Futures Pointing To Another Mixed Performance On Wall Street

The major U.S. index futures are currently pointing to a mixed open on Tuesday, with stocks likely to once again move in opposite directions after ending the previous session mixed.

The Dow may benefit from early strength among shares of Johnson & Johnson (JNJ) and 3M (MMM), which are moving to the upside in pre-market trading.

The gains by J&J and 3M come after the healthcare giant and diversified manufacturer both reported quarterly results that exceeded analyst estimates on both the top and bottom lines.

On the other hand, fellow Dow components American Express (AXP) and Verizon (VZ) are seeing pre-market weakness despite reporting better than expected fourth quarter earnings.

Shares of General Electric (GE) are moving sharply higher in pre-market trading after the industrial conglomerate reported a surge in fourth quarter net profits amid better than expected revenues and cash flow.

Microsoft (MSFT), Advanced Micro Devices (AMD), Capital One (COF), and Starbucks (SBUX) are among the companies releasing their quarterly results after the close of trading.

Profit taking may lead to a modest pullback by the Nasdaq after the tech-heavy index climbed to a new record closing high on Monday.

Stocks fluctuated over the course of the trading session on Monday before eventually ending the day mixed. While the Dow closed modestly lower, the broader Nasdaq and S&P 500 reached new record closing highs.

The Dow climbed well off its worst levels of the day but still edged down 36.98 points or 0.1 percent to 30,960.00. Meanwhile, the Nasdaq climbed 92.93 points or 0.7 percent to 13,635.99 and the S&P 500 rose 13.89 points or 0.4 percent to 3,855.36.

The continued advance by the Nasdaq came as traders expressed optimism about upcoming earnings from big-name tech companies.

Tesla (TSLA), Apple (AAPL) and Microsoft (MSFT) moved notably higher ahead of the release of their quarterly results later this week.

On the other hand, the modest drop by the Dow comes as American Express (AXP) and Caterpillar (CAT) moved to the downside ahead of the release of their quarterly results.

Traders also kept an eye on developments in Washington amid reports of intensifying Republican opposition to President Joe Biden’s proposed $1.9 trillion stimulus package.

A number of GOP Senators have expressed skepticism about the need for additional stimulus after recently approving a $900 billion relief package.

Republicans have expressed support for some elements of Biden’s proposal but have raised concerns about other initiatives as well as the price tag for the overall bill.

Biotechnology stocks showed a substantial move to the upside on the day, driving the NYSE Arca Biotechnology Index up by 2.1 percent to a record closing high.

Regeneron Pharmaceuticals (REGN) posted a strong gain after BMO Capital upgraded its rating on the company’s stock to Outperform from Market Perform.

Considerable strength was also visible among utilities stocks, as reflected by the 1.7 percent gain posted by the Dow Jones Utility Average.

On the other hand, oil service stocks moved sharply lower on the day, dragging the Philadelphia Oil Service Index down by 3.4 percent. The sell-off by oil service stocks came despite an increase by the price of crude oil.

Airline stocks also showed a significant move to the downside on the day, resulting in a 2.7 percent slump by the NYSE Arca Airline Index.

Commodity, Currency Markets

Crude oil futures are rising $0.26 to $53.03 a barrel after climbing $0.50 to $52.77 a barrel on Monday. Meanwhile, after edging down $1 to $1,855.20 an ounce in the previous session, gold futures are inching up $0.50 to $1,855.70 an ounce.

On the currency front, the U.S. dollar is trading at 103.64 yen compared to the 103.75 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.2155 compared to yesterday’s $1.2139.

Asia

Asian stocks fell in thin holiday trading on Tuesday amid uncertainty over a U.S. stimulus package and concerns over delays in distributing Covid-19 vaccines. Investors also awaited cues from a two-day policy meeting of the U.S. Federal Reserve starting later today.

Chinese shares ended lower as financials succumbed to selling pressure against a backdrop of tightening liquidity conditions. With short-term rates hitting pre-Covid levels, speculation was rife that the country’s central bank might adopt a tightening bias in its monetary policy.

The benchmark Shanghai Composite Index slumped 54.81 points, or 1.5 percent, to 3,569.43, while Hong Kong’s Hang Seng Index plunged 767.75 points, or 2.6 percent, to 29,391.26.

Japanese shares tumbled on worries about potential roadblocks to the Biden administration’s $1.9 trillion stimulus and delays in distributing coronavirus vaccines.

The Nikkei 225 Index ended down 276.11 points, or 1 percent, at 28,546.18, retreating from the 30-year high logged the previous day. The broader Topix closed 0.8 percent lower at 1,848.

Marine transportation issues fell, with Nippon Yusen losing 4.5 percent and Kawasaki Kisen giving up 6 percent. Steelmakers Kobe Steel and JFE Holdings shed 2.9 percent and 5.5 percent, respectively.

In economic news, minutes of the Bank of Japan’s December meeting showed some discussions on the topic of exchange rates and further policy easing in light of the economic stresses caused by the pandemic.

Australian markets were closed in observance of Australia Day. New Zealand shares fell, dragged down by utility and tourism-related stocks.

The benchmark NZX 50 Index dropped 75.64 points, or 0.6 percent, to 13,323.46, a day after the country confirmed its first case of Covid-19 in several months, leading neighboring Australia to suspend a travel bubble with the country for 72 hours. Auckland International Airport fell 2.8 percent and Contact Energy lost 3.7 percent.

The services sector in New Zealand continued to contract in December, albeit at a slower pace, the latest survey from BusinessNZ showed with a Performance of Services Index score of 49.2, up from 46.7 in November.

Seoul stocks fell sharply as foreign and institutional investors locked in profits. The benchmark Kospi tumbled 68.68 points, or 2.1 percent, to 3,140.31 after hitting a record high in the previous session. Samsung Electronics, Hyundai Motor, LG Chem and SK Hynix lost 3-4 percent.

South Korea’s gross domestic product climbed a seasonally adjusted 1.1 percent sequentially in the fourth quarter of 2020, the Bank of Korea said in an advance estimate. That beat expectations for an increase of 0.7 percent following the 2.1 percent gain in the previous three months.

On a yearly basis, GDP sank 1.4 percent compared to forecasts for a drop of 1.7 percent following the 1.1 percent decline in the three months prior.

Europe

European stocks have rebounded on Tuesday after two sessions of declines despite the escalation of U.S.-China tensions in the South China Sea, continued political uncertainty in Italy and doubts over the speed and size of U.S. stimulus.

Investors await a two-day policy meeting of the U.S. Federal Reserve starting later today for guidance on rates and any outlook on the Fed’s bond-buying plan.

While the German DAX Index has surged up by 1.9 percent, the French CAC 40 Index is up by 1.4 percent and the U.K.’s FTSE 100 Index is up by 0.8 percent.

UBS shares have jumped after the Swiss wealth manager reported a surge in quarterly net profit and said it plans to buy back as much as 4 billion francs ($4.5 billion) worth of shares over the next three years.

Swedish buyout group EQT has also soared after it agreed to take over global real estate investment manager Exeter Property Group.

Hikma Pharmaceuticals has also risen. The company confirmed that it has entered into a non-binding term sheet with GlaxoSmithKline S.A.E., the Egyptian subsidiary of GlaxoSmithKline plc.

On the other hand, Swiss drug maker Novartis has slid after its fourth-quarter sales and core net income came in below estimates.

Aerospace company Rolls Royce has also slumped after it warned of significant uncertainty over the “precise shape and timing of the recovery in air traffic”.

JD Sports Fashion has also moved lower. The company announced that it is exploring additional funding options with a view to increasing its flexibility to invest in future strategic opportunities and that this may involve a non-pre-emptive equity placing.

British Airways owner IAG and EasyJet have also come under pressure amid the prospect of tougher restrictions in England and other European countries.

In economic news, the U.K. unemployment rate increased and the employment rate continued to decline in three months to November, labor force survey results from the Office for National Statistics showed.

The jobless rate rose 0.6 percentage points from the previous quarter to 5 percent in the three months to November. The expected rate was 5.1 percent.

At the same time, the employment rate dropped 0.4 percentage points sequentially to 75.2 percent. Employment decreased by 88,000 on the quarter.

The number of people out of work increased by 202,000 on quarter to 1.72 million in the three months to November.

U.S. Economic Reports

Standard & Poor’s is scheduled to release its report on home prices in major metropolitan areas in the month of November at 9 am ET.

At 10 am ET, the Conference Board is due to release its report on consumer confidence in the month of January. The consumer confidence index is expected to edge down to 88.5 in January from 88.6 in December.

The Treasury Department is scheduled to announce the results of its auction of $61 billion worth of five-year notes at 1 pm ET.

Stocks In Focus

Shares of Etsy (ETSY) are moving sharply higher in pre-market trading after Tesla (TSLA) CEO Elon Musk tweeted that he “kinda loves” the online arts and crafts retailer.

Private equity firm Apollo Global Management (AGO) is also likely to see initial strength after announcing Leon Black it stepping down as CEO following an investigation of his previous professional relationship with Jeffrey Epstein.

Shares of Polaris (PII) may also move to the upside after the recreational vehicle maker reported better than expected fourth quarter results and provided upbeat guidance.

On the other hand, shares of CureVac (CVAC) may come under pressure after the biopharmaceutical company announced an underwritten public offering of 5 million common shares.