Today’s Big Picture
Of the Asian markets open today, Japan’s Nikkei advanced 1.68% and India’s Sensex gained 1.18%.Hong Kong, China, Taiwan, and South Korea markets remained closed in observance of the Lunar New Year.By mid-day trading, European equity indices are up across the board and U.S.futures point to a positive open.
There are several factors spurring U.S.equity futures higher this morning, including stellar quarterly results from Alphabet ( GOOGL ) and AMD ( AMD ) , as well as an 18% gain in U.S.comparable sales at Starbucks ( SBUX ) in the December quarter.
Following the latest rash of economic data, the notion of a 50 basis point rate hike from the Fed at the next meeting is losing steam.
As of this morning, Fed Funds futures point to a 96% chance of a 25-basis point move in March.Reinforcing a potentially softer-than-expected path for interest rate hikes, yesterday St.Louis Federal Reserve President James Bullard said he favors three successive rate increases at the Fed’s March, May, and June meetings and then assess whether more needs to be done.
Bullard also indicated he was not a fan of a 50-basis point rate hike at the Fed’s March meeting.
Adding to the mix will be the January ADP report to be released at 8:15 AM ET.More on what to expect and how to handicap the results below, under the “Domestic Economy” section.
As all of that is digested, Ukraine’s President Volodymyr Zelensky warned a military confrontation with Russia would likely lead to “a full-scale” war in Europe.Meanwhile, the FBI is warning U.S.businesses to report any “increased [cyber] activity against Ukraine or U.S.
critical infrastructure,” including against financial, health care, and energy companies.
Data Download
Coronavirus
Coronavirus cases continue to drop in the U.S.as reported new cases for the week ending January 24 fell to just under 3.2 million, signaling that this latest wave has indeed rolled over.
Despite this drop, deaths attributed to Covid have seen only marginal improvement per the World Health Organization as the U.S.crossed 875,000 recently.
FedEx Corp ( FDX ) announced it is suspending two- and three-day economy freight services due to omicron-related staffing issues.
International Economy
A light day today as the Eurozone announced YoY CPI which advanced to 5.10% as compared to last month’s 5.00% reading and surprised 0.80% over estimates.
Core inflation moderated slightly to 2.30% from the previous 2.60% reading but still came in 0.40% greater than expectations.The concern is the ECB’s December inflation forecast for the current quarter of 4.1% may need to be revised to a figure with a 5-handle.
That along with renewed political uncertainty in Italy sets the stage for the European Central Bank’s monetary policy meeting tomorrow and will likely lead to President Christine Lagarde carefully crafting her message.
Italy also released YoY CPI which came in a 5.30% advancing significantly over the previous month’s 4.20% reading as well as surprising 1.20% over estimates.
Domestic Economy
Before U.S.equity markets commence trading, we’ll first receive the January ADP Employment Change Report, which is expected to show 184K jobs created in the private sector vs.807K in December.With the White House warning the January Employment Report out later this week will be ugly due to the omicron variant, we could see the same for today’s report from ADP.
The question is will it be as bad as some expect or better than feared? Depending on what we learn, we could see some adjustment to U.S.equity futures and how the day’s trading kicks off.
Markets
The stock market rebound that ended January continued with the S&P 500 rising 0.7% yesterday, the first day of February.The Nasdaq Composite and the Dow Jones Industrial Average gained 0.8% on the day, while the small-cap heavy Russell 2000 rose 1.1%.
Here are how the major market indicators stack up year to date:
Dow Jones Industrial Average: -2.6% S&P 500: -4.6% Nasdaq Composite: -8.3% Russell 2000: -8.7% Bitcoin (BTC-USD): -16.2% Stocks to Watch
Before trading kicks off for U.S.-listed equities, AbbVie (ABBV), Brinker (EAT), Capri Holdings (CPRI), DR Horton (DHI), Emerson (EMR), Ferrari (RACE), Sally Beauty (SBH), Silicon Labs (SLAB), and Waste Management (WM) will be among the companies reporting their December quarter results.
IPOs
There are no IPO offerings expected to price this week.Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page .
After Today’s Market Close
8×8 (EGHT), Allegiant Travel (ALGT), Cognizant Tech.
(CTSH), Corteva (CTVA), FormFactor (FORM), Hologic (HOLX), Kulicke & Soffa (KLIC), Meta Platforms (FB), Omega Health (OHI), Qualcomm (QCOM), Spotify (SPOT), and T-Mobile US (TMUS) will be among the sea of companies reporting their latest quarterly results.Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar .
On the Horizon
Thursday, Feb.
3
Japan: PMI Services – January Italy, France, Germany: Markit PMI Services – January Eurozone: Markit PMI Services – January UK: CIPS Services PMI – January Eurozone: PPI – December Eurozone: Retail Sales – December UK: Bank of England Interest Rate Announcement US: Weekly Initial & Continuing Jobless Claims US: Productivity – 4Q 2021 US: Markit Services PMI – January US: Durable Orders – December US: Factory Orders – December US: ISM Services Index – January Friday, Feb.4
Germany: Manufacturing Orders & Turnover – December France: Industrial Production – December US: Employment Report – January Thought for the Day
“Wednesday: Halfway to the weekend!” ~Anonymous
Disclosures
Qualcomm (QCOM) is a constituent of the Tematica BITA Digital Infrastructure & Connectivity Index Waste Management (WM) is a constituent of the Tematica Research Thematic Dividend All-Stars Index .
