The stock futures are mixed this morning, with a slew of earnings reports having an impact on investor sentiment. The NASDAQ and S&P 500 futures are trading in the red, following a few underwhelming releases from companies such as Netflix (NFLX), which posted weaker-than-expected revenues. At the same time, Tesla (TSLA) shares tumbled on news that vehicle production would slow due to plant shutdowns related to factory improvements. However, the Dow Jones Industrial Average futures is holding up better on news that Johnson & Johnson (JNJ) announced stronger-than-expected earnings and revenues and raised its full-year outlook. Overall, these reports suggest a mixed start to the trading day. A few economic reports will be released after the opening bell, and could impact trading, such as existing home sales and the Conference Board's U.S. Leading Economic Indicators Index.
The market started higher yesterday, buoyed by stronger earnings results and positive market sentiment. However, the markets trended lower through the remainder of the day, but finished above breakeven levels. Overall, the S&P 500 rose 11 points (up 0.24%), the NASDAQ increased four points (up 0.03%), and the Dow Jones Industrial Average climbed 109 points (up 0.31%). Market breadth was quite positive, as advancers outpaced decliners by a 1.9-to-1.0 ratio. Interest-rate-sensitive REITs’ and utilities' stocks were among the best performers, aided by a decline in interest rates. On the other hand, materials equities were among the weakest performers.
In commodities news, oil prices fell slightly yesterday, despite a drop in inventories. This commodity has been trending higher in recent weeks, reflecting improved sentiment for global demand. Meantime, U.S. Treasury bond yields were much lower following the release of inflationary data in the United Kingdom. Traders thought this report would suggest that global monetary tightening would end sooner than prior expectations. The Chicago Board Options Exchange Volatility Index, or VIX, more commonly known as the fear index, increased throughout the day yesterday. The VIX remains close to its lowest levels of the year, showing that traders have been less eager to pay for options protection against volatility.
The calendar is bereft of economic news on Friday. That said, most eyes will be waiting for the outcome of next week's Federal Open Market Committee meeting. Traders are largely expecting the Fed to hike interest rates by 25 basis points but will look to glean any information about future monetary tightening in the months ahead. Elsewhere, several hundred companies will report quarterly results in the coming days, which should give further insight into how companies are faring. These reports include Dow-30 component American Express (AXP), which will report earnings before tomorrow's opening bell. - 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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