Five things you need to know before the market opens on Monday January 23:
1. -- Stock Futures Mixed As Market Eyes Tech, Dollar Slides
U.S. equity futures traded mixed Monday, while the dollar extended its recent slump on foreign exchange markets and Treasury yields slipped lower, as investors looked ahead to a crucial week for Wall Street on the tailwind of a final dovish forecast from a key Federal Reserve official.
Around half of the market weight of the S&P 500 will report December quarter earnings this week, with investors likely focused on near-term demand and profit projections from some of the world's biggest companies amid mounting concerns for a near-term recession in the world's biggest economy.
Refinitiv data suggests collective S&P 500 earnings will fall 2.9% from last year to a share-weighted $443.4 billion, although once the volatile energy sector is stripped away, that figure weakens to a decline of around 7.3%.
Markets are leaning into the softer projections, however, following comments late Friday from Fed Governor Christopher Waller in what are likely the last public remarks from any official ahead of the central bank's two-day rate meeting which begins on January 31.
Waller said the felt the Fed was "pretty close" to sufficiently restrictive, given the recent downturn in inflation and the fact that "there appears to be little turbulence ahead", adding he favors a smaller 25 basis point increase at the Fed's next meeting.
The CME Group's FedWatch puts the chances of that hike, which would lift the Fed Funds rate to a range of between 4.5% and 4.75%, at a virtual lock, with an 82.5% chance of a similar hike in March.
Benchmark 10-year Treasury note yields were marked modestly lower in overnight trading, slipping 2 basis points to 2.48% while 2-year notes were pegged at 4.17%. The U.S. dollar index, which tracks the greenback against a baskets of its global peers, was marked 0.31% lower at 101.690.
That said, despite last week's tech rally , which lifted boosted the Nasdaq to a year-to-date gain of around 6.2%, the S&P 500 continues to find it difficult to scale the 4,000 point mark, a level that denotes the benchmark's 200-day moving average and is seen by traders as a key technical level heading into the thick of the earnings season.
Heading into the start of the trading day on Wall Street, futures tied to the the S&P 500 are priced for a 2 point opening bell dip while those linked to the Dow Jones Industrial Average are set for a 27 point bump. The Nasdaq was marked little-changed from Friday's closing level of 11,140.44 points.
In overseas markets, the the region-wide MSCI ex-Japan index gained 0.23% into the close of trading, although markets in China and elsewhere remained closed for Lunar New Year celebrations. Tokyo's Nikkei 225, meanwhile, gained 1.33% in a follow-on rally from Friday's close on Wall Street lead by chip and tech stocks.
Tech was also the leading sector in Europe, where the Stoxx 600 was marked 0.24% higher in early Frankfurt dealing, pacing a 0.22% gain for the FTSE 100 in London.
2. -- Week Ahead: Big Earnings Wave, PCE Inflation Data In Focus
Wall Street faces a crucial week of earnings and inflation data over the next five days, heading into the Fed's first policy meeting on the year later this month, as its looks to test the strength of the market's January rally.
Around 88 S&P 500 companies will report December quarter profits this week as earnings season kicks-in to full gear - although not with any particular momentum thus far.
Of the 56 companies that have already reported, around 64% have topped Wall Street forecasts, a tally that compares to the long-term average of around 66.3% but trails the 75.5% average of the previous four quarters.
Microsoft (MSFT), Boeing, (BA), Johnson & Johnson (JNJ), AT&T (T), 3M (MMM), Verizon (VZ), Chevron (CVX) Mastercard (MA), Visa (V) and Tesla (TSLA) are a few of the bluechip names slated for updates between Tuesday and Friday.
Friday will also bring a key reading of the Fed's preferred inflation gauge, the core PCE price index, for the month of December, with analysts looking for an easing in price pressures that echoes the big monthly decline in headline CPI reported by the Commerce department earlier this month.
3. -- Salesforce Shares Leap As Elliott Management Builds Activist Stake
Salesforce (CRM) shares were marked firmly higher in pre-market trading following reports that activist investor Elliott Management has taken a stake in the world's biggest enterprise software group.
The Wall Street Journal reported late Sunday that Elliott said it's "looking forward to working with Salesforce to realize the value benefiting a company of its stature", but did not indicate whether it would seek a seat on the company's board of directors or push for specific changes.
Earlier this month, unveiled plans to cut around 10% of its global workforce amid a restructuring strategy under stand-alone CEO Marc Benioff. Salesforce said the job cuts, as well as the broader restructuring plans,, will cost between $1.4 billion and $2.1 billion, with a hit of around $1 billion expected over its fiscal fourth quarter.
Benioff was left as stand-alone CEO of the San Francisco-based group after Bret Taylor said he would leave the company to pursue other interests just a year after becoming co-CEO.
Salesforce shares were marked 3.2% in pre-market trading to indicate an opening bell price of $156.625 each.
4. -- AMD Shares Extend Gains After Barclays Upgrade
Advanced Micro Devices (AMD) shares jumped higher in pre-market trading following an upgrade from Barclays that looks to extend last week's chip sector rally.
Barclays analyst Blayne Curtis lifted his rating AMD to 'overweight', with an improved $85 price target, citing the chipmaker's lead over rival Intel INTC in the server market following the launch of its new data center product Genoa late last year. CEO Lisa Su said Genoa will translate into "lower capex, lower opex and lower total cos of ownership" for enterprises and for cloud data centers.
Curtis also said AMD could see the potential for it to build gains from Meta Platforms when it accelerates spending later this year.
AMD shares were marked 2.61% higher in pre-market trading, following on from Friday's 3.5% advance, to indicate an opening bell price of $71.89 each.
5. -- Lawmakers Move to Tweak Debt Ceiling Calculation
Republican lawmakers said over the weekend that they plan to develop a bi-partisan plan that would fundamentally alter the way the U.S. calculates its debt ceiling.
The plan, unveiled by Republican Brian Fitzpatrick and endorsed by Democrat Josh Gottheimer -- both of whom sit on the so-called 'Problem Solvers Caucus' of their respective parties -- would replace the current nominal debt ceiling of $31.4 trillion with a rule that would limit total debt to a share of domestic output.
Neither lawmaker would put a figure on their new plan, but with U.S. debt hovering at around 125% of GDP, growth slowing and borrowing expected to rise, it would likely need to be applied far north of current levels.
A new calculation, however, could end years of partisan bickering over the nature of efficacy of the debt ceiling itself, which continues to exist even as Congress agrees annual spending plans separately.
