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Stock futures pointed to a lower open Wednesday morning as investors awaited another batch of corporate earnings results and the Federal Open Market Committee’s (FOMC) January monetary policy decision.
S&P 500 futures traded lower by about 0.7%, pulling back from the index’s all-time high. Contracts on the Dow fell by about the same percentage margin.
The Nasdaq outperformed, holding near the flat line as some major tech stocks held up strongly. Shares of heavily weighted tech stock Microsoft (MSFT) jumped after the company posted fiscal second quarter results that handily topped expectations late Tuesday, driven by accelerating growth in its key cloud and personal computing businesses. But other quarterly results failed to impress Wall Street: Shares of Starbucks (SBUX) fell in early trading after the company’s quarterly comparable same-store sales growth declined more than expected due to lingering impacts of the pandemic.
Elsewhere, shares of GameStop (GME) surged by more than 60% higher in the pre-market session after closing higher by 93% a day earlier earlier. The stock’s market capitalization sailed to more than $10 billion as online traders clashed with Wall Street short-sellers yet again. Shares of other heavily shorted stocks including Express (EXPR) and Bed Bath & Beyond (BBBY) also jumped in early trading.
Individual stocks aside, the major equity indexes came under pressure as investors awaited more updates on fiscal stimulus out of Washington and the FOMC’s latest monetary policy statement. The FOMC will release its statement at 2 p.m. ET on Wednesday, with Federal Reserve Chair Jerome Powell set to deliver a press conference shortly thereafter.
Many economists are expecting this month’s FOMC meeting to be yet another buffer meeting eliciting virtually no policy changes, as officials wait to ascertain the strength of the economic recovery once the COVID-19 vaccine is widely distributed and the pandemic comes under control. Powell himself said during public remarks earlier this month that he currently sees the U.S. economy as “far from our goals,” and added that the Fed was looking to “be careful not to exit too early.”
“I think the key message coming out of tomorrow: It’s far too early to talk about normalization from the Fed’s perspective, really premature to talk about tapering, and Chair Powell should send a dovish message,” Matthew Luzzetti, Deutsche Bank chief U.S. economist, told Yahoo Finance on Tuesday.
On the earnings front, companies including Facebook (FB), Apple (AAPL) and Tesla (TSLA) are set to report quarterly results on Wednesday.
8:30 a.m. ET: Durable goods orders increased far less than expected in December
Orders for U.S. manufactured goods intended to last three years or longer slowed more than expected in December, as slumping transportation goods orders weighed on results.
Durable goods orders rose just 0.2% in December over November, the Commerce Department said Wednesday, following an upwardly revised increase of 1.2% in November. Consensus economists were looking for durable goods orders to rise by 1.0%. Still, orders rose for an eighth straight month.
Excluding transportation orders, however, durable goods orders were up 0.7% to outpace estimates for a rise of 0.5%. New orders for non-defense aircraft and parts slumped more than 50% in December over November.
Non-defense capital goods orders, excluding aircraft, increased by a better than expected 0.6%, following an upwardly revised 1.0% rise in November. This metric is closely watched as a proxy for business capital expenditures, and has risen for eight consecutive months.
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