Futures Pointing To Initial Strength On Wall Street

The major U.S. index futures are currently pointing to a higher open on Wednesday, with stocks likely to add to the modest gains posted during yesterday’s choppy trading session.

The markets may benefit from recent upward momentum, which helped lift the Dow and S&P 500 to record highs last week despite waning optimism about the Federal Reserve cutting interest rates in March.

While CME Group’s FedWatch Tool suggests the chances of March rate cut are just 20.5 percent, the Fed is still expected to begin lowering rates sometime in the coming months.

Recent upbeat economic data has seemingly reduced the likelihood of a near-term rate cut but a strong economy is still seen as a net positive for stocks.

A positive reaction to some of the latest earnings news may also generate buying interest, with shares of Enphase Energy (ENPH) soaring in pre-market trading after the solar inverter maker reported weaker than expected fourth quarter revenues but said it expects demand to improve throughout 2024.

Auto giant Ford (F) is also likely to see initial strength after reporting better than expected fourth quarter results, providing upbeat guidance for 2024 and announcing a supplemental dividend of 18 cents per share.

On the other hand, shares of Snap (SNAP) are plummeting in pre-market trading after the Snapchat parent reported mixed fourth quarter results and forecast first quarter sales below analyst estimates.

Following the significant volatility seen over the past few sessions, stocks showed a lack of direction throughout the trading day on Tuesday. The major averages spent the day bouncing back and forth across the unchanged line before eventually closing modestly higher.

The Dow climbed 141.24 points or 0.4 percent to 38,521.36, the S&P 500 rose 11.42 points or 0.2 percent to 4,954.23 and the Nasdaq inched up 11.32 points or 0.1 percent to 15,609.00.

The choppy trading on Wall Street came as some traders seemed reluctant to make significant moves amid uncertainty about the near-term outlook for the markets the following recent volatility.

Stocks fell sharply following the Federal Reserve’s monetary policy announcement last Wednesday but rebounded to record highs over the following two sessions only to pullback sharply once again in early trading on Monday.

While the major averages climbed well off Monday’s early lows, fading optimism the Fed will lower interest rates in March continued to hang over the markets.

A lack of major U.S. economic data also kept some traders on the sidelines following several key events last week.

Among individual stocks, shares of Palantir Technologies (PLTR) skyrocketed by 30.8 percent after the data analytics provider reported better than expected fourth quarter revenues amid strong demand for its artificial intelligence offerings.

Audio streaming service provider Spotify (SPOT) also jumped by 3.9 percent after reporting stronger than expected fourth quarter subscriber growth and providing upbeat guidance.

On the other hand, shares of Rambus (RMBS) plunged by 19.2 percent after the chipmaker reported a year-over-year decline in fourth quarter revenue.

While most of the major sectors showed only modest moves on the day, airline stocks showed a substantial move back to the upside.

Reflecting the strength in the sector, the NYSE Arca Airline Index soared by 5.3 percent after plunging by 2.9 percent on Monday.

Considerable strength was also visible among oil service stocks, as reflected by the 2.0 percent jump by the Philadelphia Oil Service Index. The strength in the sector came amid an increase by the price of crude oil.

Biotechnology, commercial real estate and healthcare stocks also moved notably higher, while semiconductor stocks showed a significant move to the downside.

Commodity, Currency Markets

Crude oil futures are advancing $0.61 to $73.92 a barrel after climbing $0.53 to $73.31 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $2,050.60, down $0.80 compared to the previous session’s close of $2,051.40. On Tuesday, gold rose $8.50.

On the currency front, the U.S. dollar is trading at 148.12 yen compared to the 147.94 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0776 compared to yesterday’s $1.0755.

Asia

Asian stocks rose broadly on Wednesday, with positive cues from Wall Street and hopes of more support from Beijing helping underpin investor sentiment.

Gold prices were little changed in Asian trading, as the dollar and yields fell despite hawkish comments from Federal Reserve officials.

Oil ticked higher but held in a tight range after industry data showed U.S. crude stocks grew less than expected during the week ended February 2.

China’s Shanghai Composite Index rallied 1.4 percent to 2,829.70, as policymakers redoubled efforts to crack down on market manipulation and revive the country’s wobbling financial markets.

In a notice, the China Securities Regulatory Commission urged companies to step up mergers and acquisitions and restructuring to enhance the value of listed companies.

Bloomberg reported that companies have spent more than $4 billion on buybacks after officials called on them to play their part.

Hong Kong’s Hang Seng Index slipped 0.3 percent to 16,081.89 after soaring 4 percent in the previous session.

Japanese markets edged down slightly, with tech and machinery stocks leading losses. The Nikkei 225 Index ended 0.1 percent lower at 36,119.92 after a choppy session. The broader Topix Index rose 0.4 percent to 2,549.95.

Mitsubishi Corp. soared 9.7 percent after the trading house announced a share buyback. Automaker Toyota Motor rallied 4 percent after its earnings upgrade.

Seoul stocks rose sharply to snap a two-day losing streak amid an extended buying streak by foreign investors. The Kospi jumped 1.3 percent to close at 2,609.58, with tech, battery and auto stocks leading advances. Samsung SDI, LG Energy Solution, Kia Motors and Hyundai Motor rallied 2-4 percent.

Australian markets eked out modest gains, led by utilities and material stocks. The benchmark S&P ASX 200 Index rose 0.5 percent to 7,615.80, while the broader All Ordinaries Index settled 0.5 percent higher at 7,850.90.

Woodside Energy Group rose half a percent, while Santos slumped 5.8 percent after they ended tie-up talks.

Across the Tasman, New Zealand’s benchmark S&P NZX-50 Index inched up 0.2 percent to 11,952.17.

New Zealand’s jobs market remained resilient with just a small uptick in the unemployment rate to 4 percent in the fourth quarter, Stats NZ data revealed.

Europe

European stocks have moved lower on Wednesday as traders digest hawkish comments from a slew of Federal Reserve officials and wait to see whether Chinese officials will unveil more effective measures to sustain a nascent market recovery.

Meanwhile, German industrial production posted a sharper-than-expected decline in December and France’s trade deficit increased at the end of the final quarter, while U.K. house prices increased for the fourth straight month in January, separate reports revealed earlier today.

While the U.K.’s FTSE 100 Index has fallen by 0.4 percent, the German DAX Index is down by 0.2 percent and the French CAC 40 Index is down by 0.1 percent.

Homebuilder Barratt Developments has plunged in London after it agreed to buy rival Redrow. Shares of the latter have spiked.

Supermarket group Sainsbury has also tumbled after reporting lower general merchandize sales in the 16 weeks to January 6.

Emerging market specialist Ashmore Group has also moved to the downside after reporting a decrease in first half adjusted profit.

Meanwhile, Carlsberg shares have rallied. The Danish brewer said it expects organic operating profit growth of 1-5 percent in 2024.

Vestas, the world’s leading wind turbine maker, has also surged after it swung to a full-year pre-tax profit, boosted by a strong order intake.

German computer software company TeamViewer has also moved sharply higher after its fourth quarter revenue beat estimates.

Bio-pharmaceutical firm Evotec has also jumped after expanding a collaboration with Advanced BioScience Laboratories to fight against HIV.

Siemens Energy has also risen after it swung to a 1.58 billion-euro ($1.7 billion) net profit in the first quarter and confirmed is full-year outlook.

U.S. Economic Reports

With imports increasing by more than exports, the Commerce Department released a report on Wednesday showing the U.S. trade deficit widened in the month of December.

The Commerce Department said the trade deficit increased to $62.2 billion in December from a revised $61.9 billion in November.

Economists had expected the trade deficit to narrow to $62.2 billion from the $63.2 billion originally reported for the previous month.

The wider trade deficit came as the value of imports shot up by $4.2 billion or 1.3 percent, while the value of exports jumped by $3.9 billion or 1.5 percent.

At 10:30 am ET, the Energy Information Administration is due to release its report on oil inventories in the week ended February 2nd.

Crude oil inventories are expected to increase by 2.1 million barrels after rising by 1.2 million barrels in the previous week.

Federal Reserve Board Governor Adriana Kugler is scheduled to speak on “The Outlook for the Economy and Monetary Policy” before the Brookings Institution at 11 am ET.

At 11:30 am ET, Boston Federal Reserve President Susan Collins is due to give perspectives on the economy before the Boston Economic Club.

Richmond Federal Reserve President Thomas Barkin is due to participate in a conversation before the Economic Club of Washington, D.C. at 12 pm ET.

At 1 pm ET, the Treasury Department is scheduled to announce the results of this month’s auction of $42 billion worth of ten-year notes.

Federal Reserve Board Governor Michelle Bowman is due to speak on “Supporting Entrepreneurship and Small Businesses” before a virtual “Uneven Outcomes in the Labor Market” conference at 2 pm ET.

At 3 pm ET, the Federal Reserve is scheduled to release its repot on consumer credit in the month of December. Consumer credit is expected to increase by $16.0 billion.

Stocks In Focus

Shares of Enphase Energy (ENPH) are moving sharply higher in pre-market trading after the solar inverter maker reported weaker than expected fourth quarter revenues but said it expects demand to improve throughout 2024.

Auto giant Ford (F) is also likely to see initial strength after reporting better than expected fourth quarter results, providing upbeat guidance for 2024 and announcing a supplemental dividend of 18 cents per share.

On the other hand, shares of Snap (SNAP) are plummeting in pre-market trading after the Snapchat parent reported mixed fourth quarter results and forecast first quarter sales below analyst estimates.

Rideshare giant Uber (UBER) is also seeing pre-market weakness despite reporting much better than expected fourth quarter earnings.