U.S. equity futures edged lower Friday, with tech leading declines, as investors expect a grim quarterly update from Intel to at least temporarily blunt market optimism following a firm rally yesterday that lifted stocks to their highest levels in more than a month.
Intel’s surprise December quarter loss, paired with a less-than-stellar outlook for PC and data center sales, was quickly followed by reports the the U.S. has convinced Japan and the Netherlands — home to chip-designing giant ASML — to join it in limiting the export of high-end semiconductors to China.
The potential for another round of trade tensions between Washington and Beijing, just as the world’s second-largest economy begins to ramp-up growth and investment following three years of pandemic restrictions, kept a lid on stocks overnight and looks to hold down early gains on Wall Street.
At the same time, traders are noting an important move higher in Treasury bond yields following yesterday’s stronger-than-expected reading of fourth quarter GDP, which showed the U.S. economy advancing at a 2.9% clip, and the lowest tally of weekly jobless claims since May of last year.
The data has yet to alter rate hike forecasts for the Fed’s two-day meeting next week in Washington, but alongside today’s PCE Price index reading could provide fuel for policymakers who argue that inflation continues to run at unacceptably high levels in the world’s biggest economy.
The Federal Reserve‘s preferred measure of U.S. inflation, in fact, slowed again in December, with the core PCE Index falling to 4.4% on an annualized basis as personal spending declined and income gains were muted.
The CME Group’s FedWatch still suggests a 99.1% chance of a 25 basis point rate hike next week, with odds of a similar move in March pegged at 85%.
Benchmark 10-year Treasury note yields, meanwhile, were marked 2 basis points lower at at 3.524% in New York trading following the PCE data while 2-year notes eased to 4.195%. The U.S. dollar index, which tracks the greenback against a baskets of its global peers, was marked 0.05% higher at 101.906.
Heading into the start of the trading day on Wall Street, futures tied to the S&P 500 are priced for a 13 point opening bell decline while those linked to the Dow Jones Industrial Average are set for a 5 point dip. The tech-focused Nasdaq, which closed at a four-month high of 11,512.41 points, was marked 60 points lower.
In terms of individual stocks, Intel (INTC) – Get Free Report shares plunged 10% after the chipmaker post a surprise fourth quarter loss and said lingering weakness in PC demand would pressure margins and clip near-term earnings.
Visa (V) – Get Free Report shares rose 1.5% after the world’s biggest credit card company posted better-than-expected first quarter earnings thanks in part to a surge in cross-border spending amid the ongoing travel boom.
American Express (AXP) – Get Free Report, meanwhile, surged 5.7% after it forecast solid profit and revenue growth, along with a dividend boost, that offset weaker-than-expected fourth quarter earnings.
Hasbro (HAS) – Get Free Report shares slumped 6.4% after the toy and games maker said it would slash around 15% of its global workforce and warned that a disappointing holiday season would see it post softer-than-expected fourth quarter earnings.
Chevron (CVX) – Get Free Report shares slipped 1.3% after the oil major posted softer-than-expected fourth quarter earnings just days after unveiling plans for a $75 billion buyback.
In overseas markets, Europe’s Stoxx 600 added 0.05% in afternoon Frankfurt trading, while Asia’s region-wide MSCI ex-Japan index touched a fresh seven-month high, rising 0.16%, as markets in China re-opened following the five-day Lunar New Year holidays.
