Wall Street is looking at a muted open Tuesday as investors pick through another series of December quarter earnings will focusing on the release of January inflation data later this week.
U.S. equity futures edged lower Tuesday, while oil prices eased from their recent seven-year peak, as investors continue ride a solid fourth quarter earnings season while closely tracking interest rate markets ahead of a key reading on inflation later this week.
Soaring wage gains, which underpinned last week’s stronger-than-expected January jobs report, have all but cemented the case for a series of 2022 rate hikes from the Fed, with the CME Group’s FedWatch tool pricing in a more than 30% chance of a 50 basis point move next month.
That’s helped lift 2-year note yields to a multi-year high of 1.319% and narrowed the spread between 10-year notes to just 62 basis points. That gap, along with global oil prices trading worryingly close to the $100 per barrel level — a near certain signal of recession — has traders on edge this week, although the prospect of a breakthrough in talks with Iran over its nuclear program pulled crude modestly lower in overnight trading.
Earnings have provided something of a floor for stocks this week, with fourth quarter S&P 500 profits expected to rise 27.2% from last year to a share-weighted $448.4 billion.
Peloton, Meta, Nvidia, Take-Two and Stock Markets – Five Things You Must Know
That pace will slow markedly over the first three months of the year, however, with forecasts indicated a 7% growth rate and share-weighted earnings of $438.2 billion.
On Wall Street, futures tied to the Dow Jones Industrial Average are indicating a modest 5 point opening bell dip while those linked to the S&P 500 are priced for a 9 point retreat.
Nasdaq Composite futures are indicating a 55 point pullback for the tech-focused benchmark as 10-year Treasury note yields rise to 1.941% in early New York trading.
Peloton PTON shares were the most active in pre-market trading, falling nearly 8% after yesterday’s surge amid news that CEO John Foley would step down amid what it called a ‘major’ restructuring that includes 2,800 job cuts.
The group also published weaker-than-expected second quarter earnings and slashed its near-term revenue forecasts.
Pfizer (PFE) – Get Pfizer Inc. Report shares were also in focus after the pharma giant posted better-than-expected fourth quarter earnings, and forecast $54 billion in vaccine and treatment sales for the coming year, as it continues to outpace rivals in Covid treatment developments.
Nvidia (NVDA) – Get NVIDIA Corporation Report, too, was trading in the red, falling 1.2% after it formally called-off its planned $40 billion takeover of chipmaker Arm Holdings from Japan’s SoftBank Group.
Softbank, which purchased Arm for around $32 billion in 2016, is now looking to list the chip designing business following a series of push-backs on the sale to Nvidia from regulators on both sides of the Atlantic, as well as in China, over the impact of the deal on global competition.
In overseas markets, Europe’s Stoxx 600 was marked 0.10% lower by mid-day trading in Frankfurt while Japan’s Nikkei 225 closed 0.13% lower in Tokyo at 27,284.52 points.
