Pre-Markets Stay Positive After Strong Friday Trading
Monday, January 23rd, 2023
Pre-market futures to start a new week are continuing higher, after Friday’s surprise move into the green, which sent all major indices back into positive territory thus far into 2023. The Dow is +95 points at this hour, followed by the Nasdaq +20 and the S&P 500 +5 points.
The Fed is entering its “blackout period” ahead of the next Federal Open Market Committee (FOMC) meeting, which starts a week from tomorrow and concludes with a new statement on interest rates on Wednesday, February 1st. Much of the positive sentiment in the markets currently has to do with the idea that the Fed will raise by only 25 bps, taking the Fed funds rate to 4.50-4.75%, instead of a 50 bps hike that would bring us to our highest levels since the summer of 2007.
In the meantime, we do have plenty of information coming out that may influence the Fed’s decision — this week alone, we’ll get S&P PMI Manufacturing and Services prints tomorrow; Jobless Claims, Durable Goods Orders and a first read on Q4 GDP Thursday; and a full December Personal Consumption Expenditures (PCE) report out on Friday. None of these by themselves is likely to have as much impact as CPI two weeks ago or the Employment Report at the top of the month, but taken together the may.
Also this week, Q4 earnings season picks up pace, with Microsoft MSFT and Tesla TSLA putting out results on Tuesday and Wednesday afternoon, respectively. Microsoft shares are up marginally in the first few weeks of January, while Tesla has been amped up +23% year to date. Over the past year, however, Microsoft is still down -19% and Tesla -57%. The quarterly numbers will be important, but just as key will be the perspective of each company’s forward outlook.
After today’s open, we’ll see a new report on Leading Economic Indicators for December. Results are expected to be down again, -0.7%, but less deeply than the -1.0% posted for last November. And Spotify SPOT is reportedly cutting around 600 workers from its payrolls, about 6% of its total workforce. The drip-drip-drip of tech layoffs continues. SPOT shares are +5% on the news.
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