The major U.S. index futures are currently pointing to a mixed opening on Monday, as the Nasdaq futures are notably higher but the Dow futures are under pressure.
The tech-heavy Nasdaq appears poised to reach another new record high, benefiting from strength among stocks such as Apple (AAPL), Tesla (TSLA) and Microsoft (MSFT)
Apple, Tesla and Microsoft are moving higher in pre-market trading ahead of the release of their quarterly results later this week, as earnings season picks up steam.
3M (MMM), American Express (AXP), General Electric (GE), Johnson & Johnson (JNJ), Verizon (VZ), Boeing (BA), and McDonald’s (MCD) are also among a slew of companies due to report their quarterly results this week.
Overall trading activity may be somewhat subdued, however, as traders may be reluctant to make significant moves amid uncertainty about President Joe Biden’s proposed stimulus package.
A lack of major U.S. economic data may also keep traders on the sidelines ahead of the Federal Reserve’s monetary policy decision on Wednesday.
The Fed is widely expected to leave interest rates unchanged, but traders will looking for any guidance regarding the central bank’s bond purchasing program.
Reports on consumer confidence, durable goods orders, new home sales, and personal income and spending may also attract some attention later this week.
Stocks showed a notable move to the downside at the start of trading on Friday but managed to regain ground over the course of the session. The major averages climbed well off their lows, although only the tech-heavy Nasdaq managed to reach positive territory.
The major averages came under pressure going into the close, but the Nasdaq held on to a modest gain. While the Nasdaq inched up 12.15 points or 0.1 percent to a record closing high of 13,543.06, the Dow slid 179.03 points or 0.6 percent to 30,996.98 and the S&P 500 fell 11.60 points or 0.3 percent to 3,841.47.
For the holiday-shortened week, the Nasdaq spiked by 4.2 percent, the S&P 500 jumped by 1.9 percent and the Dow rose by 0.6 percent.
Profit taking contributed to the initial weakness on Wall Street, as some traders looked to cash in on the recent run to new record highs.
Selling pressure waned over the course of the session, however, as traders shrugged off uncertainty about President Joe Biden’s proposed $1.9 trillion coronavirus relief package.
Optimism about more stimulus has helped propel stocks higher recently, although traders seemed unfazed by moderate Republican Senators Mitt Romney and Lisa Murkowski both expressing skepticism about the proposal.
Romney and Murkowski both pointed to the recently approved $900 billion stimulus and raised questions about whether more relief is needed.
Democrats could attempt to pass a new stimulus bill without Republican support by the so-called reconciliation process, which only requires a majority.
However, Democratic Senator Joe Manchin has also expressed concerns about the cost of increasing the size of direct payments to individuals to $2,000 from $600.
The negative sentiment may have been partly offset by a report from the National Association of Realtors showing an unexpected rebound in existing home sales in the month of December.
NAR said existing home sales climbed by 0.7 percent to an annual rate of 6.76 million in December after tumbling by 2.2 percent to a revised rate of 6.71 million in November.
The rebound surprised economists, who had expected existing home sales to slump by 2.1 percent to a rate of 6.55 million from the 6.69 million originally reported for the previous month.
With the unexpected monthly increase, existing home sales in December were up by 22.2 percent compared to the same month a year ago.
“Home sales rose in December, and for 2020 as a whole, we saw sales perform at their highest levels since 2006, despite the pandemic,” said Lawrence Yun, NAR’s chief economist.
He added, “What’s even better is that this momentum is likely to carry into the new year, with more buyers expected to enter the market.”
Semiconductor stocks showed a significant move to the downside on the day, dragging the Philadelphia Semiconductor Index down by 1.8 percent.
Industry giant Intel (INTC) led the sector lower after jumping late in the previous session after reporting better than expected fourth quarter results just before the close of trading.
Intel released its quarterly results ahead of schedule following reports that a graphic in its earnings statement had been the object of unauthorized access.
Considerable weakness was also visible among computer hardware stocks, with the NYSE Arca Computer Hardware Index falling by 1.4 percent after ending the previous session at a record closing high.
Shares of IBM Corp. (IBM) fell sharply after the tech giant reported better than expected fourth quarter earnings but on revenues that missed analyst estimates.
On the other hand, biotechnology stocks turned in a strong performance on the day, driving the NYSE Arca Biotechnology Index up by 1.2 percent.
Commodity, Currency Markets
Crude oil futures are slipping $0.07 to $52.20 a barrel after sliding $0.86 to $52.27 a barrel last Friday. Meanwhile, after falling $9.70 to $1,856.20 an ounce in the previous session, gold futures are climbing $7.10 to $1,863.30 an ounce.
On the currency front, the U.S. dollar is trading at 103.77 yen versus the 103.87 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.2148 compared to last Friday’s $1.2171.
Asian stocks rose on Monday, as expectations of healthy quarterly earnings as well as optimism about the prospects for additional stimulus in the U.S. offset worries about rising Covid-19 cases and doubts over the ability of vaccine makers to supply the promised doses on time.
Investors looked ahead to this week’s Federal Reserve policy meeting amid bets that officials will likely put off any changes in their bond-buying program until 2022.
China’s Shanghai Composite Index rose 17.49 points, or 0.5 percent, to 3,624.24 as investors awaited President Xi Jinping’s keynote address at the World Economic Forum’s first global virtual meeting.
Hong Kong’s Hang Seng Index spiked 711.16 points, or 2.4 percent, to 30,159.01 after the government lifted a weekend lockdown forced on thousands of residents of an inner city area to test for the coronavirus.
Japanese shares ended at a 30-year high as focus shifted to the corporate earnings season and data showed new coronavirus cases in Tokyo dropped below 1,000 for the first time in twelve days.
The Nikkei 225 Index gained 190.84 points, or 0.7 percent, to close at 28,822.29, marking its highest closing level since Aug. 3, 1990. The broader Topix closed 0.3 percent higher at 1,862.00. Pharmaceutical, textile and apparel, and services sector-oriented issues led the gainers.
Australian markets finished modestly higher, with miners pacing the gainers ahead of a public holiday on Tuesday for Australia Day. Sentiment was underpinned after the country’s medical regulator formally approved the Pfizer Covid-19 vaccine.
The benchmark S&P/ASX 200 Index rose 24.30 points, or 0.4 percent, to 6,824.70, while the broader All Ordinaries Index ended up 32.50 points, or 0.5 percent, at 7,111.40.
Mining heavyweights BHP and Rio Tinto rose 1-2 percent, while smaller rival Fortescue Metals Group surged 4 percent, marking its biggest intraday jump in over two weeks. The big four banks ended flat to slightly higher ahead of headline inflation data due on Wednesday.
Energy stocks extended losses for the third day, with Woodside Petroleum, Santos, Origin Energy and Oil Search ending down 1-2 percent.
Seoul stocks rallied as investors awaited earnings results from a flurry of big-name firms. The benchmark Kospi jumped 68.36 points, or 2.2 percent, to 3,208.99, a record closing high on hopes of faster economic recovery and improvement in corporate earnings. Market bellwether Samsung Electronics climbed 3 percent and No. 2 chipmaker SK Hynix spiked 5.1 percent.
European stocks have moved sharply lower on Monday as U.S. stimulus hopes are offset by concerns surrounding tighter border restrictions and extended Coivd-19 lockdowns.
Meanwhile, German business confidence weakened in January, survey results from the ifo institute revealed. The business confidence index fell to 90.1 in January from revised 92.2 in the previous month. The score was forecast to drop moderately to 91.8.
While the German DAX Index has plunged by 1.9 percent, the French CAC 40 Index is down by 1.7 percent and the U.K.’s FTSE 100 Index is down by 1.2 percent.
Siemens Energy shares have climbed. The company, which was spun off from Siemens AG last year, reported that preliminary revenue for the first quarter of fiscal year 2021 increased by 2.6 percent to 6.54 billion euros. The company confirmed its outlook for fiscal year 2021.
Dutch health technology company Philips has also advanced after it reported a 7 percent increase in fourth-quarter core profit.
British drug major AstraZeneca has also moved to the upside after it announced positive high-level results from the ELEVATE-RR Phase III trial of Calquence against ibrutinib in chronic lymphocytic leukaemia.
Recruiter SThree Plc has surged after its annual profit beat forecasts. Ricardo, an engineering, technical, environmental and strategic consultancy business, has also jumped.
The company noted that order intake, revenue and operating profit all increased during the six months ended December 31, compared to the six months to June 30, 2020.
U.S. Economic Reports
The Treasury Department is scheduled to announce the results of its auction of $60 billion worth of two-year notes at 1 pm ET.
Stocks In Focus
Shares of AMC Entertainment (AMC) are skyrocketing in pre-market trading after the movie theater operator secured $917 million of new equity and debt capital and said any talk of an imminent bankruptcy is “completely off the table.”
Biotechnology Regeneron Pharmaceuticals (REGN) is also likely to see initial strength after BMO Capital upgraded its rating on the company’s stock to Outperform from Market Perform.
Shares of Kimberly-Clark (KMB) may also move to the upside after the consumer products company reported better than expected fourth quarter results, raised its dividend and announced a new stock repurchase program.
On the other hand, shares of Merck (MRK) may see initial weakness after the drug giant discontinued developments of its coronavirus vaccine candidates following disappointing trial results.
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