OPENING CALL
Stock futures were little changed on Thursday, pointing to the S&P 500 opening only several points shy of the 5,000 mark.
Well-received results from Disney after Wednesday's closing bell will be supporting sentiment - though that positivity may be somewhat counteracted by another disappointing earnings update from PayPal .
Perhaps more important for the S&P 500, and indeed Nasdaq, was the 20% pop in shares of Arm Holdings after the chip designer delivered upbeat guidance and said it saw "increasing demand for new technology driven by all things AI."
"Overall, these earnings reports are likely to cheer the market," XTB said.
"At the start of earnings season, a spate of poor reports from U.S. banks had weighed on earnings growth, however, now that the 10 other sectors have mostly reported earnings, the picture has brightened."
Calmer conditions in bond markets have also helped the S&P 500 rally. The Treasury on Wednesday saw strong demand for its bonds auction, a sign the market is more relaxed about inflation and the timing of the Federal Reserve's likely first rate cut being pushed back to May.
"The strong demand...hints that investors continue to binge-buy the 10-year paper while sitting patiently in the waiting room and watching the major [equity] indices' record-breaking race," Swissquote Bank said.
The Treasury will auction $25 billion of 30-year bonds later on Thursday.
Overseas Markets
Chinese stocks fell after a data release showed deflation in the country is worsening, with consumer prices falling at the steepest pace since 2009. The Hang Seng Index lost 1.3%.
Japanese equities gained, lifted by SoftBank 's 11% climb and the Bank of Japan's deputy governor who said the bank was closer to achieving its inflation target, but would maintain accommodative financial conditions. The Nikkei 225 added 2.1%.
Premarket Movers
U.S.-listed shares of Arm Holdings were up 24% after the company said it anticipated revenue in its fiscal fourth quarter of $850 million to $900 million, well above the $779 million midpoint of analysts' estimates.
Blue Bird's fiscal first-quarter sales increased about 35%, topping analysts estimates with the help of higher selling prices and more units. The company lifted its guidance for adjusted Ebitda and swung to a profit. Shares rose 13%.
Confluent issued 2024 revenue guidance ahead of Wall Street's expectations after the company's revenue rose sharply again in the fourth quarter. Shares rose 24%.
Disney's global Disney+ streaming subscriber base was stable in the fiscal first quarter and its operating loss in its direct-to-consumer business narrowed. It also announced a $1.5 billion deal for an equity stake in "Fortnite" video-game maker Epic Games and plans to stream a cut of Taylor Swift's Eras Tour concert movie. Shares rose 5.9%.
PayPal said it expects to report adjusted earnings in 2024 roughly in line with the $5.10 a share that the company posted during 2023. Analysts had been forecasting profit of $5.51 a share. The stock was down 8.7%.
Wynn Resorts posted fourth-quarter adjusted earnings of $1.91 a share, better than analysts' estimates of $1.15. Net income attributable to Wynn Resorts was $729.2 million, compared with $32.4 million for the year-earlier period. The stock rose 5.2%.
Watch For:
Weekly Jobless Claims; Fed's Tom Barkin speaks at the Economic Club of New York; Earnings from Philip Morris, ConocoPhillips
Today's Top Headlines/Must Reads:
- Investors Are Almost Always Wrong About the Fed
- Logistics Operators See a Shipping-Market Rebound Taking Shape
- Disney's Moves Give Bob Iger a Sporting Chance
MARKET WRAPS
Forex:
Dollar strength has waned somewhat this week in the absence of new data, yet the euro has failed to rise much as a result, Commerzbank Research said.
The euro edges higher against the U.S. currency but this is "almost entirely attributable to the dollar side" rather than to independent strength in the euro which continues to struggle, Commerzbank said. "The euro is having a hard time at the moment."
Deutsche Bank Research said the two-month correlation of EUR/USD with money markets' pricing of the likelihood of a Fed rate cut in May is a notable 90%, which is fractionally above the probability for March.
"We would expect this gap to grow as the market puts more weight on the May expectation."
Were May to end with no Fed rate cut, EUR/USD would trade with a 1.05 handle, while, in contrast, because a Fed rate cut in May is still 90% priced, a 25 basis point cut that month would presumably not imply much increase in EUR/USD from current levels, Deutsche Bank said.
Energy:
Oil prices rose on a weaker dollar and improved sentiment on the demand side following a larger-than-expected drawdown in U.S. fuel stocks.
Meanwhile, Middle East tensions continued to keep traders on edge after Benjamin Netanyahu rejected Hamas's proposed deal for a ceasefire in Gaza.
Metals:
Base metals were firmer, with gold narrowly down on pressure from the elevated dollar and yields.
Fed officials are expected to reiterate their higher-for-longer narrative, keeping the dollar and the 10-year yield at current levels, and leaving persistent pressure on gold as a safe-haven metal. This offsets any potential gains from Middle Eastern tensions.
TODAY'S TOP HEADLINES
Fidelity's Abigail Johnson Shakes Up Executive Ranks, Again
Fidelity Investments appointed a new slate of executives to senior roles, including finance chief, in one of the biggest management reshuffles in Abigail Johnson's near-decadelong run as chief executive officer.
The moves reflect Johnson's commitment to rotating members of her leadership team into new roles, exposing them to different parts of the company and bringing new perspectives to those assignments. All but one of Fidelity's major businesses, and now many of its corporate functions, have welcomed new leaders since late 2022. Among the changes: Maggie Serravalli, the finance chief, was appointed chief administrative officer.
Elon Musk Opens New Front in Disney Fight
Elon Musk is intensifying his feud with Disney.
Musk, the billionaire owner of X, is soliciting people who want to sue Disney for discrimination. He says he is willing to help pay for their cases.
Amazon's Newest Competitors Are Stepping Into Its Territory-Literally
Fast-fashion company Shein and TikTok's shopping unit are expanding in Amazon.com's territory, seeking to poach Amazon's employees and building out workspaces in the same Seattle-area office tower.
The two companies are bolstering their staff at a 22-story tower near Seattle known as the Key Center, and both are recruiting current and former Amazon employees as they expand their U.S. logistics and supply-chain operations.
U.S. Drone Strike Kills Iraq Militia Leader Behind Deadly Attack on American Base
WASHINGTON-A U.S. drone strike in Baghdad killed a commander of the Iran-backed Iraqi militia blamed for a deadly strike at a U.S. base in Jordan last week, part of a sharpened effort by the Pentagon to deter attacks on its forces.
The commander, of the Iraqi militia group Kataib Hezbollah, was responsible for directly planning and participating in attacks on American forces in the region, the Pentagon said.
Supreme Court Takes Up Donald Trump's Ballot Eligibility
WASHINGTON-The Supreme Court on Thursday will for the first time hear arguments over disqualifying a presidential candidate for allegedly engaging in insurrection, in a special sitting where lawyers for Donald Trump are seeking to keep his name on the Colorado ballot and defeat a legal challenge that could broadly threaten his candidacy.
The case involves not only the mayhem of Jan. 6, 2021, when a pro-Trump mob raided the Capitol in an effort to prevent lawmakers from certifying President Biden's victory in the November 2020 election. Equally at issue is the meaning of a spare phrase added to the Constitution following the Civil War disqualifying from public office former federal and state officers who "engaged in insurrection or rebellion against" the U.S. and gave "aid and comfort" to its enemies.
Write to ina.kreutz@wsj.com
TODAY IN CANADA
Earnings:
ARC Resources 4Q
Aurora Cannabis 3Q
BCE 4Q
Bombardier 4Q
Brookfield 4Q
Cameco 4Q
Colliers 4Q
Gogold Resources 1Q
Interfor 4Q
Lightspeed 3Q
Medicenna Therap 3Q
Rogers Sugar 1Q
Russel Metals 4Q
Sangoma Tech 2Q
Saputo 3Q
Silvercorp Metals 3Q
TFI Intl 4Q
Thomson Reuters 4Q
Trisura Grp 4Q
WildBrain 2Q
Economic Indicators (ET):
0830 Dec Stocks of Canadian grain at Dec 31
Stocks to Watch:
Canfor Pulp Products to Sell Taylor Pulp Site for C$7 Million
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Computer Modelling 3Q EPS C$0.07; 3Q Rev C$33M
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Firan Technology 4Q EPS C$0.16; 4Q Sales C$40M; 4Q Adj EPS C$0.10
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Orbit Garant Drilling 2Q Loss C$1.7M; 2Q Loss/Shr C$0.05; 2Q Rev C$43.4M
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Rogers Communications Prices US$2.5B Offering of Senior Notes; Offering Comprises US$1.25B of 5.00% Senior Notes Due 2029, US$1.25B of 5.30% Senior Notes Due 2034; Expect to Use Proceeds to Repay Debt, Including Part of Borrowing Used to Fund Shaw Communications Acquisition; Sale of Notes Expected to Close Feb. 9
Expected Major Events for Thursday
00:01/UK: Jan KPMG and REC UK Report on Jobs
00:01/UK: Jan RICS Residential Market Survey
04:30/JPN: Jan Corporate Insolvencies
05:00/JPN: Jan Economy Watchers Survey
09:30/UK: 4Q Mortgage and landlord possession statistics
09:30/UK: 4Q Mortgage Arrears and Possessions data
13:00/RUS: Weekly International Reserves
13:30/CAN: Dec Stocks of Canadian grain at Dec 31
13:30/US: 02/03 Unemployment Insurance Weekly Claims Report - Initial Claims
13:30/US: U.S. Weekly Export Sales
15:00/US: Dec Monthly Wholesale Trade
15:30/US: 02/02 EIA Weekly Natural Gas Storage Report
17:00/US: Jan Monthly U.S. Retail Chain Store Sales Index
(MORE TO FOLLOW) Dow Jones Newswires
02-08-24 0618ET
