© TheStreetDow Futures Slip Lower On Stimulus Delay Concern; Johnson & Johnson Highlights Earnings Focus
The Tuesday Market Minute
- Global stock mixed as investor focus shifts to U.S. earnings parade while possible delays to Biden's stimulus bill prompt cautions trades in bonds and the dollar.
- Senate focus on Trump impeachment could push stimulus negotiations into March, while Biden claims he's "open to negotiating" terms of the $1.9 trillion package.
- Janet Yellen confirmed as first woman Treasury Secretary by the Senate in an 84-15 vote late Monday.
- S&P 500 earnings highlight a busy week on Wall Street, with 120 companies reporting including Microsoft, Starbucks and AMD after the close of trading.
- GameStop extends surge, with Blackberry and AMC Entertainment rising higher, as retail investors continue to push favored stocks to multi-year highs.
- U.S. equity futures suggest a modestly weaker open on Wall Street ahead of quarterly updates from Johnson & Johnson, General Electric, 3M and Verizon before the start of trading.
Wall Street futures slipped lower Tuesday, while the dollar rallied alongside Treasury bonds, as investors adopted a cautious stance on risk markets heading into the busiest stretch of the quarterly earnings season.
Sentiment was largely tamed by comments from President Joe Biden, who told reporters in Washington yesterday that he was "open to negotiating" terms of his $1.9 trillion coronavirus relief plan amid pushback from Republican lawmakers in the 50/50 split Senate.
Moves by Democratic lawmakers to bring impeachment proceedings against Donald Trump, as well, could command weeks of the Senate's time and delay the passage of the bill until mid-March, some reports have suggested, leaving the economy to sputter with steepening job losses and slower consumer spending.
That would likely compel the Federal Reserve to at least reiterate its commitments to near-zero interest rates and billions in monthly bond purchases until at least the end of the year, if not beyond, as it begins its two-day policy meeting in Washington.
In the meantime, a host of corporate earnings, both before and after the bell, will likely dictate trading over the next few days, with updates expected from General Electric , 3M , Verizon Communications and Lockheed Martin prior to the start of trading.
Video: Gold price may rise further, but there are still 'downside risks': UBS (CNBC)
Gold price may rise further, but there are still 'downside risks': UBS
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Johnson & Johnson will also publish its fourth quarter earnings before the opening bell, and may also update on progress in its coronavirus vaccine development amid questions as to whether AstraZeneca will get clearance for its candidate from health officials in Europe and the United States.
Collective S&P 500 earnings are expected to decline 5.7% from last year to a share-weighted $324.8 billion, according to data from Refinitiv, before rebounding 18.1% over the first three months of the year.
Futures contracts tied to the Dow Jones Industrial Average suggest a modest 15 point opening bell decline, while those linked to the S&P 500 suggest a 7 point pullback. Nasdaq Composite futures are indicating a 40 point retreat for the tech-focused benchmark.
Two notable movers from yesterday's session -- GameStop and AMC Entertainment Holdings -- were back on the rise in pre-market trading Tuesday, with the video game retailer rising 18.4% to indicate an opening bell price of $90.90 each and the world's biggest movie theatre chain rising 17.2% to $5.18 each.
Both stocks, as well as BlackBerry Ltd , have been the subject of intense retail investor focus over the past few sessions, with hundreds of millions of shares changing hands amid limited information flows, a condition that ignites concern for the state of risk tolerance in a market that is well ahead, in terms of performance, than the underlying economy it is ostensibly meant to represent.
A further reflection of that caution came from the CBOE's key indicator of equity volatility, the VIX, which was marked 7.5% higher and marked at a two-week high of 23.47 points in extended trading.
Elsewhere, The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.1% higher on the session at 90.466, while benchmark 10-year Treasury note yields slipped to 1.048% in the cautious overnight session.
In Europe, better-than-expected earnings from Swiss bank UBS, as well as well as the German chemical group Linde, powered the region-wide Stoxx 600 to an early 0.7% gain, with Germany's DAX performance index rising 1.4% in Frankfurt.
Overnight in Asia, stocks slumped the most in nearly two months amid questions over the size and timing of the U.S. stimulus package as well as the worrying rise of coronavirus infections in some of the region's largest economies more than a year after it was first identified in the central industrial city of Wuhan.
Japan's Nikkei 225 closed 0.96% lower at 28,546.18 points while the region-wide MSCI ex-Japan index was marked 1.67% lower heading into the final hours of trading.
This article was originally published by TheStreet.