A look at the day ahead in U.S. and global markets from Mike Dolan
Groundhog Day for investors dawns with the familiar sight of twin gains in tech stocks and Treasuries.
Both Meta and Amazon refueled the Big Tech juggernaut overnight even as Apple (NASDAQ:)’s China woes saw it stumble – sending already buoyant Nasdaq futures up another 1% ahead of Friday’s open and pointing to further gains after its best day in almost a month.
Broader markets enthused by interest rate cut optimism and this week’s sharp plunge in U.S. Treasury yields now home in on Friday’s U.S. jobs report for further guidance, with more signs this week of U.S. labor market cooling encouraging Federal Reserve easing hopes.
There was an element of deja vu around the world too, with a fresh 1% swoon in ailing Chinese stocks to new 5-year lows – perhaps alarmingly without an obvious trigger and suggesting an element of panic selling amid geopolitical tensions, tit-for-tat investment curbs and seemingly endless property sector woes.
But Meta steals the show back on Wall St.
Its shares soared 15% ahead of Friday’s open after the social media giant issued its first dividend days ahead of flagship Facebook (NASDAQ:)’s 20th anniversary. It reported revenue and profit that beat expectations on robust ad sales and authorized a $50 billion stock buyback.
The company’s stock market valuation is now set to jump by more than $140 billion, extending a long recovery that saw Meta hit record highs for the first time in more than two years.
Amazon.com (NASDAQ:) stock is also on a tear, up 8% ahead of the bell as the online retailing behemoth beat fourth-quarter revenue expectations with new generative AI features in its cloud and ecommerce businesses and robust growth during the holiday period.
Apple was more downbeat however as it forecast a drop in iPhone sales and targeted overall revenue $6 billion below expectations – with its China business taking a hit. That overshadowed overall first-quarter sales and profit that beat analysts’ targets and sent its shares down 3% overnight.
With worries about commercial property exposure weighing on regional bank stocks again and perhaps exaggerating this week’s Fed-inspired slide in Treasury yields, the main event on Friday is January’s payrolls report.
U.S. job growth likely slowed marginally in January as a resilient economy and strong worker productivity encouraged most businesses to retain their employees. Payrolls are forecast to have risen 180,000 and the jobless rate is seen ticking up to 3.8%
Although 10-year Treasury yields bounced back a little overnight, they have plunged 28 basis points over the past week to their lowest this year, below 4%. The was lower in early Friday trade.
Even though the Fed pushed back a little on the prospects of a March rate cut, more than a quarter point of easing is still priced by May 1 and 145bps through the full year.
Key diary items that may provide direction to U.S. markets later on Friday:
* U.S. Jan employment report, Dec factory goods orders, University of Michigan final Jan household sentiment survey
* Bank of England Chief Economist Huw Pill speaks
* U.S. corporate earnings: Exxon Mobil (NYSE:), Chevron (NYSE:), Abbvie, Bristol Myers (NYSE:) Squibb, Regeneron (NASDAQ:), LyondellBasell, WW Grainger (NYSE:), Cboe Global Markets (NYSE:), Charter Communications (NASDAQ:), Church & Dwight (NYSE:)
(By Mike Dolan, editing by Nick Macfie mike.dolan@thomsonreuters.com)
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