Futures Pointing To Modestly Higher Open On Wall Street

The major U.S. index futures are currently pointing to a modestly higher open on Monday, with stocks poised to extend the significant rebound seen last Friday.

Traders may continue to look to pick up stocks at relatively reduced levels following the weakness seen throughout most of the previous week.

Buying interest may be somewhat subdued, however, as traders look ahead to the release of earnings news from a number of big-name companies this week.

General Electric (GE), Johnson & Johnson (JNJ), Verizon (VZ), Microsoft (MSFT), AT&T (T), Boeing (BA), IBM Corp. (IBM), Tesla (TSLA), Intel (INTC) and American Express (AXP) are just some of the companies due to report their quarterly results in the coming days.

Reports on durable goods orders, fourth quarter GDP, new home sales and personal income and spending are also likely to attract attention later in the week.

Additionally, next week’s Federal Reserve meeting is likely to remain on investors’ minds amid ongoing uncertainty about the outlook for interest rates.

The Fed is widely expected to further slow the pace of rate hikes to 25 basis points at its next meeting, but the possibility of additional rate hikes continues to hang over the markets.

Stocks moved sharply higher over the course of the trading session on Friday, regaining ground after posting steep losses for two straight days. Tech stocks helped lead the rebound, resulting in a particularly strong gain by the tech-heavy Nasdaq.

The major averages saw further upside going into the close, ending the session at their best levels of the day. While the Nasdaq spiked 288.17 points or 2.7 percent to 11,140.43, the S&P 500 surged 73.76 points or 1.9 percent to 3,972.61 and the Dow jumped 330.93 points or 1.0 percent to 33,375.49.

For the holiday-shortened week, the major averages turned in a mixed performance. The Nasdaq climbed by 0.6 percent, but the S&P 500 slid by 0.7 percent and the Dow tumbled by 2.7 percent.

The rebound on Wall Street came as traders looked to pick up stocks at relatively reduced levels following recent weakness, which reflected ongoing concerns about the outlook for the economy and interest rates.

The rally by tech stocks partly reflected a positive reaction to quarterly results from streaming giant Netflix (NFLX).

Shares of Netflix soared by 8.5 percent after the company reported fourth quarter earnings that missed analyst estimates but stronger than expected subscriber growth.

Netflix also announced Reed Hastings is stepping down as co-CEO, with COO Greg Peters assuming the post of co-CEO alongside Ted Sarandos.

Google parent Alphabet (GOOGL) also shot up by 5.3 percent after announcing plans to cut about 12,000 jobs or 6 percent of its workforce.

In U.S. economic news, the National Association of Realtors released a report showing a continued decline in U.S. existing home sales in the month of December, although the decrease was much smaller than economists had expected.

NAR said existing home sales slumped by 1.5 percent to an annual rate of 4.02 million in December after plunging by 7.9 percent to a revised rate of 4.08 million in November.

Economists had expected existing home sales to tumble by 3.4 percent to an annual rate of 3.95 million from the 4.09 million originally reported for the previous month.

Software stocks turned in some of the market’s best performances on the day, resulting in a 3.6 percent spike by the Dow Jones U.S. Software Index. The index ended the session at its best closing level in over a month.

Substantial strength was also visible among banking stocks, as reflected by the 3.1 percent surge by the KBW Bank Index.

Semiconductor stocks also showed a significant move to the upside, driving the Philadelphia Semiconductor Index up by 3.1 percent.

Retail, chemical and housing stocks also saw considerable strength on the day, moving higher along with most of the other major sectors.

Commodity, Currency Markets

Crude oil futures are rising $0.67 to $82.31 a barrel after jumping $1.03 to $81.64 a barrel last Friday. Meanwhile, after inching up $4.30 to $1,928.20 an ounce in the previous session, gold futures are edging down $0.50 to $1,927.70 an ounce.

On the currency front, the U.S. dollar is trading at 130.36 yen versus the 129.60 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.0872 compared to last Friday’s $1.0856.

Asia

Asian stocks ended mostly higher in thin trading on Monday, with markets in mainland China, Hong Kong, Singapore and Seoul closed for Lunar New Year celebrations. Chinese markets won’t resume trading until January 30.

Japanese shares rallied as the yen retreated from last week’s 7 1/2-month high and minutes of the Bank of Japan’s December policy meeting showed board members wanted to modify their yield control curve in order to improve market functionality.

The Nikkei 225 Index jumped 1.3 percent to 26,906.04, with chip-related stocks leading gains. The broader Topix ended 1.0 percent higher at 1,945.38.

Australian markets finished marginally higher as miners snapped a two-day winning streak, offsetting gains in the tech sector.

The benchmark S&P/ASX 200 Index closed up 5.10 points or 0.1 percent at 7,457.30, extending gains for the fourth day running and hitting its highest level since April 22 last year.

The broader All Ordinaries Index finished higher by 7.90 points 0.1 percent at 7,674.20. Tech heavyweight Block Inc surged 6.1 percent.

Across the Tasman, New Zealand shares ended slightly lower as the Labor Party caucus selected Chris Hipkins to succeed Jacinda Ardern as the country’s next prime minister.

Hipkins has stated he would switch focus from COVID-19 to bolstering the economy as recession looms after a series of sharp interest rate hikes.

The benchmark S&P/NZX-50 Index settled 0.2 percent lower at 11,948.72 ahead of the latest inflation figures due in the middle of the week.

Serko soared 8.7 percent after the business travel software maker upgraded its revenue guidance for the fiscal year.

Europe

European stocks are mostly higher on Monday as dovish Fed remarks help offset investor concerns of a global economic slowdown.

On a light day on the economic front, investors await Euro area consumer confidence survey results and a speech by ECB President Christine Lagarde at an event for directional cues.

While the U.K.’s FTSE 100 Index has climbed by 0.5 percent, the French CAC 40 Index is up by 0.3 percent and the German DAX Index is up by 0.2 percent.

Dignity Plc shares have soared. The British funeral service provider said it would be acquired by a consortium comprising investment firms SPWOne V Ltd, Castelnau Group and Phoenix Asset Management Partners.

Finnish critical networks and communications company Nokia Corp. has also advanced after it signed a new cross-license 5G patent agreement with Samsung Electronics.

Infrastructure group Balfour Beatty has also moved to the upside after it secured a 1.2 billion pounds contract from National Highways to deliver the ‘Roads North of the Thames’ package of works for the proposed Lower Thames Crossing.

Public transport provider National Express Group has also jumped. The company said that its unit National Express Rail GmbH has won a 1 billion euro contract for rail operations in Germany.

Saga has also rallied. The over-50’s travel operator said it is seeking buyers for its in-house insurance underwriting business.

Meanwhile, agricultural machinery company CNH Industrial NV has edged down slightly as union workers ratified a new contract with the company covering equipment factories in Mount Pleasant and in Burlington, Iowa.

Aerospace major Airbus SE has also dipped in Paris. The company is planning to spin off Zephyr, its solar powered high-altitude surveillance and communications drone program, with the intention of creating a standalone telecoms and earth observation business that will start commercial operations by the end of next year, Financial Times reported.

U.S. Economic Reports

The Conference Board is scheduled to release its report on leading U.S. economic indicators in the month of December at 10 am ET. The leading economic index is expected to decrease by 0.7 percent in December after slumping by 1.0 percent in November.

Stocks In Focus

Shares of Wayfair (W) are moving sharply higher in pre-market trading after JPMorgan upgraded its rating on the online retailer to Overweight from Underweight.

Cloud-based software giant Salesforce (CRM) is also likely to see initial strength amid reports activist investor Elliott Management has taken a multibillion-dollar stake in the company.

On the other hand, shares of Tapestry (TPR) may move to the downside after Barclays downgraded its rating on the Coach and Kate Spade parent to Equal Weight from Overweight.