Today’s Big Picture
Asian markets closed mixed today as Japan’s Nikkei gained 2.09%, South Korea’s KOSPI advanced 1.87% while India’s Sensex declined 0.13%, China’s Shanghai Composite fell 0.97% and Hong Kong’s Hang Seng closed the day down 1.08%. As a reminder, Taiwan’s markets are closed through Friday, February 4 for the Lunar New Year celebrating the beginning of the year of the Tiger. By mid-day trading, European equity indices are down across the board and U.S. futures point to a rough open.
This morning, the Personal Income & Spending report for December will be published. Not only will it reveal if consumers overspent during the holiday shopping season, but we’ll also see to what degree they may have forgone saving for the month. Investors might be surprised to see lower numbers for December but don’t forget that the holiday shopping season this year started earlier than usual. Shoppers began as early as October to beat what they perceived as potentially reduced inventories, so some of that spending might not show up in December figures.
Tucked inside that same report will be the latest reading of the PCE Price Index, one of the Fed’s preferred metrics for inflation. Following the Fed’s comments this week and the market starting to bake in 5 rate hikes in 2022, the December PCE figures will be ones that likely dictate how stocks will close out the trading week. Consensus expectations call for the headline PCE Price Index to hit 5.8% in December, up from November’s 5.7% reading, while the core PCE Price Index for December is targeted at 4.8%, a tick higher than 4.7% in November.
Data Download
Coronavirus
While the U.S. may have seen omicron peak, based on new cases and hospitalizations, yesterday’s reported numbers point to an increase in deaths compared to last week's figures. 75.15% of U.S. population has reportedly received at least one vaccine dose and 63.66% of U.S. population has been fully vaccinated.
The Associated Press reports that Thai officials have adopted guidelines that outline the country’s shift from treating Covid as a pandemic to an endemic situation. The Ministry of Public Health has indicated that while the guidelines have been established, it would most likely take 6 months to a year to fully implement based on case counts and other metrics.
International Economy
Germany's recent fourth quarter GDP contraction has some predicting a potential recession for the country as this quarter starts with the headwinds of what is looking like a renewed covid surge, not to mention the possibility of a severe disruption in energy markets. It is reported that The EU and the U.K., with support from the U.S, are drawing up plans to sanction Russia's energy sector if it invades Ukraine. The group would cut off financing for new gas projects. It is not expected that Russia will institute an economic response to sanctions.
France released GDP for the fourth quarter of 2021 which, while down significantly on a QoQ basis to 0.70% from last quarters 3.10% still surprised 0.20% over estimates. Despite the QoQ contraction, the YoY figure showed strength, rising to 5.40% from the previous reading of 3.50%. French Consumer Spending growth remained positive for December at 0.20% as opposed to estimates of a 0.05% contraction but was down 0.70% from the previous release. French December PPI fell to 1.00% from the previous 3.50%.
The Eurozone reported Consumer and Economic Confidence figures for January with Consumer Confidence remaining at -8.5 and Economic Confidence coming in at 112.7, lower than both estimates and the previous release.
Last night, ET Japan released January CPI which printed at 0.50%, 0.30% lower than the previous reading of 0.80%
Markets
While stocks moved higher early yesterday, investors once again sold into strength leading all the major US market indices to finish the day lower as the fed funds futures market started to price in the probability for five rate hikes this year. Despite the negative index closes, six of the 11 S&P 500 sectors finished in positive territory led by energy, utilities, and consumer staples. Consumer discretionary, information technology, and financials led the other five sectors lower on the day.
As we get ready to close out the week, here are how the major U.S. market barometers stack up on a year-to-date basis:
Stocks to Watch
The parade of December quarter earnings reports continues this morning with Badger Meter (BMI), Caterpillar (CAT), Charter Communications (CHTR), Chevron (CVX), Colgate Palmolive (CL), Synchrony Financial (SYF), VF Corp. (VFC), and Weyerhaeuser (WY) publishing their latest quarterly results.
Apple’s (AAPL) closely watched quarterly results came in ahead of top and bottom line expectations led by better than expected iPhone, Mac, and Wearables revenue as well as stronger margins. Apple shared that, as expected, supply chain issues worsened compared to the September quarter, but those issues are easing in the current one. Exiting the quarter, the company’s active install base of devices was 1.8 billion, and over the last year it added 165 million paid subscriptions. While Apple did not offer formal revenue guidance, it shared expectations for “solid” revenue growth in the current quarter, but signaled the rate of growth will be less than the 11.3% booked in the December quarter. Investors should look to earnings from Qualcomm (QCOM), Skyworks (SWKS), and Qorvo (QRVO) to get another perspective on iPhone expectations for the current quarter.
December quarter results came up short relative to consensus expectations for Robinhood (HOOD) and the company issued downside guidance for the current quarter. Options for the December quarter increased 14% YoY to $163 million; Cryptocurrencies increased 304% YoY to $48 million; Equities decreased 35% to $52 million. Monthly Active Users exiting the December quarter increased 48% YoY to 17.3 million from 11.7 million but fell 8% QoQ from 18.9 million. Average Revenues Per User for the quarter decreased 39% to $64 on an annualized basis, compared with $106 in the year ago quarter.
Snacking company Mondelez International (MDLZ) reported mixed December quarter results with EPS falling a tad short of consensus expectations, while revenue for the quarter climbed 4.9% YoY to $7.66 billion, edging out the $7.58 billion consensus. The company shared it is “continuing to operate in a dynamic environment characterized by global input cost inflation alongside supply chain, labor, and transportation disruption.” Mondelez targets organic net revenue growth of 3+% for the coming year and high-single-digit adjusted EPS growth YoY. Helping it achieve that goal, the company expects “the sequential introduction of pricing,” which to us sounds like we’ll be paying more for our Oreos.
Insulet (PODD) received FDA clearance for its Omnipod 5 Automated Insulin Delivery System (Omnipod 5) for individuals aged six years and older with type 1 diabetes.
Digital luxury goods platform Farfetch (FTCH) announced it will acquire luxury beauty retailer, Violet Grey. The acquisition comes ahead of the launch of Beauty on the FARFETCH Marketplace, which is scheduled for later this year.
IPOs
There are no expected IPO offerings pricing today. Readers looking to dig more into the upcoming list of offerings should visit Nasdaq’s Latest & Upcoming IPOs page.
After Today’s Market Close
Once again it is Friday, and that means there are no companies expected to report their quarterly results. Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar.
On the Horizon
Monday, Jan. 31
Tuesday, Feb. 1
Wednesday, Feb. 2
Thursday, Feb. 3
Friday, Feb. 4
Thought for the Day
“Failure is unimportant. It takes courage to make a fool of yourself.”
― Charlie Chaplin
Disclosures
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
