Today’s Big Picture
Asia-Pacific equity markets finished the day higher except for Hong Kong’s Hang Seng and China’s Shanghai Composite which fell 0.21% and 1.46%, respectively as those markets continue to struggle. Japan’s Nikkei gained 0.41%, Taiwan’s TAIEX rose 0.51%, India’s SENSEX advanced 0.61%, Australia’s ASX All Ordinaries added 1.44%, and South Korea’s KOSPI closed 2.87% higher as tech earnings continue to unfold. European markets are higher in midday trading and U.S. equity futures are pointing to a higher open although Dow futures are flirting with a flat open as shares of Apple (AAPL) are coming under pressure this morning (more below).
Futures for the S&P 500 and especially the Nasdaq Composite are being lifted by the market’s strong response to quarterly results last night from Amazon (AMZN) and Meta Platforms (META). Those contracts would be even stronger were it not for Apple shares trading off.
Following Fed Chair Powell’s comments earlier this week that quashed a March rate cut, the market is once again trying to determine when the central bank is likely to begin its rate-cutting cycle. Should the economy continue to surprise to the upside, it gives the Fed that much more justification in taking a measured approach to start that effort.
This means the current market mindset is that bad news is good news. Why? If the data points to the economy slowing or grinding to a halt, so long as inflation data continues to fall toward the Fed’s 2% target, it could spur the Fed into action sooner rather than later. Understanding that mindset, this morning’s jobs data, which showed that the U.S. economy added 353,000 jobs in January, well above expectations of 185,000, means that the Fed has more leeway when it comes to deciding when to cut rates.
Data Download
International Economy
Oil prices are inching higher this morning following OPEC’s decision to keep its oil output policy unchanged. Reports indicate the group will decide in March whether or not to extend 1Q 2024’s voluntary oil production cuts.
Domestic Economy
In addition to this morning’s January Employment Report, December Factory Order data will be published at 10 AM ET and it is expected to rise 0.2% MoM. Also being published at that time is the final January reading for the University of Michigan Consumer Sentiment Index, which is expected to come in at 78.9, up markedly compared to December’s 69.7 reading.
Markets
After the reaction to the Fed meeting and comments from Chair Powell, traders decided that all was not lost and ended up retracing some of Wednesday’s selloff. All sectors had a healthy day except for Energy (-0.01%) and Financials (0.15%). Consumer Staples (2.04%), Consumer Discretionary (1.92%), and Utilities (1.90%) led while the remaining sectors posted gains between 1.03% (Communication Services) and 1.76% (Real Estate). Unsurprisingly, all broad equity indexes were up, with the Dow gaining 0.97%, the S&P 500 rising 1.25%, the Nasdaq Composite adding 1.30% and the Russell 2000 closing 1.39% higher.
Yesterday’s pre-market action in Aflac (AFL) and C.H. Robinson Worldwide (CHRW) carried through the day as both names were bid lower due to earnings results. Aflac dropped 9.65% and C.H. Robinson fell 12.59%, clear indications from traders that failure is not an option in this market. Here’s how the major market indicators stack up year-to-date:
- Dow Jones Industrial Average: 2.20%
- S&P 500: 2.86%
- Nasdaq Composite: 2.33%
- Russell 2000: -2.60%
- Bitcoin (BTC-USD): 2.52%
- Ether (ETH-USD): 0.28%
Stocks to Watch
AbbVie (ABBV), Bristol-Meyers (BMY), Cboe Global Markets (CBOE), Charter Communications (CHTR), Chevron (CVX), Exxon Mobil (XOM), Grainger (GW), and Restaurant Brands (QSR) are among the companies expected to release quarterly earnings before equities begin trading later this morning.
Pre-market breadth is healthy today as 236 names in the S&P 500 have traded hands so far this morning with 155 gainers and 81 decliners. Shares of Meta Platforms are poised to open over 17% higher after the company’s earnings call (more below) while Clorox Company (CLX) and Amazon (more below) are catching a healthy bid as well. Microchip Technoogy Inc, PPL Corporation (PPL), and Apple (more below) are coming under pressure ahead of the open.
Apple topped consensus expectations for its December quarter and shared that it sees its total revenue as well as its iPhone revenue comparable to the March 2023 quarter. That suggests a sequential decline of roughly 20%, roughly in line with the $95.6 billion consensus forecast. For the December quarter, iPhone and services revenue surprised to the upside relative to Wall Street expectations but those gains were mitigated year over year declines for iPad and Wearables, Home and Accessories. Exiting the quarter, Apple’s install base surpassed 2.2 billion and over 1 billion paid subscriptions across its platform.
Amazon also topped consensus expectations for its December quarter with its bottom line aided by stronger than expected operating income and a pickup in Amazon Web Services revenues. Advertising sales across the company’s platform were also strong, rising 26% to $14.65 billion, ~9% of total sales for the quarter. For the current quarter, Amazon sees revenue in the range of $138.0-$143.5 billion compared to the $142.01 billion consensus with operating income in the $8-$12 billion range, which bookends the $10.3 billion consensus. On the earnings call, Amazon shared it isn’t done driving cost out of the business. Separately, Amazon launched a new generative AI powered shopping assistant dubbed “Rufus.” The assistant is now available to a small subset of customers using the Amazon mobile app and will be rolled out to more customers in the U.S. in the coming weeks.
Meta Platforms reported quarterly earnings of $5.33 per share, beating analysts estimates by $0.51. Revenues rose 24.7% YoY to $40.11 billion versus the $39.12 billion consensus outlook. The company’s daily active users (DAUs) rose 6% YoY to average 2.11 billion for the quarter while ad impressions delivered across Family of Apps increased by 21% YoY and the average price per ad increased by 2% year-over-year. For its March quarter, Meta sees revenue of $34.5-$37 billion, ahead of the $39.3 billion consensus. Management indicated it will continue to invest heavily in AI, the Metaverse, servers, and data centers with expected 2024 capita spending of $30-$37 billion compared to total 2024 forecasted expenses of $94-$99 billion. The company took the step of announcing its first ever dividend, declaring a $0.50 per share dividend for both class A and B shares of common stock. Holders of record as of February 22, 2024, will receive payment on March 26, 2024. Meta also announced a $50 billion increase to its share repurchase program.
Nvidia (NVDA) CEO Jensen Huang said countries around the world, including India, France, and Canada, are aiming to build and run what it described as “sovereign AI capabilities” that will drive up demand for AI chips and related products.
Hologic (HOLX) received approval from the U.S. Food and Drug Administration (FDA) approval for its new digital cytology system, making it the first FDA-cleared digital cytology platform.
Shares of Skechers USA (SKXX) are under pressure this morning following a mixed quarter earnings report and guidance for the current quarter and full year 2024 that fell short of Wall Street expectations. For the current quarter, management sees EPS between $1.05-$1.10 on revenue of $2.18-$2.23 billion compared to the consensus forecast of $1.20 and $2.2 billion. The company’s guidance puts EPS and revenue for 2024 between $3.65 to $3.85 and $8.6-$8.8 billion respectively, well below the consensus forecasts of $4.18 and $8.93 billion.
IPOs
Readers who want to dig deeper into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.
After Today’s Market Close
We’ve reached the end of the trading week, and that means no companies are expected to report quarterly results after equities stop trading today. Those looking for more on upcoming quarterly earnings reports should head on over to Nasdaq’s Earnings Calendar.
On the Horizon
Monday, February 5
- Eurozone: HCOB Service PMI (Final) – January
- UK: S&P Global Services PMI (Final) – January
- Eurozone: Producer Price Index (Final) – December
- US: S&P Global Final Services PMI – January
- US: ISM Non-Manufacturing Index – January
- US: Federal Reserve Senior Loan Officer Survey
Tuesday, February 6
- Eurozone: Retail Sales – December
Wednesday, February 7
- Eurozone: Consumer Inflation Expectations – December
- US: Consumer Credit – December
Thursday, February 8
- China: Inflation Rate, Producer Price Index – January
Thought for the Day
“How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.” — Robert G. Allen“
Disclosures
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
