Nasdaq Futures Plummet As Alphabet, AMD Disappointments Sour Sentiment; Spotlight Shifts To Fed Statement, Powell's Presser

Disappointing tech tidings appear to be weighing down on the market, with the Nasdaq futures diving in early trading on Wednesday while the Dow futures were barely holding up. Earnings from the likes of Advanced Micro Devices, Inc. AMD, Microsoft Corp. MSFT, and Alphabet, Inc. GOOGL GOOG have triggered negative reactions, with the former two reacting to softish guidance, while the latter came under pressure due to weakness in its bread-and-butter ad revenue.

Traders may also look to bide time to see off the Federal Reserve’s rate decision due Wednesday. Investors will likely turn their attention to the policy statement as they seek clues on the potential timing and scale of future rate cuts, said Comerica Chief Investment Officer John Lynch. A pause decision at the January meeting now appears to be a foregone conclusion.

Cues From Tuesday's Trading:

Stocks closed mixed on Tuesday as traders digested the earnings flow from before the market open and awaited key tech earnings reports due after the close. They also reacted to positive job market, housing and consumer confidence readings.

As traders pushed back their rate cut expectations following a string of positive Main Street data, financial stocks rallied, keeping the Dow Industrials in the green. The 30-stock blue-chip average ended at a fresh high on Tuesday. On the other hand, the S&P 500 retreated from a closing high hit on Monday, and the Nasdaq Composite also experienced weakness.

Among the S&P sector indices, communication services, IT, and real estate stocks retreated on Tuesday, while energy and financial stocks gained some ground.

US Index Performance On Tuesday

Analyst Color:

“When the S&P 500 goes more than a year without hitting new highs, the Index generally performs well over the next 12 months,” said Comerica’s Lynch.

“In eight of the nine previous instances, the S&P has marched higher over the next twelve months, delivering an average return of 12.1%. Additionally, new highs tend to come more quickly with the Index setting record closes an average of 37 times in the following year, accounting for roughly 15% of all trading days.”

The analyst said this historical trend supports “time in” the market rather than “timing” the market.

Futures Today

Futures Performance On Wednesday

In premarket trading on Wednesday, the SPDR S&P 500 ETF Trust SPY slipped 0.43% to $488.78, and the Invesco QQQ ETF QQQ slumped 1.01% to $420.99, according to Benzinga Pro data.

Upcoming Economic Data:

ADP is due to release its private payroll report for January at 8:15 a.m. ET. Economists, on average, expect the private sector to have added 145,000 in January, a decrease from December’s 164,000.

The Labor Department will release its employment cost index for the fourth quarter at 8:30 a.m. ET. The consensus estimate calls for a 1% quarter-over-quarter increase in the employment cost index compared to a 1.1% gain in the third quarter.

The Chicago Institute of Supply Management will release the results of its regional business activity survey at 9:45 a.m. ET. The business barometer is expected to improve from 46.9 in December to 48 in January, with the most recent month’s reading showing continued contraction.

The Energy Information Administration is scheduled to release its customary weekly petroleum status report at 10:30 a.m. ET.

The Fed is expected to release its post-meeting policy statement at 2 p.m., followed Chair Jerome Powell’s press conference at 2:30 p.m. ET.

See also: Best Futures Trading Software

Stocks In Focus:

• AMD fell about 6% in premarket trading due to the company’s quarterly results.
• Among other stocks moving on earnings are Microsoft (down about a percent), Alphabet (down about 6%), Electronic Arts Inc. EA (down about 2%), Mondelez International, Inc. MDLZ (down over 4%), Skyworks Solutions, Inc. SWKS (up nearly 3.5%), and Starbucks Corp. SBUX (up over 3.5%).
• Boston Scientific Corporation BSX, Brinker International, Inc. EAT, GSK plc GSK, Mastercard Incorporated MA, Nasdaq, Inc. NDAQ, Novartis AG NVS, Old Dominion Freight Line, Inc. ODFL, Rockwell Automation, Inc. ROK Teva Pharmaceutical Industries Limited TEVA, Thermo Fisher Scientific Inc. TMO and Boeing Co. BA are due to report their quarterly results ahead of the market open.
• Those reporting after the close include Kulicke and Soffa Industries, Inc. KLIC, MetLife, Inc. MET, Qorvo, Inc. QRVO, C.H. Robinson Worldwide, Inc. CHRW, Wolfspeed, Inc. WOLF and Qualcomm, Inc. QCOM.
• Paramount Global, Inc. (NAS4DAQ: PARA) rallied over 17% after Bloomberg reported that media mogul Byron Allen made a $14.3-billoon offer to buy the company.
• Tesla, Inc. TSLA fell nearly 3% amid a legal setback for its CEO Elon Musk, whose 2018 compensation was nullified by a Delaware Chancery Court Judge.

Commodities, Bonds, Other Global Equity Markets:

Crude oil futures fell 1.20% to $76.89 in early European session on Wednesday, reversing most of Tuesday’s 1.35% advance.

The benchmark 10-year Treasury note fell 0.023 percentage points to 4.034% on Wednesday.

China weighed on the equity markets in Asia, as the markets in the country, Hong Kong and Taiwan fell sharply, while sentiment was modestly positive elsewhere. European stocks showed nervousness in late-morning trading.

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