The futures markets are well in the green this morning, following several positive earnings reports after the close yesterday and before the open this morning. Shares of streaming content provider Netflix Inc. (NFLX) are notably higher in premarket trading following better subscriber numbers and a deal with sports entertainment company WWE (WWE) for Netflix’s first foray into live events. Other stocks have shown significantly positive price action this morning, suggesting a strong start to the trading day. After the market opens, the S&P Flash Services and Manufacturing Purchasing Managers’ Indices will be released, which may affect stocks during the trading session.
The stock market initially sold off yesterday, due to some profit-taking and underperformance in a few key stocks. However, buying occurred throughout the latter portion of the trading session and the markets eclipsed their previous levels. The S&P 500 reached a new all-time high for a third day in a row. Overall, the S&P 500 rose 14 points (up 0.29%) and the NASDAQ increased 66 points (up 0.43%). However, the Dow Jones Industrial Average was lower by 96 points (down 0.25%). The latter was dragged notably lower by soft results out of 3M Company (MMM), which was hurt by weaker-than-expected guidance for 2024 due to sluggish consumer demand and mixed industrial sales. Market breadth was divided, favoring neither the advancers nor decliners by a notable amount. Consumer Staples stocks were among the best performers, while REITs were among the weakest.
In commodity news, oil prices fell in the early portion of the trading session before recovering some, as traders priced in the potential for oversupplied conditions. Drilling has continued to increase in the United States, and sentiment weakened on the potential for slowdowns in the global economy. Elsewhere, U.S. Treasury bond yields were largely lower as traders priced in a higher amount of rate cuts. The Fed will hold its January Federal Open Market Committee (FOMC) meeting next week, and no change is expected in interest rates then. Still, traders are pricing in significant odds of a rate cut in March. The Chicago Board Options Exchange Volatility Index, or VIX, more commonly known as the fear index, largely fell, suggesting lower demand for options protection.
Several economic reports will be released in the coming days. These include the preliminary estimate for U.S. fourth-quarter GDP, initial jobless claims, and new home sales for December on Thursday. On Friday, the core- and non-core Personal Consumption Expenditures reports will be on the docket, which will show how well the consumer is faring. Elsewhere, hundreds of companies will report quarterly results in the days ahead and give insights into their expectations for 2024. This includes Dow-30 components International Business Machines (IBM) later today, Intel Corp. (INTC) and Dow Chemical (DOW) tomorrow, and American Express (AXP) on Friday. - 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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