Daily Markets: Inflation in Focus Today

Today’s Big Picture

China and Taiwan markets are closed today as both countries wrap up Lunar New Year celebrations. Other Asia-Pacific equity markets ended the day mixed. South Korea’s KOSPI gained 0.63%, Hong Kong’s Seng rose 0.54%, Australia’s ASX All Ordinaries advanced 0.28%, while Japan’s Nikkei was close to flat, eking out a 0.07% gain to close out the week. Yesterday’s decline in India’s Sensex picked up steam with the index down 1.45% today. The same research house that has targeted companies like Herbalife (HLF) in the past has now set its sights on one of India’s largest conglomerates and issued a lengthy report calling out what it feels is fraudulent activity. 

By mid-day trading, European equity indices are up across the board, and U.S. futures point to a lower market open. Weighing on futures were disappointing earnings and guidance from Intel (INTC) that indicate we still have further to go until demand for PCs and its other end markets improve. As we digest this morning’s crop of earnings reports from American Express (AXP), Chevron (CVX), and others, 8:30 AM ET brings the last piece of inflation data in the form of the December Personal Consumption Expenditure (PCE) price index before the Fed’s monetary policy meeting next week. This is a favorite inflation gauge for the Fed and will be bundled along with the December data for Personal Income and Spending. In that data, the market will be paying attention to the December core PCE data, which ticked lower to 4.4% YoY from November’s 4.7% reading, exactly in line with expectations.

Data Download

International Economy

Reports indicate that in addition to a new offensive on Ukraine that could come as soon as next month, Russian President Vladimir Putin is preparing the country for a conflict that is expected to last for years. 

Oil prices are moving higher in early market trading following yesterday’s stronger-than-expected U.S. economic growth and hopes of a rapid recovery in Chinese demand as Covid-19 cases and deaths plunged from last month’s peak levels.

Domestic Economy

Soon after the market open, December Pending Home Sales data will be published as will the final January reading for the University of Michigan Consumer Sentiment Index. 

House Republican leaders are considering proposing a short-term extension of the federal debt ceiling to delay the risk of default until September 30.

Markets

Yesterday saw markets rally as the Dow and the Russell 2000 gained 0.61 and 0.67%, respectively, the S&P 500 rise 1.10%, and the Nasdaq Composite close 1.76% higher. All Sectors except for Consumer Staples (-0.35%) gained, with Energy (3.16%) and Consumer Discretionary (2.05%) leading the way. The Consumer Discretionary sector was boosted by Tesla (TSLA) gaining 10.97% on a well-received , contributing to just over 60% of the sector’s gain on the day. Materials (0.48%) was held back by Sherwin Williams (SHW) disappointing in its and lowering 2023 guidance, stating they are preparing “for the worst.” The stock was down 8.92%. 

Here’s how the major market indicators stack up year-to-date:

• Dow Jones Industrial Average: 2.42%
• S&P 500: 5.75%
• Nasdaq Composite: 9.99%
• Russell 2000: 8.05%
• Bitcoin (BTC-USD): 38.56%
• Ether (ETH-USD): 33.64%

Stocks to Watch

Before trading kicks off for U.S.-listed equities,  American Express, Booz Allen Hamilton (BAH), Charter Communications (CHTR), Chevron (CVX), Gentex (GNTX), and HCA Healthcare (HCA) will be among the companies reporting their quarterly results.

Shares of Intel sank in after-market trading last night after the company reported December quarter results that missed the mark and issued downside guidance for the current quarter. In sharing its March quarter guidance that calls for EPS of -$0.15 on revenue of $10.50-$11.50 billion vs. the respective expectations of $0.25 and $14.0 billion, Intel shared it expects macro weakness to persist through 1H23 with the possibility of 2H23 improvements. That prompted Intel to share that it now sees the PC market in 2023 toward the lower end of its prior 270-295 million forecast.

Semiconductor capital equipment company KLA Corp. (KLAC) posted December quarter results that topped top and bottom line expectations. However, the company acknowledged that despite favorable long-term prospects, the coming year would be one of year industry capacity adjustments as customers fine-tune their CapEx plan to address decreased demand in some segments. 

The return of cross-border travel led Visa (V) to deliver better than expected results for its December quarter. Payments volume in the quarter rose 7% YoY in constant dollars with cross-border volume up 22% and processed transactions up 10%. That led Visa to report December quarter EPS of $2.18 vs. the $2.01 consensus and revenue of $7.9 billion vs. the $7.7 billion consensus.

Hasbro (HAS) issued downside guidance for its December quarter with revenue and EPS of $1.68 billion and $1.29-$1.31 vs. the $1.93 billion and $1.53 consensus. Per the company, "Despite strong growth in Wizards of the Coast and Digital Gaming, Hasbro Pulse, and our licensing business, our Consumer Products business underperformed in the fourth quarter against the backdrop of a challenging holiday consumer environment.” Hasbro also announced it would eliminate ~1,000 positions from its workforce, ~15% of the full-time employee base.

European planemaker Airbus (EADSY) will recruit another 13,000 workers in 2023, 9,000 of which will be based in Europe, with the balance spread across operations in the U.S. and China. 

IPOs

The IPO calendar could be a bit warmer than in recent weeks with potential pricings from Genelux (GNLX), Elate Group (ELGP), MorningStar Partners (TXO), and Syla Technologies (SYT). Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.

After Today’s Market Close

We made it to Friday, and that means no companies are slated to report their latest quarterly results after equities stop trading today. Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar. 

On the Horizon

Monday, January 30

• Eurozone: Business and Consumer Survey – January
• US: Chicago PMI – January

Tuesday, January 31

• Japan: Unemployment Rate, Industrial Production, Retail Sales – December
• China: Manufacturing and Non-manufacturing PMI – January
• Germany: Consumer Price Index - January
• US: Employment Cost Index – 4Q 2022 
• US: Consumer Confidence – December 

Wednesday, February 1

• Japan: Nikkei S&P Global Manufacturing PMI – January
• China: Caixin Manufacturing PMI – January
• Eurozone: Manufacturing PMI – January
• Eurozone: Consumer Price Index - January
• US: Weekly MBA Mortgage Applications 
• US: ADP Employment Change Report – January 
• US: S&P Global Final Manufacturing PMI – January
• US: Construction Spending – December
• US: ISM Manufacturing Index – January 
• US: JOLTs Job Openings Report – December 
• US: Weekly EIA Crude Oil Inventories
• US: FOMC Rate Decision

Thursday, February 2

• European Central Bank Interest Rate Decision
• US: Challenger Job Cuts – January
• US: Weekly Initial & Continuing Jobless Claims
• US: Unit Labor Cost & Productivity – 4Q 2022 
• US: Factory Orders – December 
• US: Weekly EIA Natural Gas Inventories

Friday, February 3

• Japan: Services PMI – January
• China: Caixin Services PMI – January
• Eurozone: S&P Global Services PMI, Producer Price Index - January
• UK: Services PMI – January
• US: Employment Report – January 
• US: S&P Global Final Services PMI – January
• US: ISM Non-manufacturing Index – January

Thought for the Day

"You may have to fight a battle more than once to win it." – Margaret Thatcher

Disclosures

• Tesla (TSLA) is a constituent of the Tematica BITA Cleaner Living Sustainability Screened Index
• American Express (AXP), Intel (INTC) are constituents of the Tematica BITA Digital Infrastructure & Connectivity Index
• Visa (V) is a constituent of the Tematica Research Thematic Dividend All-Stars Index

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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