Market Snapshot: U.S

Market Snapshot: U.S. stock futures move lower as investors focus on tech earnings, await Fed

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Stock-index futures traded lower Wednesday, with investors focusing on a stream of earnings reports from technology companies and awaited the outcome of the Federal Reserve’s first policy meeting of 2021.

Investors also remained transfixed by trading in videogame retailer GameStop Corp. GME, which has surged more than 600% this month as an army of individual investors organized via Reddit’s wallstreetbets forum and other platforms took aim at heavily shorted stocks.

What are major benchmarks doing?

  • Futures on the Dow Jones Industrial Average YM00, -0.94% were down 238 points, or 0.8%, at 30,604.
  • S&P 500 futures ES00 declined 30.85 points, or 0.8%, to 3,811.75.
  • Nasdaq-100 futures NQ00 were off 19.50 points, or 0.1%, at 13,466.

Stocks ended a choppy session with small losses on Tuesday, with the Dow DJIA, S&P 500 SPX and Nasdaq Composite COMP each declining 0.1%. The Dow fell for a fourth straight session, while the Nasdaq broke a five-day win streak. Both the Nasdaq and S&P 500 had closed at records on Monday.

What’s driving the market?

Investors continued to sift through a heavy round of corporate earnings, including results from Microsoft Corp. MSFT, +1.22%, which reported strong results late Tuesday, with updates from Facebook Inc. FB, +1.45%, Apple Inc. AAPL, +0.17% and Tesla Inc. TSLA, +0.26% due after the closing bell Wednesday.

The Federal Reserve will conclude its first policy meeting of 2021 on Wednesday afternoon, releasing a policy statement at 2 p.m. Eastern, followed by Chairman Jerome Powell’s news conference at 2:30 p.m.

The Fed isn’t expected to make any policy moves and Powell is likely to reiterate the central bank’s commitment to maintaining loose monetary policy until after inflation has exceeded its 2% target.

“An implicit promise that the Fed will keep its foot firmly on the QE gas would argue for a retreat in the dollar and some upside in equities,” though any reaction is likely to be minor since that’s what investors already expect, said Marios Hadjikyriacos, investment analyst at XM, in a note.

“In fact, the risks here may be asymmetric, because if markets sense that Powell could backtrack on this promise or that other [Federal Open Market Committee] officials don’t share his views, it could come as a ‘shock’ and spark much bigger reactions in the opposite direction,” he said.

The GameStop saga continued, with CNBC reporting that hedge fund Melvin Capital had exited its short position at a hefty loss. Also, Citron Research’s Andrew Left, in a YouTube video, said it had also exited the bulk of its short positions in the stock. GameStop shares trimmed sharp premarket gains, but remained up 66%.

December data on U.S. durable goods orders are due at 8:30 a.m. ET. Economists surveyed by MarketWatch, on average, expect a 0.8% increase after a 1% rise in November.

Which companies are in focus?

  • Microsoft shares were up 1.9% in premarket trade after its results easily topped expectations late Tuesday, with the software giant surpassing $40 billion in sales and $15 billion in profit in a quarter for the first time.
  • Shares of Advanced Micro Devices Inc. AMD, +0.62% were down more than 2% in premarket action, despite the chip maker topping $3 billion in quarterly revenue for the first time, delivering results and outlook that both beat Wall Street expectations.
  • Shares of coffee retailer Starbucks Corp. SBUX, +1.20% were down 2.8% after reporting mixed results Tuesday afternoon.
  • Walgreens Boots Alliance WBA, +2.86% shares rose 4% in premarket trade after the pharmacy chain late Tuesday said it had tapped Starbucks executive Roz Brewer to serve as its new chief executive.

Credit: MarketWatch

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