Wall Street looks set to kick-off the month of February on a cautious note, but easing Treasury bond yields and muted market volatility could provide a spark later in the session.
Updated at 8:30 am EST
U.S. equity futures traded mixed Tuesday, following on from a wild January ride that provided the best two-day rebound for tech stocks in two years and the weakest monthly performance for the S&P 500 in more than a decade.
Markets remain gripped by the wholesale re-pricing of assets amid the Federal Reserve’s hawkish turn on inflation, which could trigger between four and five rate hikes this year, slowing corporate profit growth and a broader weakening in the global economic recovery.
The CME Group’s FedWatch tool is pricing in a 100% chance of a March rate hike, with the balance of bets resting on an increase that would take the benchmark Fed Funds rate to a range of 0.25% to 0.5%.
At least two of those concerns will come into focus today with a key reading of January economic activity in the world’s largest economy at 10:00 am Eastern time — the ISM manufacturing PMI survey — and a duo of tech-related earnings after the bell from Google parent Alphabet (GOOGL) – Get Alphabet Inc. Class A Report and chipmaker Advanced Micro Devices (AMD) – Get Advanced Micro Devices, Inc. Report.
Collective S&P 500 profits are expected to grow 25.2% to a share-weighted $441.3 billion. However, based on forward projections and corporate outlooks, that growth rate will slow to just 6.8% over the three months ending in March.
The CBOE Group’s benchmark volatility gauge, the Vix (undefined) , has fallen nearly 27% from the one-year peak it scaled last week, while a modest pullback in Treasury bond yields has provided some stability in markets on Wall Street heading into the start of February.
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Futures tied to the Dow Jones Industrial Average are indicating a modest 20 point opening bell decline while those linked to the S&P 500 are priced for a 3.5 point move to the upside. Nasdaq Composite futures are indicating a 35 point gain.
AT&T (T) – Get AT&T Inc. Report shares were the notable early-market mover Tuesday, falling 4.3% to $24.40 each after it opted for a spin-off of its WarnerMedia assets as part of its media asset merger with Discovery (DISCA) – Get Discovery, Inc. Class A Report while slashing its annual dividend payout by around $7 billion.
United Parcel Service (UPS) – Get United Parcel Service, Inc. Class B Report shares were also active, rising 7.35% to $217.07 each after the package delivery giant posted stronger-than-expected fourth quarter earnings, while boosting its planned dividend, as rebound in global traffic lifted the group’s top and bottom line.
Exxon Mobil (XOM) – Get Exxon Mobil Corporation Report, meanwhile, jumped 1.5% following better-than-expected fourth quarter earnings, and a new $10 billion share buyback, as surging global oil and gas prices helped deliver the strongest group profits in seven years.
AMC Entertainment (AMC) – Get AMC Entertainment Holdings, Inc. Class A Report shares surged nearly 15% after the world’s largest cinema chain posted preliminary fourth quarter earnings that could confirm its aim to return to profit over the final months of the year.
In overseas markets, Europe’s Stoxx 600 was marked 1.24% higher in by mid-day trading in Frankfurt, thanks in a part to the strongest reading of January factory activity in the region for at least five months.
Asia’s MSCI ex-Japan index rode the wave of buying on Wall Street last night to a solid 0.31% gain, while the Nikkei 225 in Tokyo closed 0.28% higher at 27,078.48 points.
