Here are five things you must know for Wednesday, February2:
1. -- Stock Futures Edge Higher, Paced By Big Tech Gains
U.S. equity futures nudged higher Wednesday, potentially extending the strongest three-day rally on Wall Street in two years, powered by better-than-expected tech sector earnings and fading bets of a big rate increase from the Federal Reserve.
Google's (GOOGL) blowout fourth quarter earnings after the close of trading last night, alongside plans to split its 3,000 stock down to around $150 a share, coupled with a robust chip sector outlook from Advanced Micro Devices (AMD) looks set to rip tech stocks higher Wednesday, clawing back losses from the sector's worst January performance in more than a decade.
Stocks are also getting help from fading bets on a 50 basis point rate hike from the Fed next month, with the CME Group's FedWatch tool indicating a 90.5% chance of a 25 basis point move as more data suggests a modest slowing of the U.S. economy's post-pandemic recovery.
Still, faster-than-expected inflation figures from Europe today, showing the region's estimate of harmonized consumer prices rose 5.1% last month -- the fastest on record -- is a reminder that the 'transitory' narrative is no longer in place, and quicker U.S. readings could alter the Fed's policy tract in the months ahead.
Oil prices are also trading near seven-year highs again Wednesday ahead of a key meeting of OPEC leaders in Vienna, where the cartel and its allies, including Russia, are likely to stick to plans that will only add small increases to their output in the months ahead.
Brent crude contracts for April delivery, the global pricing benchmark, were last seen 11 cents higher on the session at $89.32 per barrel.
On Wall Street, futures tied to the Dow Jones Industrial Average are indicating a 45 point opening bell gain while those linked to the S&P 500 are priced for a 35 point move to the upside.
Google, AMD and Nvidia (NVDA) are giving Nasdaq Composite futures a solid boost, with the tech-focused benchmark indicating a 225 point opening bell gain as benchmark 10-year note yields ease to 1.779%.
2. -- Google Shares Surge After Blasting Q4 Earnings, Unveiling 20-For-1 Split
Google shares surged higher in pre-market trading, setting up the potential for a record high open, after the ad sales and tech giant blasted Wall Street earnings forecasts and planned a 20-for-1 split of its $3,000 stock.
Alphabet, Google's parent company, said earnings for the three months ended in December came in at a record $20.6 billion, or $30.69 per share, up 37.6% from the same period last year and well ahead of the Street consensus forecast of $27.48 per share. Group revenues were up 32.3% to an all-time high of $75.3 billion.
Google also said it has approved a 20-for-1 stock split, following similar moves by Apple (AAPL) and Tesla (TSLA) over the past two years, that would give each investor a special 'one-time' dividend of 19 shares for each of its Google holdings. CFO Ruth Porat said the decision was aimed a "making our shares more accessible."
Google shares were marked 10.6% higher in pre-market trading to indicate an opening bell price of $,3044.90 each.
3. -- AMD Shares Soar As Chipmaker Beats On Earnings, Sees Big 2022 Demand Boost
Advanced Micro Devices (AMD) shares soared higher in pre-market trading after the chipmaker posted record fourth quarter earnings and issued a bullish sector forecast for the coming year.
AMD said 2022 revenues should come in north of $21.5 billion, well ahead of the Refinitiv forecast of around $19.25 billion, thanks to surging demand for its data center chips.
For the three months ending in December, AMD posted earnings of 92 cents per share, topping Street forecasts by 16 cents, on adjusted revenues of $4.83 billion.
"We made outstanding progress in the last year. We exit 2021 with data center revenue contributing a mid-20s percentage of overall revenue," CEO Lisa Su told investors on a conference call late Tuesday. "And we expect 2022 to be another year of significant growth based on the strong customer demand signals for our current and next generation products."
AMD shares were marked 11.5% higher in pre-market trading Wednesday to indicate an opening bell price of $130.25 each.
4. -- PayPal Shares Plunge After Muted Near-Term Outlook
PayPal (PYPL) shares plunged in pre-market trading after the group cautioned that Ebay's (EBAY) decision to go with an in-house system payments system would carve more than $600 million from its near-term revenue forecast.
PayPal posted a set of fourth quarter earnings figures that were largely in-line with TheStreet, as revenues rose 13% to $6.9 billion over the three months ending in December, generating a bottom line of $1.11 per share.
PayPal's 2022 forecasts were also affected by a strategy shift that will focus on customer engagement over account growth, a move that could improve margins by concentrating on higher-end users but is likely to result in much slower-than-expected net new account growth.
PayPal shares were marked 16.7% lower in pre-market trading to indicate an opening bell price of $146.30 each.
5. -- Starbucks Sees More Menu Price Hikes to Offset Input Costs
Starbucks Corp. (SBUX) shares moved lower in pre-market trading after the world's biggest coffee chain posted softer-than-expected December quarter earnings as input costs and store closures eroded its bottom line.
Starbucks said restrictions in China, its fastest-growing market, delay store re-openings as the government pursues its 'zero-Covid' policy. Alongside big increases in materials costs, as well as labor, Starbucks is looking to boost menu prices again this year to compensate, adding it will also cut down on marketing and advertising.
"To help offset the higher-than-expected expense of this benefit, we are taking the necessary measures to reduce spending in discretionary areas of our U.S. P&L," CEO Kevin Johnson told investors on a conference call late Tuesday. "As an example, with strong customer demand, we believe we can tighten up a bit more in ... promotional spend and marketing. We believe these measures are prudent as we work to balance increasing cost pressures with our commitment to our partners."
For the three months ending in December, Starbucks' fiscal first quarter, the group earned 72 cents a share on revenues of $$8.1 billion.
Starbucks shares were marked 3% lower in pre-market trading to indicate an opening bell price of $95.58 each.
