The major indices are expected to open lower. The S&P futures are down 19 points and are trading 0.8% below fair value. The Nasdaq 100 futures are down 59 points and are trading 0.9% below fair value. The Dow Jones Industrial Average futures are down 183 points and are trading 0.8% below fair value.
The impetus for the negative bias reportedly is growth concerns that have been kicked up by some weaker than expected trade data out of China. The continued partial government shutdown, and suggestions a solution may not be reached soon, has also been a drag on sentiment.
Those are some macro factors in play.
A micro factor in play is the news from utility company PG&E (PCG) that it expects to file for a Chapter 11 bankruptcy reorganization in a California court on or about January 29, as it wrestles with the expected liabilities associated with wildfires that took place in 2017 and 2018.
Shares of PG&E are indicated 45% lower in pre-market trading, which should place considerable pressure on the Dow Jones Utility Average and related sector ETFs.
Another micro factor, which will pique some macro concerns, is the earnings report from Citigroup (C), which generates more than half of its revenue outside the United States. Citigroup topped consensus earnings estimates, primarily with the help of cost cutting, a lower cost of credit, and a lower effective tax rate, yet its revenue came up shy of expectations as it suffered a 21% drop in its fixed income business.
Shares of Citigroup are trading 0.6% lower after climbing 15% from its close on December 24. The early weakness, then, is probably a reflection of investors' concerns that the results weren't strong enough in terms of operating quality to keep the stock moving higher unabated in the short term.
Citigroup is the first of a number of major financial firms that will be reporting their fourth quarter earnings this week, marking the official start to the fourth quarter reporting period.
Those earnings reports -- and the response to them -- will be a focal point throughout the week along with the Brexit vote in the UK Parliament on Tuesday, developments (or lack thereof) in trying to end the partial government shutdown, the behavior of oil prices ($51.18, -$0.73, -1.4%), and the movement of fixed income markets as a barometer of global investor sentiment.
Currently, Treasury yields are down one to two basis points across the curve. That's a relatively subdued move given the tenor of this morning's headlines, which is perhaps fostering a sense that the headlines have created more of an excuse to take some money off the table in the stock market after three straight weeks of gains than it is a sea-change in sentiment.
The inference is that there is an inkling beneath the surface that there will be an effort to buy the opening weakness. That has been the inclination over the past three weeks anyway, so market participants will be paying close attention to see if that dynamic remains intact or whether it loses some luster.
In terms of China's trade date, it featured a 4.4% year-over-year decline in exports in December and a 7.6% year-over-year decline in imports. Economists were expecting both exports and imports to be up in December. That clearly wasn't the case; hence, global growth concerns are back in the trading narrative that is creating a story line to take some profits.