Stock futures edge lower as bulls pause after Powell interview; Disney earnings on deck as Peltz steps-up activist pressure; Chipotle shares slide after softer Q4 profits; Uber earnings in focus as ride momentum accelerates and LeBron James nets all-time NBA scoring title, passing Kareem Adbul-Jabbar.
Five things you need to know before the market opens on Wednesday February 8:
1. — Stock Futures Edge Lower As Bulls Pause After Powell Interview
U.S. equity futures nudged lower Wednesday, while the dollar retreated against its global peers, as investors parsed comments from Federal Reserve Chairman Jerome Powell that indicated a balanced assessment of inflation and rate prospects in the world’s biggest economy.
Powell, who participated in a question-and-answer session at the Economic Club of Washington, D.C. yesterday, said he expects “significant declines” in inflation this year, but conceded that it will take “some time” before price pressures return to the Fed’s 2% target.
He also noted that more rate hikes may be needed if economic data, particularly in the jobs market, were to persist, but did not indicate a Fed reaction beyond what has already been telegraphed in prior speeches and his press conference with reporters last week in Washington.
The CME Group’s FedWatch suggests both a 93.7% chance of another 25 basis point rate hike from the Fed next month in Washington, with bets on a follow-on move in May — that would take the Fed Funds rate to a range of between 5% and 5.25% — rising to around 70.2%.
The sanguine tone, just days after the Labor Department showed January jobs creation topped 500,000, provided markets with another dose of optimism amid a strong start to the year for the S&P 500, lifting the benchmark by around 1.3% by the close of trading.
Market focus now is likely to shift to market technicals for the remainder of the week, particularly given the fact that the S&P 500 is trading close to the 4,100 point level and only a few bluechip earnings — and no major data releases — are slated for release.
Today’s $35 billion 10-year Treasury note auction, however, could provide insight into the market’s appetite for fixed income paper amid bets on peaking inflation and sustained economic growth.
Bond yields were marked modestly lower from their closing highs yesterday, with benchmark 10-year notes trading at 3.651% and 2-year notes pegged at 4.438% in overnight trading. The U.S. dollar index, which tracks the greenback against a basket of its global peers, was marked 0.36% lower at 103.060.
On Wall Street, futures tied to the S&P 500 were marked for a 15 point opening bell decline while those linked to the Dow Jones Industrial Average are set for a 66 point dip. The tech-focused Nasdaq was marked 40 points in the red.
In overseas markets, Europe’s Stoxx 600 was marked 0.79% higher in early Frankfurt trading, following on from last night’s rally on Wall Street, while firmer commodity prices helped lift the FTSE 100 by around 0.67% in London.
Overnight in Asia, the region-wide MSCI ex-Japan index was marked 0.77% higher into the close of trading while the Nikkei 225 slipped 0.29% as the yen built gains against a weaker U.S. dollar.
2. — Disney Earnings On Deck As Peltz Steps-Up Activist Pressure
Disney, which facing the potential of a proxy fight with billionaire activist investor Nelson Peltz over his desire for a seat on the company’s board, is attempt to re-focus its operations on profitability and cost control over growth and expansion following the ouster of former CEO Bob Chapek late last year.
Peltz has said he wants to work Bob Iger, who returned to the group on a temporary basis in November, on a CEO succession plan, improving operating margins at the group’s direct-to-consumer business, accelerating cost cuts and reinstating the company’s dividend by 2025.
Disney’s bottom line is expected to fall 26% from last year to 78 cents per share, even as revenues rise 7.1% to $23..37 billion.
Disney shares were marked 0.65% in pre-market trading and indicating an opening bell price of $112.35 per share.
3. — Chipotle Shares Slide After Softer Q4 Profits
Chipotle Mexican Grill (CMG) – Get Free Report shares slumped lower in pre-market trading after the country’s third-largest restaurant chain posted weaker-than-expected fourth quarter earnings following a muted holiday season.
Chipotle said adjusted earnings for the three months ending in December came in at $8.29 per share, a 48.6% increase from the same period last year but well shy of the Street consensus forecast of $8.90 per share. Group revenues, Chipotle said, were up 11.3% to $2.181 billion, a tally that also missed analysts’ estimates.
Comparable sales were up 5.6%, the group said, while forecasting a growth rate of “high single digits” for the current quarter, as the group continues to attract higher-income customers than can absorb menu prices changes and improve profit margins.
Chipotle shares were marked 5.12% lower in pre-market trading to indicate an opening bell price of $1,634.61 each.
4. — Uber Earnings In Focus As Ride Momentum Accelerates
Uber had forecast an increase in gross bookings of around 25% over the three months ending in December following its narrower-than-expected third quarter loss and a rebound in ride-related revenues. That momentum is likely to see Uber post a modest adjusted loss of 18 cents per share, down from a loss of 26 cents per share last year, on revenues of $8.5 billion.
Key to the release, however, will be CEO Dara Dara Khosrowshahi’s forecasts for near-term profits, particularly over the whole of the fiscal year, as it leverages its international scale over market rival Lyft LYFT and expands operating margins amid a return to normal commuting patterns and the ongoing travel and restaurant boom.
Uber shares were marked 1.4% higher in pre-market trading to indicate an opening bell price of $35.40 each.
5. — LeBron James Nets All-Time NBA Scoring Title, Passing Kareem Adbul-Jabbar
LeBron James became the National Basketball Association’s all-time leading scorer last night, passing the legendary Kareem Adbul-Jabbar with a fade-away jumper in the final seconds the Los Angeles Lakers’ loss to the Oklahoma City Thunder.
James, 38, scored 38 points in last night’s contest, taking him to a career total of 38,390 points, 3 points ahead of Kareem’s record, which stood for 38 years. The former Laker sat courtside, in fact, to watch the record-breaking event.
“Everything just stopped,” James said of his historic fade-away jumper. “It gave me an opportunity to embrace it and look around and seeing my family, the fans, my friends. It was pretty cool.”
“I probably can count on my hands how many times I have cried in 20 years, either in happiness or in defeat,” he added. “So that moment was one of them when I kinda teared up a little bit. It was ‘I can’t believe what’s going on’ tears.”
Since entering the league, straight from high school, as the number one draft pick of the Cleveland Cavailers, James has gone on to win four NBA championships, four MVP trophies, lead the league in scoring and rank fourth all-time in assists over his 20 seasons.
“This ride has been fantastic,” he said.