Stock futures edge higher as inflation surge fails to rock bulls; Wall Street banks set to kick-off fourth quarter earnings season, TSMC sees chip industry ‘megatrend’ amid profit surge; Big tech bosses head to White House for cybersecurity talks and convicted fraudster and Theranos founder Elizabeth Holmes will be sentenced on September 26.
Here are five things you must know for Thursday, January 13:
1. — Stock Futures Edge Higher After Inflation Fails to Rock Sentiment
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 headline consumer price index rose 7% from last year, the Commerce Department said yesterday, 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.
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.
On Wall Street, futures tied to the Dow Jones Industrial Average are indicating a modest 25 point opening bell gain while those linked to the S&P 500 are priced for a 4 point bump to the upside.
Futures tied to the Nasdaq are indicating a 30 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.
2. — Wall Street Banks Set to Kick-Off Q4 Earnings Season
JPMorgan Chase (JPM) – Get JPMorgan Chase & Co. Report, Citigroup (C) – Get Citigroup Inc. Report and Well Fargo (WFC) – Get Wells Fargo & Company Report will unofficially kick-off the fourth quarter earnings season Friday as investors look to slower profit growth in the months ahead.
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.
Delta Air Lines (DAL) – Get Delta Air Lines, Inc. Report, which reports later today, is a prime example: it will likely post a modest 15 cents per share profit, but that matches against last year’s nadir of a $2.53 loss. Going forward, comparisons won’t be nearly as flattering.
3. — TSMC Sees Chip Profit Surge, ‘Multi-Year Industry Megatrend’
Taiwan Semiconductor Mfg. Co. Ltd., (TSM) – Get Taiwan Semiconductor Manufacturing Co. Ltd. Report the world’s biggest contract chipmaker and a lead supplier for Apple Inc. (AAPL) – Get Apple Inc. Report iPhones, posted record quarterly profits and forecast a big boost in capital spending to meet the surge in global semiconductor demand.
TSMC said earnings for the three months ending in December rose 16.4% from last year to just of $6 billion, with revenues surging 24.1% to $15.75 billion.
The industry bellwether said it would boost capital spending to between $40 billion and $44 billion this year, a 33% increase from 2021 levels, and raised its compound annual growth rate targets for revenue to between 15% and 20% amid what it called a “multi-year industry megatrend” for global semiconductor demand.
TSMC’s U.S.-listed shares were marked 4% higher in pre-market trading Thursday to indicate an opening bell price of $137.52 each.
4. — Big Tech Bosses Head To White House to Talk Cyber Security
Executives from tech giants such as Apple, Microsoft, Google and Amazon will meet with administration officials at the White House Thursday to discuss cybersecurity issues.
Deputy National Security Advisor for Cyber & Emerging Technology Anne Neuberger will host the meeting, which was called by White House National Security Advisor Jake Sullivan late last year in the wake of several high profile cyber attacks on U.S. companies.
The focus of the talks will be on what is known as Log4j vulnerability, a reference to a function in software coding that allows thousands of websites and applications perform mundane tasks. The same function, however, can be easily taken-over by a remote host, which can then begin running separate — or potentially harmful — software in its place.
5. — Elizabeth Holmes Sentencing Date Set
Elizabeth Holmes, the founder of blood testing start-up Theranos, will be sentenced on September 26 following her conviction for defrauding investors in a company once worth $9 billion.
Holmes, 37, lied about the efficacy of Theranos’ technology to both investors and patients as she attempted to develop a tool that would conduct multiple blood tests from a single prick.
She was convicted on January 3 on three counts of fraud, and one count of conspiracy to commit fraud, but was cleared on other charges related to the defrauding of patients.
Holmes faces a potential maximum sentence of 80 years in prison, but is likely to serve far less time if the sentences are concurrent. She is currently free on a $500,000 bond and is planning an appeal.
