The futures markets are positive this morning, following strong earnings reports from several companies after yesterday's close and this morning before the opening bell. Among the releases them was Netflix (NFLX) after the market closed yesterday, which reported an impressive increase of 18.91 million subscribers in the fourth quarter, prompting traders to rapidly bid the stock up. Additionally, Dow-30 component Procter & Gamble (PG) reported better-than-expected earnings, as consumers have been purchasing more household products. The company also reaffirmed its fiscal 2025 forecast. In contrast, Dow-30 member Johnson & Johnson (JNJ) reported strong revenue and profit gains in the latest period, but cautioned that growth in fiscal 2025 will be weighted toward the second half of the year. The market did not receive this guidance well. Overall, positive earnings results have boosted investor sentiment, suggesting a strong start to the trading day.
The stock market started positively yesterday following the recess due to the Martin Luther King Jr. Day Holiday and the inauguration of a new U.S. Presidential Administration. Investors believe that President Trump's policies will be more business-friendly, and investors have started to price in a longer ramp up time for tariffs on goods from abroad. This led to a strong start for the major market indices. However, the markets moved lower for a brief spell early in the day before resuming the march higher, and the major market indices ended near their highs of the day. Overall, the S&P 500 increased 53 points (up 0.88%), the NASDAQ gained 127 points (up 0.64%), and the Dow Jones Industrial Average was higher by 538 points (up 1.24%). Market breadth was very positive, as advancers outpaced decliners by a 4.1-to-1.0 ratio. Industrial stocks were amongst the best performers on the day, while energy issues were amongst the worst performers.
In commodity news, oil prices have continued to slide following several developments. President Trump signed an executive order Monday to exit from the Paris Climate Agreement and instructed the Energy Department to lift the freeze on LNG export permit applications. Traders digested these developments, along with the new Administration’s announcements indicating it would be much more amenable to new oil projects, as it anticipates higher future supply flows, causing prices to decline for the commodity.
Elsewhere, U.S. Treasury bond yields largely increased as traders moved out of the safe haven asset. The Chicago Board Options Exchange Volatility Index, or VIX, commonly known as the fear index, declined rapidly through the day yesterday, as traders moved away from options protection while piling into equities.
Several economic reports are scheduled in the days ahead. These include initial jobless claims on Thursday, while existing home sales, the final University of Michigan Consumer Sentiment Report for January, and the S&P flash U.S. Services and Manufacturing Purchasing Managers Indices will be released on Friday. Elsewhere, several hundred companies will be releasing their quarterly results, including many large financial institutions and several communications companies such as Dow component Verizon Communications (VZ). - John E. Seibert III
At the time of this article’s writing, the author held positions in one or more of the companies mentioned.
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