US stocks set for a mixed opening as investors await key earnings reports

Source Fxstreet
Feb 7, 2024 12:58
  • US stock index futures trade mixed ahead of Wall Street's opening bell on Wednesday.
  • Investors keep a close eye on earnings reports.
  • US economic calendar will feature mid-tier data releases.

S&P 500 futures are down 0.06%, Dow Jones futures drop 0.16%, and Nasdaq futures are unchanged.

S&P 500 (SPX), Dow Jones (DJIA), and Nasdaq (IXIC) indexes closed on Tuesday with a 0.23% gain, a 0.37% increase, and unchanged, respectively.

What to know before stock market opens

  • Enphase Energy INC (ENPH) was the top-performing stock in the S&P 500 on Tuesday, gaining more than 13% on a daily basis, ahead of GE HealthCare Technologies (GEHC) and Fortinet (FTNT), which rose 11.6% and 7.3%, respectively.
  • Kroger (KR), KLA Tencor Corp. and Fiserv Inc. shares were the biggest losers Tuesday, falling more than 2%. 
  • The US Census Bureau will release Goods Trade Balance data for December on Wednesday. The Federal Reserve will publish Consumer Credit Change later in the day, and Fed Governor Michelle Bowman and Richmond Fed President Thomas Barkin will also be speaking.
  • Late Tuesday, Qatar, acting as a mediator, said that Hamas had given a "generally positive" response to a proposed truce deal with Israel. Although it's too early to say whether there will be further progress in peace talks, a de-escalation of the conflict in the Middle East could attract risk flows. According to Israel's Channel 13, an Israeli official said that some of the demands made by Hamas in the counterproposal were entirely unacceptable.
  • Alibaba Group Holdings Ltd. (BABA) reported Q3 adjusted net income of RMB 47,951 million and Q3 revenue of RMB 260,348 million on Wednesday. In its earnings report, the company said that the board of directors approved an increase of $25 billion to the share repurchase program. “Our top priority is to reignite the growth of our core businesses, e-commerce and cloud computing,” Alibaba said, per Reuters.
  • Uber Technologies Inc (UBER) announced Q4 net income of $1.4 billion and Q4 gross bookings of $37.6 billion. Net revenue for that period was $9.94 billion. "Uber's platform advantages and disciplined investment in new growth opportunities resulted in record engagement and accelerating Gross Bookings in Q4," Chief Financial Officer Prashanth Mahendra-Rajah said, per Reuters.
  • Walt Disney Company (DIS), ARM Holdings PLC (ARM) and Paypal Holdings Inc (PYPL) are among top companies scheduled to announce earnings after the closing bell on Wednesday. 
  • Federal Reserve Bank of Philadelphia President Patrick Harker said on Tuesday that the central bank made the right choice last week to maintain interest rates steady amid an outlook that likely heralds more inflation declines. “The data point to continued disinflation, to labor markets coming into better balance, and to resilient consumer spending—three elements necessary for us to stick to the soft landing we remain optimistic to achieve,” he added.
  • The CME FedWatch Tool shows that markets are pricing in a 21.5% probability of a 25 basis points Fed rate cut in March.

S&P and Nasdaq futures are presented by CME e-minis and Dow Jones futures are presented by CBOT e-mini.

 

S&P 500 FAQs

What is the S&P 500?

The S&P 500 is a widely followed stock price index which measures the performance of 500 publicly owned companies, and is seen as a broad measure of the US stock market. Each company’s influence on the computation of the index is weighted based on market capitalization. This is calculated by multiplying the number of publicly traded shares of the company by the share price. The S&P 500 index has achieved impressive returns – $1.00 invested in 1970 would have yielded a return of almost $192.00 in 2022. The average annual return since its inception in 1957 has been 11.9%.

How are companies chosen to be included in the S&P 500?

Companies are selected by committee, unlike some other indexes where they are included based on set rules. Still, they must meet certain eligibility criteria, the most important of which is market capitalization, which must be greater than or equal to $12.7 billion. Other criteria include liquidity, domicile, public float, sector, financial viability, length of time publicly traded, and representation of the industries in the economy of the United States. The nine largest companies in the index account for 27.8% of the market capitalization of the index.

How can I trade the S&P 500?

There are a number of ways to trade the S&P 500. Most retail brokers and spread betting platforms allow traders to use Contracts for Difference (CFD) to place bets on the direction of the price. In addition, that can buy into Index, Mutual and Exchange Traded Funds (ETF) that track the price of the S&P 500. The most liquid of the ETFs is State Street Corporation’s SPY. The Chicago Mercantile Exchange (CME) offers futures contracts in the index and the Chicago Board of Options (CMOE) offers options as well as ETFs, inverse ETFs and leveraged ETFs.

What factors drive the S&P 500?

Many different factors drive the S&P 500 but mainly it is the aggregate performance of the component companies revealed in their quarterly and annual company earnings reports. US and global macroeconomic data also contributes as it impacts on investor sentiment, which if positive drives gains. The level of interest rates, set by the Federal Reserve (Fed), also influences the S&P 500 as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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