Today’s Big Picture
Asia-Pacific equity markets finished the day lower except for Taiwan’s TAIEX which gained 0.20%, and Japan’s Nikkei which added 0.54% on a combination of last week’s tech earnings and a still weakening Yen. Hong Kong’s Hang Seng declined 0.15%, India’s SENSEX shed 0.49%, South Korea’s KOSPI gave back 0.92%, and Australia’s ASX All Ordinaries closed 0.96% lower. China’s Shanghai Composite fell an additional 1.02%, putting it down just over 10% YTD despite the government’s attempts to stabilize that market. Major European markets are higher in midday trading, and U.S. equity futures are pointing to a lower open.
We start the week off as the market digests Fed Chair Jerome Powell’s 60 Minutes interview on Sunday night. Powell largely reiterated his comments last week following the Fed policy meeting that a rate cut at the Fed’s March meeting is unlikely. With the economy continuing to surprise to the upside, something we saw in last week’s January Employment Report, Powell shared the central bank remains on guard in case inflation becomes “more persistent.”
The Atlanta Fed’s GDPNow Model was already at 4.2% for the current quarter heading into the stronger-than-expected jobs report. Odds are that the forecast will be revised, but we’ll have a much better sense once Monday’s ISM Non-Manufacturing Services PMI report is published. With a barrage of Fed speakers returning to the stage this week, we would expect them to largely reiterate Powell’s message that the Fed needs to take a prudent approach in dialing back monetary policy and also remind everyone that it’s only a matter of time before they start. Today’s calendar for Fed speakers includes Chicago Fed President Austan Goolsbee at 10 AM ET, Atlanta Fed President Raphael Bostic at 2 PM ET, and Philadelphia Fed President Patrick Harker at 7 PM ET this evening.
Data Download
International Economy
The au Jibun Bank Japan Services PMI was revised higher to 53.1 in January from the flash reading of 52.7 and a final 51.5 in December. It marked the 17th straight month of expansion in the service sector and the strongest pace since September due to a faster rise in new business inflows, while foreign demand grew for the first time in five months.
The Caixin China General Service PMI inched down to 52.7 in January from December’s five-month high of 52.9 amid softer rises in new orders. It was the 13th straight month of expansion in services activity, signaling a further solid increase in service sector output, supported by firmer underlying demand conditions and new customer wins.
The HCOB Eurozone Services PMI fell to 48.4 in January from 48.8 in the previous month, missing earlier market estimates of 49 and pointing to the sixth consecutive contraction in the currency bloc’s services activity. New business dropped for the seventh consecutive month, underscoring weak demand conditions as high borrowing costs continued to magnify muted consumer appetite.
The S&P Global UK Services PMI rose to 54.3 in January of 2024 from 53.4 in the previous month, revised higher from preliminary estimates of 53.8 to point to the sharpest growth rate in the British services activity in eight months. Firms signaled a sharp increase in new business activity, attributed to strengthening economic conditions and client confidence.
Industrial producer prices in the Euro Area dropped by 0.8% MoM in December, marking the largest decline since May 2023.
China pledged to stabilize markets after shares sank to a five-year low in chaotic trading on Friday. Over the weekend, the China Securities Regulatory Commission vowed to prevent abnormal fluctuations, saying it would guide more medium- and long-term funds into the market and crack down on illegal activities including malicious short-selling and insider trading.
After three days of attacks, the U.S. vowed more strikes against Iran’s forces and its proxies in the Middle East if attacks on commercial ships in the Red Sea continue, although White House National Security Advisor Jake Sullivan clarified that President Joe Biden “is not looking for a wider war.” In response, the Houthis said they would retaliate meeting “escalation with escalation.”
Domestic Economy
At 9:45 AM ET, S&P Global will publish its final January Services PMI, which is expected to increase to 52.9 from 51.4 the previous month. Then at 10 AM ET, ISM will release its January Non-Manufacturing Index and that figure is forecasted to come in at 52 compared to December’s 50.6 reading. Inside both reports, market watchers will be interested in what is captured regarding new order activity, inflation pressures, and employment trends.
The next iteration of the Federal Reserve Senior Loan Officer Survey (SLOOS) report will be issued at 2 PM ET. It will describe current credit conditions and loan activity, a potential harbinger of economic activity.
Markets
Meta Platforms’ (META) 20.32% rise, fueled by earnings, including their first-ever dividend announcement pushed Communication Services ahead 4.02% while Amazon’s (AMZN) 7.87% gain helped the Consumer Discretionary sector add 1.79% and Microsoft (MSFT) and Nvidia (NVDA) combined to contribute to almost 70% of Technology’s 1.03% return at the close. Outside of those sectors, the rest of the market was mixed, with Utilities (-1.80%) and Real Estate (-1.26%) leading lower. As has been the case through many of 2024 trading days so far, the Russell 2000 was the only major index to fall, down 0.59% while the Dow gained 0.35%, the S&P 500 rose 1.07% and the Nasdaq Composite closed 1.74% higher.
We already covered market moving names above, but another big gainer was Edwards Lifescience Corporation (EW) which saw shares bid up 9.38% after it was announced that the company had received FDA approval for its tricuspid valve replacement system. Here’s how the major market indicators stack up year-to-date:
- Dow Jones Industrial Average: 2.56%
- S&P 500: 3.96%
- Nasdaq Composite: 4.11%
- Russell 2000: -3.17%
- Bitcoin (BTC-USD): 2.80%
- Ether (ETH-USD): 0.48%
Stocks to Watch
Caterpillar (CAT), Estee Lauder (EL), McDonald’s (MCD), On Semiconductor (ON), and Tyson Foods (TSN) are expected to release quarterly earnings before equities begin trading later this morning. Pre-market breadth is a little wider today as 286 names in the S&P 500 have traded hands so far this morning with 99 gainers and 187 decliners. Shares of Air Products and Chemicals (APD) are on track to open about 9% lower than Friday’s close after this morning’s earnings and outlook release. Estee Lauder Companies (EL) is surging over 12% after this morning’s earnings release which included the announcement of a restructuring program. Catalent (CTLT) shares are up a similar amount after this morning’s announcement that they are to be acquired by Novo Holdings, the controlling shareholder of Novo Nordisk A/S (NVO), for $16.5 billion.
Boeing (BA) encountered another setback, finding more mistakes with holes drilled in the fuselage of its 737 Max jet.
Foxconn (FXCOF), the world’s largest contract electronics maker, expects its business this year to be “slightly better” than last year but is facing a shortage of chips for AI servers. Foxconn will report its fourth-quarter earnings next month when it will also update its outlook for this year.
Sphere Entertainment (SPHR) and the NFL announced a collaboration that will see custom Super Bowl LVIII content, created exclusively by Sphere Studios, displayed on Sphere’s fully programmable LED exterior — the Exosphere — throughout Super Bowl Week.
Tesla (TSLA) opened its first South American store last week at an upscale mall located in Santiago, Chile.
IPOs
The market is expected to price three IPO offerings this week – American Healthcare REIT (AHR), Kyverna Therapeutics (KYTC), and the Fortega Group (TFG). Readers who want to dig deeper into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.
After Today’s Market Close
Chegg (CHGG), NXP Semiconductor (NXPI), Palantir Technologies (PLTR), and Simon Prosperities (SPG) are expected to report quarterly results after equities stop trading today. Those looking for more on upcoming quarterly earnings reports should head on over to Nasdaq’s Earnings Calendar.
On the Horizon
Tuesday, February 6
- Eurozone: Retail Sales – December
Wednesday, February 7
- Eurozone: Consumer Inflation Expectations – December
- US: Consumer Credit – December
Thursday, February 8
- China: Inflation Rate, Producer Price Index – January
Thought for the Day
“Don’t wait until February to start living in January.” ― Anthony T. Hincks
Disclosures
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.