Five things you need to know before the market opens on Thursday January 26:
1. -- Stocks Futures Mixed Ahead of GDP, Jobs Data
U.S. equity futures traded mixed Thursday, while the dollar held near an eight month low against its global peers, as investors headed into another busy session for corporate earnings and the first estimate of economic growth for the fourth quarter.
The Commerce Department will release its advanced reading of fourth quarter GDP at 8:30 am eastern time, with economists looking for headline growth of around 2.6%, a marked slowdown from the 3.9% pace recorded over the three months ending in September.
The pace of gains, however, is likely to have moderated sharply over the final month of last year, thus carrying little momentum into the first quarter of 2023, as evidenced in part by the series of gloomy near-term forecasts unveiled during this week's corporate earnings parade.
Comcast (CMCSA), American Airlines (AAL), Southwest Airlines (LUV) and Mastercard (MA) will continue the earnings rush prior to the opening bell, with Intel (INTC) and Visa (V) expected after the close of trading.
The GDP data, alongside today's weekly jobless claims figures and tomorrow's PCE inflation reading for the month of December, will lead into next week's Federal Reserve policy meeting, which begins Tuesday in Washington, with investors debating the prospects of a near-term recession and looking for signals of a pause in rate hike projections following the seven increases put in place last year.
The Bank of Canada yesterday, in fact, indicated it may pause its rate-hike cycle, which it continued with a 25 basis point increase that took its benchmark rate to a 15-year high of 4.5%, as the economic outlook darkens.
The CME Group's FedWatch still suggests a 99.7% chance of a 25 basis point rate hike next week, with odds of a similar move in March pegged at 79.5%.
Benchmark 10-year Treasury note yields, meanwhile, were marked at 3.356% in overnight trading 3.476% while 2-year notes slipped to 4.133%, deepening the yield curve inversion that typically signals recession. The U.S. dollar index, which tracks the greenback against a baskets of its global peers, was marked 0.19% higher at 101.82, but still trading near the lowest levels in eight months.
Heading into the start of the trading day on Wall Street, futures tied to the the S&P 500 are priced for a 3 point opening bell gain while those linked to the Dow Jones Industrial Average are set for a 35 point decline. The tech-focused Nasdaq was marked 45 points lower.
In overseas markets, Europe's Stoxx 600 added 0.52% in early Frankfurt trading, while Asia's region-wide MSCI ex-Japan index touched a fresh seven-month high, rising 1.1%, as markets in Hong Kong re-opened following the three-day Lunar New Year holidays.
2. -- Tesla Soars As Bullish Musk Pushes Case For Big 2023 Delivery Gains
Tesla (TSLA) shares surged higher in pre-market trading after the carmaker posted better-than-expected fourth quarter earnings and vowed to exceed its own forecast of a 50% annual delivery growth rate.
CEO Elon Musk also said orders for the month of January to date were "the strongest in our history" and were nearly twice the rate of Tesla's global production, adding that without disruption, the company could deliver 2 million cars this year.
The group's stated forecast, however, calls for a delivery target of 1.8 million, a 37% increase from last year's levels that clashes with its 50% forecast.
For the December quarter, Tesla posted better-than-expected earnings of $1.19 per share on record revenues of $24.32 billion. A range of price cuts in both the U.S. and China, however, narrowed its gross automotive profit margin to 25.9%.
"Price really matters for EV sales," Musk told investors on a conference call after the company's earnings report. "Our price cuts will make a difference to the average consumer looking to buy a Tesla. Our goal is to make our cars as affordable as possible."
Tesla shares were marked 6.9% higher in pre-market trading to indicate an opening bell price of $154.40 each.
3. -- IBM Slides After Muted Q4 Earnings, Planned Job Cuts
IMB (IBM) shares moved lower in pre-market trading after its muted fourth quarter earnings while adding its name to the list of big tech companies slashing jobs in divisions around the world.
IBM said revenues for the three months ending in December were flat to last year at $16.7 billion and just ahead of the Street consensus forecast, but the 5.5% annual advance was the best in more than a decade. Adjusted earnings of $3.60 per share, a 7.5% increase from last year, essentially matched Street forecasts.
Revenues from Red Hat, the cloud computing group that IBM purchased for $34 billion in 2019, were up 10%, while software revenues rose 2.8% to $7.3 billion. Consulting revenues were up 0.5% to $4.8 billion.
The group also said it will cut around 3,900 jobs from its global workforce, a move linked in part to last year's spin-off of Kyndryl and the divesting of its healthcare data business. IBM said it would take a $300 million hit from the headcount reduction.
IBM shares were marked 2% lower in pre-market trading to indicate an opening bell price of $137.89 each.
4. -- Intel Earnings On Deck As Chip Sector Looks For Investment Rebound
Intel (INTC) shares edged higher in pre-market trading ahead of the chipmaker's fourth quarter earnings after the close of trading.
Intel, the country's biggest semiconductor company, is expected to post a bottom line of 20 cents per share for the three months ending in December, down from $1.09 per share last year, on revenues of $14.45 billion.
Intel cautioned investors last year that fourth quarter PC demand would weaken, and extend that decline into 2023, holding down gains for its client computing group.
Key to the company's sector outlook, however, will be its capital expenditure plans as it accelerates the rollout of new facilities in the U.S. and elsewhere, supported at home by billions in funds linked to President Joe Biden's CHIPS and Science Act of 2022. At the same time, Intel is looking to cut costs by was much as $3 billion this year, and a further $8 billion to $10 billion by 2025.
Intel shares were marked 0.64% higher in pre-market trading to indicate an opening bell price of $29.89 each.
5. -- Chevron Unveils Massive $75 Share Buyback, Dividend Boost
Chevron (CVX) shares powered higher in pre-market trading after the oil major said it would boost its quarterly dividend and buyback as much as $75 billion worth of company stock.
Chevron said it would pay a quarter dividend of $1.51 per share, up from $1.42 per share, while tripling its share buyback plans with a new $75 billion authorization. The dividend is payable to payable on March 10 to holders of record on February 16.
Chevron posted profits of $11.2 billion, or $5.78 per share, over its fiscal third quarter, with operating cash flows of around $15..3 billion. Analysts expect a bottom line of $4.38 per share on revenues of around $54.6 billion when the group reports fourth quarter earnings prior to the opening bell on Friday.
Chevron shares were marked 2.5% higher in pre-market trading to indicate an opening bell price of $1843.59 each.
