Five things you need to know before the market opens on Friday February 3:
1. -- Stock Futures Lower On Tech Slump, Jobs Data In Focus
U.S. equity futures moved lower Friday, while the dollar held steady against its global peers, as investors reacted to a trio of disappointing earnings from the tech sector's biggest companies and braced for a crucial January jobs report.
Stocks have been riding solid gains for much of the week, powered in part by a dovish interpretation of Federal Reserve Chairman Jerome Powell's Wednesday press conference, where he warned that the central bank would likely continue raising its benchmark lending rate, but noted that good progress on inflation had already been made and disinflation in some sectors was beginning to accelerate.
The CMEGroup's FedWatch tool now suggests an 82.7% chance of a follow-on hike of 25 basis points in March, but sees that as the likely last hike of the cycle, even as Powell indicated a preference for "a couple more" moves to the upside.
That thesis is likely to face a stern test prior to the start of trading from data within the Bureau of Labor Statistics January employment report. Economists are expecting a net gain of 185,000 new jobs for the month, with the headline jobless rate likely holding at 3.5%.
Wage growth, however, is likely to be the market's key focus following data showing a marked slowdown in employment costs over the final months of last year, and yesterday's Challenger Gray report indicating layoffs for the month soared to 103,000, the highest since 2009.
Sentiment heading into the data, expected at 8:30 am eastern time, is likely to remain muted, however, following last night's December quarter updates from Apple, Amazon and Google, all of which undershot Wall Street forecasts amid myriad issues including supply chain disruptions, fading consumer demand and costs associated with big job cuts.
Heading into the start of the trading day on Wall Street, futures tied to the S&P 500 are priced for a 34 point opening bell gain while those linked to the Dow Jones Industrial Average are set for a 115 point pullback. The tech-focused Nasdaq was marked 203 points lower
Benchmark 10-year Treasury note yields were little-changed in overnight dealing at 3.396% in overnight trading, while 2-year notes heled at 4.096%. The U.S. dollar index, which tracks the greenback against a basket of its global peers, was marked 0.09% lower at 101.659.
In overseas markets, Europe's Stoxx 600 was marked 0.14% lower in early Frankfurt trading and largely tracking U.S. futures, while Asia's region-wide MSCI ex-Japan index slipped 0.27% and Japan's Nikkei 225 gained 0.39%
2. -- Apple Slides On Rare Earnings Miss, iPhone Sales Decline
Apple (AAPL) shares edged lower in pre-market trading after the tech giant posted its first quarter earnings miss in six years as supply chain snarls in China limited the availability of its high-end iPhones in U.S. stores and clipped holiday sales.
The company said iPhone sales, however, would accelerate over the three months ending in March, adding that overall gross margins would improve to between 43.5% and 44.5%.
For the three months ending in December, the group's fiscal first quarter, Apple said earnings were pegged at 88 cents per share down 58% from the same period last year and well shy of the Street consensus forecast of $1.94 per share. Group revenues, Apple said, fell 5.5% from last year to $117.15 billion, again missing analysts' estimates of $121.2 billion.
"We believe overall given the supply chain disaster that Apple saw this was better than feared iPhone number and ultimately more of a supply issue than a demand issue," said Wedbush analyst Dan Ives.
Apple shares were marked 3.13% lower in pre-market trading to indicate an opening bell price of $146.10 each.
3. -- Amazon Slumps After Weak Holiday Quarter, Muted Outlook
Amazon (AMZN) shares slumped lower in pre-market trading after the online retailing and cloud computing group posted weaker-than-expected fourth quarter earnings and a muted near-term outlook.
Amazon said online sales fell 2.3% from last year to to $64.53 billion, suggesting weakening consumer spending over the final months of the year, although overall revenues of $149.2 billion came in firmly ahead of Street forecasts. Amazon Web Services contributed $21.38 billion, rising 202.% from last year, a similar pace of growth recorded over the three months ending in September but just inside the Street forecast of around $22 billion.
Looking into the current quarter, Amazon said it sees operating income of between zero and $4 billion on revenues in the range of $121 billion to $126 billion, compared to the Refinitiv forecast of around $125.1billion.
Amazon shares were marked 5.54% lower in pre-market trading to indicate an opening bell price of $106.65 each.
4. -- Google Tumbles As Ad Sales Slide, Earnings Miss Street Forecasts
Google (GOOGL) shares moved lower after the ad-focused tech group posted softer-than-expected fourth quarter sales, amid an ongoing pullback in marketing spending from clients around that world, and said its recent round of job cuts would produce multi-billion hit to current quarter earnings.
Google said revenues from YouTube, its signature non-search platform, fell 7.7% to around $7.9 billion over the three months ending in December, while overall ad sales were down 3.6% to $59.04 billion. Group revenues came in at just over $76 billion, around $620 million shy of the Street consensus forecast.
Google's bottom line came in at $1.05 per share over the three months ending in December, compared to last year's split-adjusted figure of $1.53 per share, a tally that also missed Street forecasts by around $1.20 per share.
Google, which unveiled plans last month to cut around 12,000 jobs from its global workforce, said the layoffs would likely cost between $1.9 billion and $2.3 billion in severance and related charges, most of which will be recognized over the current quarter.
Google shares were marked 3.9% lower in pre-market trading to indicate an opening bell price of $103.50 each.
5. -- Nordstrom Soars As Reports Say Ryan Cohen Building Activist Stake
Nordstrom (JWN) shares soared higher in pre-market trading following reports that billionaire activist investors Ryan Cohen has built a significant stake in the struggling retailer and is pressing for a seat on the board.
Cohen, who has used his influence to push for strategy changes at Bed Bath & Beyond (BBBY), including the ouster of former CEO Mark Tritton, is reportedly seeking to have him removed from the Nordstrom board, where he has served since 2020. Cohen himself, the founder of Chewy.com (CHWY) and chairman of the video game retailer GameStop (GME), is not looking to sit on the board himself, but would like to see an e-commerce expert added to the 10-member committee.
Last month, Nordstrom said earnings for its fiscal 2022 year, which ends in February, would likely come in between $1.50 to $1.70 per share, well south of the $2.13 to $2.43 per share forecast it issued in late November, as holiday sales -- which were already heavily discounted -- fell to below pre-pandemic levels.
Nordstrom shares were marked 30.4% higher in pre-market trading to indicate an opening bell price of $27.56 each.
