The equities futures market is pointing to a higher open this morning, following an uneven day of trading yesterday.
Several positive earnings reports came out after yesterday's close, including one from Dow-30 component Nike (NKE). Coronavirus-related lockdowns hampered the apparel maker’s sales in China. However, the company showed notable growth across the rest of the globe, and margins fell less than expected, allowing the company to beat Wall Street's expectations. Meanwhile, delivery company FedEx Corp. (FDX) benefited from lowered expectations, and price increases helped to partially offset a decline in volumes. These reports have boosted the market, suggesting a positive start to the trading day.
Yesterday, a few economic reports showed some weakness. Annualized building permits in November fell to 1.34 million from 1.51 million, but housing starts held steady at 1.43 million. Still, the market finished the day slightly higher, breaking a four-day losing streak that followed the Fed's interest rate policy announcement. Overall, the S&P 500 rose 4 points, the NASDAQ finished up 1 point, and the Dow Jones Industrial Average increased by 92 points.
Moreover, market breadth favored the advancers over the decliners by a 1.1-to-1.0 ratio. Energy stocks were amongst the best performers, boosted by a rise in the underlying commodities. On the other hand, consumer discretionary equities were among the weakest performers.
In commodity news, oil prices increased yesterday, as demand expectations for China improved due to fewer coronavirus restrictions and the United States braces for colder weather this holiday weekend.
Elsewhere, U.S. Treasury bond yields increased slightly across the board, as traders sold government bonds after the Bank of Japan raised interest rates higher than expected. Money fled from U.S. bonds to Japanese-dominated debt, and the Japanese yen quickly improved against the dollar. The Chicago Board Options Exchange Volatility Index, or VIX, fell yesterday as demand for options protection declined.
Several economic reports will be released in the days ahead. These include initial and continuing jobless claims, the Chicago Fed National Activity Index, and the Index of Leading Economic Indicators on Thursday. On Friday, the core and noncore Personal Consumption Expenditures Index for November and the University of Michigan Consumer Sentiment Index for December are on the docket. Additionally, a few dozen companies will report quarterly earnings results in the days ahead. Overall, we expect most eyes will be on the coming inflationary data. - John E. Seibert III
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
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