Wall Street looks set for a bit of a comeback Wednesday as a better-than-expected outlook from Microsoft boosts sentiment ahead of today’s crucial Fed rate decision.
U.S. equity futures powered higher Wednesday, while oil prices moved back towards their seven-year peak and Treasury yields advanced ahead of a crucial statement on interest rates later today from the Federal Reserve.
U.S. stocks, which finished lower again Tuesday following another whipsaw session that lifted the CBOE’s VIX (undefined) volatility gauge close to the highest level of the year, are looking at one of their worst starts to any year in more than a decade, pinched by concerns over slowing economic growth, rising interest, a Covid-hit supply chain and waning corporate profits.
Still, a solid near-term sales forecast from Microsoft (MSFT) – Get Microsoft Corporation Report — which offset a muted reading of the tech giant’s second quarter earnings — and the prospect of a record profits from Tesla (TSLA) – Get Tesla Inc Report after the bell has steadied some of the market’s nerves ahead of the Fed rate decision at 2:00 pm Eastern time.
Fed Chairman Jerome Powell and his colleagues on the Open Markets Committee are likely to hold rates steady at their current record low, but possible quicken the withdraw of certain forms of stimulus — such as government bond purchases — while teeing-up the first of three 2022 rate hikes for the middle of March.
Microsoft, Tesla, Fed, Facebook ‘Libra’ And Markets – Five Things You Must Know
That said, slowing growth, rising geopolitical tensions and the lingering impact of the Covid pandemic on corporate profits could keep the central bank from acting on its inflation fighting strategy.
The simmering tensions between Russia and the U.S., played out in the form of a possible incursion into the Ukraine, has lifted global oil prices back towards their recent seven-year highs, with Brent crude futures for March delivery rising $1.01 to $89.21 per barrel in early New York trading.
On Wall Street, futures tied to the Dow are indicating a 355 point opening bell gain ahead of earnings from AT&T (T) – Get AT&T Inc. Report and Boeing (BA) – Get Boeing Company Report while those linked to the S&P 500 are priced for a 62 point move to the upside.
Nasdaq Composite futures are indicating a 295 point opening bell advance as benchmark 10-year Treasury note yields hold at 1.778% in overnight trading.
Boeing shares, in fact, were the notable pre-market mover after posting a massive fourth quarter loss of $7.69 per share as the planemaker booked $3.5 billion in new charges linked to delays in its 787 Dreamliner program.
Microsoft, meanwhile, reversed earlier pre-market declines to rise 3.8% as investors reacted to solid near-term sales forecasts that offset a mixed batch of second quarter earnings for the world’s second-largest tech giant.
Tesla (TSLA) – Get Tesla Inc Report shares, too, are likely to be active today ahead of a fourth quarter earnings report that is expected to show record revenues for the clean energy carmaker.
Tesla, which delivered a record 936,000 cars last year, is forecast to post total revenues of $16.35 billion for the three months ending in December, a more than 52% increase from the same period last year. The Street is also expecting a bottom line of $2.31 per share, up from 80 cents per share in the final quarter of 2020.
AT&T shares jumped 1.75% after posting stronger-than-expected fourth-quarter earnings Wednesday as subscribers to its HBO streaming services neared 74 million, boosting revenues in its WarnerMedia division.
Another hot stock Wednesday was Mattel (MAT) – Get Mattel, Inc. Report, which surged more than 9% following a Wall Street Journal report that suggested the toymaker had won back the rights to sell Disney (DIS) – Get Walt Disney Company Report inspired characters from its main rival Hasbro (HAS) – Get Hasbro, Inc. Report.
In overseas markets, Europe’s Stoxx 600 surged 2.02% higher in mid-day Frankfurt trading while the MSCI ex-Japan index in Asia was little-changed at 612.36 points.
