The futures markets are trading higher this morning after a slew of earnings results were digested by the market after the close yesterday and before the open today. These include those of Dow-30 component CVS Health Corp (CVS), which rose after reporting better earnings than analysts’ expectations, while it cut its fiscal 2024 full-year profit outlook due to increased medical costs. Additionally, shares of regional bank New York Community Bank (NYCB) have been volatile this morning following several days of selling pressure due to an unexpected fourth-quarter loss and a dividend cut last week. The bank and its stock received downgrades from credit rating agencies and analysts over the past 24 hours, but rallied some on news that it had named a new executive chairman of the board.
Overall, the earnings news has been positive, and the price action from the futures suggests a positive start to the trading day. Later, several regional Federal Reserve Presidents will give speeches on the economy and monetary policy, which may well impact market sentiment.
The major indexes started in the green yesterday after several companies reported earnings results and 2024 outlooks. Stocks largely traded sideways throughout much of the day before turning higher in the final portion of the trading session. Overall, the S&P 500 rose 11 points (up 0.23%), the NASDAQ increased 11 points (up 0.07%), and the Dow Jones Industrial Average was up 141 points (up 0.37%). Market breadth was rather positive, with advancers outpacing decliners by a 2.5-to-1.0 ratio. Material stocks were among the best performers, while Technology equities were among the worst performers.
In commodity news, oil prices rose yesterday as traders priced in projections of flattening production growth in the United States. Elsewhere, U.S. Treasury bond yields were mixed, with short-term rates rising and long-term ones falling. The yield curve remains inverted as short-term rates remain higher than those with longer durations. Traders are also pricing in around 20% odds of a rate cut at the next Federal Open Market Committee (FOMC) meeting in March even after Fed Chairman Jerome Powell implied that rate cuts may take longer to come through than the investment community had anticipated. Several regional Fed Presidents have reiterated this sentiment this week. The Chicago Board Options Exchange Volatility Index, or VIX, fell considerably yesterday as traders demanded less options protection. This index continued to move lower after a spike in the early portion of trading Monday.
A few economic reports are on the docket for the days ahead. These include initial jobless claims on Thursday and the Consumer Price Index (CPI) seasonal factor revisions on Friday. Elsewhere, several hundred companies will release quarterly results and annual outlooks in the coming days. This notably includes entertainment conglomerate and Dow-30 component, The Walt Disney Company (DIS) after the close today. - 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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