Stocks ended flat again yesterday after dropping most of the day. It was a mixed bag of earnings. Tesla (TSLA 0.00%↑) beat expectations and Chevron (CVX 0.00%↑) advanced after announcing a share buyback, but then IBM (IBM 0.00%↑) dropped even after beating earnings and announcing layoffs.
State of Play
It’s a very busy day with a big dump of economic data and earnings. As of 0630 we’re looking at a bit of risk-on developing:
Stock futures are pointing to gains at the open, led by tech with the Nasdaq up 0.6%;
Commodities aren’t doing much, with WTI crude oil up less than 1% to trade around $81/barrel. Copper is unchanged;
Bonds are unchanged. The 10-year yield is 3.48%.
Economic Data Releases
Durable goods orders from December are out at 0830. This can be a good leading indicator of manufacturing activity. The headline figure is expected to increase 2.5% month-over-month after dropping 2.1% last month. The core figure, which excludes transportation items, is expected to drop a bit (by 0.2% MoM) after being essentially flat in November (0.1%).
Also at 0830 we get our first look at fourth-quarter GDP. The expectation here is for a 2.6% print, down from the 3.2% seen in Q3 but still positive.
We’ll also get a preliminary reading of December retail inventories and wholesale inventories at 0830. The wholesale figure is the only one that has a survey number attached to it. That is expected to print at 0.5% MoM after 1.0% MoM in November.
Seeing how it’s Thursday we’ll get initial jobless claims, also at 0830. Economists expect 205,000 new claims, after just 190,000 last week. This number has been trending lower for the past month — somewhat unexpectedly as this is usually when there are seasonal layoffs.
Finally new home sales for December are out at 1000. The expectation here is for 617,000 new sales, down from 640,000 seen a month ago.
Earnings Dump
It’s another interesting day for earnings. Blackstone (BX 0.00%↑), Nokia (NOK 0.00%↑), SAP (SAP 0.00%↑), STMI Electronics (STM 0.00%↑), Dow Chemicals (DOW 0.00%↑), XCEL Energy (XEL 0.00%↑), Tractor Supply Co (TSCO 0.00%↑), McCormick & Co. (MKC 0.00%↑), Valero Energy (VLO 0.00%↑), Northrup Grumman (NOC 0.00%↑), Southwest Airlines (LUV 0.00%↑), American Airlines (AAL 0.00%↑), JetBlue (JBLU 0.00%↑), Comcast (CMCSA 0.00%↑), Sherwin Williams (SHW 0.00%↑), Mastercard (MA 0.00%↑) — and that’s all before the open at 0930!
After the close at 1600 we’ll hear from Intel (INTC 0.00%↑) and Visa (V 0.00%↑), among others.
The Bottom Line©️
So a very busy morning. GDP readings don’t usually move markets seeing how they are entirely backward-looking datapoints that don’t have much (or any?) impact on the rate of change. But it is important from a psychological perspective, especially with so much debate going on over whether and when the US will enter a recession. There could be an element of concern if the number overshoots as well, because that would indicate the economy is healthier than anticipated, which would put the fear of further rate hikes back into the hearts and minds of investors.
Other than that one can probably expect earnings to drive the market. Watch for guidance especially from consumer staples (MKC, maybe SHW) and cyclicals (energy, travel stocks). What Visa and Mastercard have to say about the state of consumer spending could be interesting as well.
Economic Data Dump, Earnings Deluge, Q4 GDP