Zinger Key Points
- The S&P 500 hit a record high for a 3rd straight session on Tuesday, while the Dow closed off its record.
- The PBoC's decision to reduce reserve requirements by 50 basis points fueled a rally in Asia.
U.S. stock futures indicate a positive opening on Wednesday, buoyed by strong earnings reports from Netflix, Inc. NFLX and semiconductor equipment maker ASML Holding N.V. ASML. Investors are eagerly awaiting Tesla, Inc.‘s TSLA fourth-quarter results, which are expected to take center stage. Additionally, private sector activity data is set to be released shortly after the market opens.
Wednesday’s announcement of a stimulatory measure by the Chinese central bank has the potential to extend the strength of U.S.-listed Chinese stocks.
Cues From Tuesday’s Trading:
Major indices closed with mixed results. The Dow faced early pressure from negative earnings reports by 3M Co. MMM and Johnson & Johnson JNJ, leading to a lower start. Conversely, the Nasdaq and S&P 500 indices opened positively. The Dow, however, hit the day’s low in early afternoon trading before partially recovering losses. It concluded the session lower, breaking a three-session winning streak. In contrast, the Nasdaq and S&P 500, after dipping below the unchanged line, rebounded in the afternoon, closing modestly higher.
Communication services and consumer staple stocks emerged as notable gainers during the session.
US Index Performance On Tuesday
| Index | Performance (+/-) | Value |
| Nasdaq Composite | +0.43% | 15,425.94 |
| S&P 500 Index | +0.29% | 4,864.60 |
| Dow Industrials | -0.25% | 37,905.45 |
| Russell 2000 | -0.36% | 1,976.27 |
Analyst Color:
The Fed rate moves may not be in isolation, according to Wharton professor Jeremy Siegel. “If the economy is strong and the Fed does not cut rates as much as some expect — earnings growth may end up being supportive for the market,” the economist said in his weekly commentary for WisdomTree.
The market strength despite the high-interest rate environment is due to the continued strong performance in the semiconductor companies, primarily due to the excitement over the impact of artificial intelligence, Siegel said. “For the full year, I still expect greater participation in the rally from a broader cross-section of the market, but sentiment still favors the high quality, big tech stocks,” he added.
Futures Today
Futures Performance On Wednesday
| Futures | Performance (+/-) |
| Nasdaq 100 | +0.72% |
| S&P 500 | +0.46% |
| Dow | +0.27% |
| R2K | +0.78% |
In premarket trading on Wednesday, the SPDR S&P 500 ETF Trust SPY rose 0.46% to $487.10 and the Invesco QQQ ETF QQQ gained 0.70% to $426.45, according to Benzinga Pro data.
Upcoming Economic Data:
S&P Global is due to release its flash manufacturing and service sector purchasing managers’ indices for January at 9:45 a.m. ET. Economists, on average, expect the manufacturing PMI to come in at 47.9, flat with December reading. The service sector PMI may have edged down from 51.4 to 51. A reading above 50 suggests expanding activity and one below 50 points to contract.
The Energy Information Administration is scheduled to release its weekly petroleum status report at 10:30 a.m. ET.
The Treasury will auction five-year notes at 1 p.m. ET.
See also: Best Futures Trading Software
Stocks In Focus:
- ASML climbed over 5% in premarket trading following its earnings release.
- Netflix rallied over 10% in reaction to the company’s earnings report; Intuitive Surgical, Inc. ISRG climbed over 6% and Texas Instruments, Inc. TXN fell over 3%.
- Abbott Laboratories ABT, AT&T, Inc. T, Copper miner Freeport-McMoRan Inc. FCX, General Dynamics Corporation GD and Kimberly-Clark Corporation KMB are among the other companies due to report their quarterly results.
- Also on tap after the market close are Canadian Pacific Kansas City Limited CP, Ameriprise Financial, Inc. AMP, International Business Machines Corp. IBM, CSX Corp. CSX, Knight-Swift Transportation Holdings Inc. KNX, Lam Research Corp. LRCX, Las Vegas Sand Corp. LVS, Seagate Technology Holdings plc STX and Tesla.
Commodities, Bonds, Other Global Equity Markets:
Crude oil futures fell 0.28% to $74.16 in the early European session on Wednesday following the 1.09% retreat in the previous session.
The benchmark 10-year Treasury note fell 0.033 percentage points to 4.109% on Wednesday.
China and Hong Kong stocks led a rally in Asia, with positive tech earnings propping up sentiment further. The Japanese, Indonesian, and South Korean markets, however, bucked the uptrend. The Chinese stocks received support from the People’s Bank of China sharply reduced its reserve ratio, which according to Reuters, has the potential to inject $140 billion in incremental liquidity into the system. The 50-basis-point reduction will become effective Feb. 5.
European stocks advanced on Wednesday, propelled by some solid earnings reports, with the Euro Stoxx 50 up about 1.70%.
Read Next: 10 S&P 500 Stocks With Over 40% Upside Potential: Hidden Gems Or Value Traps?
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