industrial companies.
The growth rate is notably slower than the 42.6% pace recorded over the three months ending in September, and could mark the final quarter of double-digit gains as companies fight tougher year-on-year comparisons while grappling with the affects of Delta and Omicron-lead infection waves through the world’s largest economy.
On Wall Street, futures tied to the Dow Jones Industrial Average are indicating a modest 40 point opening bell gain — nearly all of it linked to the 2.7% pre-market gain for Boeing — while those linked to the S&P 500 are priced for a 2.5 point bump to the upside.
Futures tied to the Nasdaq are indicating a 15 point opening bell gain as benchmark 10-year Treasury note yields bump to 1.748% in overnight trading following a solid, but by no means spectacular, auction of $36 billion auction yesterday.
Airline stocks were on the rise, with American Airlines (AAL) – Get American Airlines Group, Inc. Report jumping 1.35% and United Airlines (UAL) – Get United Airlines Holdings, Inc. Report gaining 1.75%, after Delta Air Lines (DAL) – Get Delta Air Lines, Inc. Report posted stronger-than-expected fourth quarter earnings but noted that the recent surge in Omicron infections would delay its recovery momentum over the coming months.
In the tech sector, Intel (INTC) – Get Intel Corporation Report, Nvidia (NVDA) – Get NVIDIA Corporation Report and Advanced Micro Devices (AMD) – Get Advanced Micro Devices, Inc. Report were all on the rise after Taiwan Semiconductor (TSM) – Get Taiwan Semiconductor Manufacturing Co. Ltd. Report the world’s biggest contract chipmaker and a lead supplier for Apple (AAPL) – Get Apple Inc. Report iPhones, posted record quarterly profits and forecast a record boost in capital spending to meet the surge in global semiconductor demand.
Global oil prices traded modestly lower, but are still marked at the highest levels in more than two months, after the Energy Department said domestic crude stockpiles fell by 4.6 million barrels last week, nearly triple the consensus forecast, while inventories at the key Cushing, Okla., delivery hub fell by 300,000 barrels.
WTI futures contracts for February delivery, which are tightly-linked to domestic gasoline prices, were marked 30 cents on the session at $82.634 per barrel.
Brent contracts for March, the global pricing benchmark, fell 22 cents to trade at $84.43 per barrel.
In overseas trading Europe’s region-wide Stoxx 600 was marked 0.1% lower in mid-day trading in Frankfurt while the MSCI Asia ex-Japan index gained 0.14% by the close of trading.