Stock Market Update

The S&P 500 futures are down 15 points and are trading 0.3% below fair value, the Nasdaq 100 futures are down 67 points and are trading 0.4% below fair value, and the Dow Jones Industrial Average futures are down 129 points and are trading 0.3% below fair value.

Contracts linked to the S&P 500, Nasdaq 100, and Dow Jones Industrial Average are lower this morning. Pre-open losses in some mega cap names have contributed to the negative bias this morning. Earnings continue to roll in, receiving mixed responses from investors. Walmart (WMT) is up nearly 3% this morning after reporting pleasing quarterly results while Home Depot (HD) sports a premarket loss following its earnings report. 

Goldman Sachs believes the S&P 500 will reach 5,200 by the end of year, citing optimistic earnings expectations as the reason for increasing the forecast, according to Bloomberg.

Separately, the People's Bank of China lowered its five-year loan prime rate to 3.95% from 4.20% against expectations for a smaller decrease while the one-year rate remained at 3.45%.

In corporate news:

• Discover Financial Services (DFS 125.75, +15.51, +14.0%): to be acquired by Capital One (COF) in all-stock transaction valued at $35.3 billion
• Home Depot (HD 353.93, -8.42, -2.3%): beats by $0.05, reports revs in-line; increases dividend 7.7%
• Apple (AAPL 181.85, -0.46, -0.3%): EU will soon impose EUR 500 mln fine against Apple (AAPL) over access to its music streaming services (SPOT), according to FT
• Walmart (WMT 175.00, +4.64, +2.7%): beats by $0.16, beats on revs; guides Q1 EPS below consensus, revs above consensus; guides FY25 EPS in-line, revs above consensus; Q4 US comps +3.9%; increases quarterly cash dividend 9% to $0.83/share on a post-stock split basis, or $2.49/share on a pre-split basis; WMT and VIZIO (VZIO) have entered into an agreement for Walmart to acquire VIZIO for $11.50/share in cash, equating to a fully diluted equity value of ~$2.3 bln
• PNC (PNC 147.83, -1.02, -0.7%): appoints Michael Lyons as President of the corporation and its wholly owned banking subsidiary, PNC Bank, effective immediately
• Medtronic (MDT 87.65, +3.23, +3.8%): beats by $0.15, beats on revs; guides FY24 EPS above consensus, revs above consensus
• Intel (INTC 44.93, +1.42, +3.3%): in discussions with government to receive more than $10 bln in chip technology subsidies, according to Bloomberg
• GlobalFoundries (GFS 57.34, +3.96, +7.4%): and Biden-Harris Administration Announce CHIPS and Science Act Funding for Essential Chip Manufacturing

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended Tuesday on a mixed note. Japan's Nikkei: -0.3%, Hong Kong's Hang Seng: +0.6%, China's Shanghai Composite: +0.4%, India's Sensex: +0.5%, South Korea's Kospi: -0.8%, Australia's ASX All Ordinaries: UNCH.
  • In economic data:
    • South Korea's February Consumer Confidence 101.9 (last 101.6)
    • Hong Kong's January Unemployment Rate 2.9% (last 2.9%)
  • In news:
    • The People's Bank of China lowered its five-year loan prime rate to 3.95% from 4.20% against expectations for a smaller decrease while the one-year rate remained at 3.45%.
    • FT reported that China has been warned that the U.S. and allies will retaliate if China decides to dump goods on the international market.
    • The latest policy Minutes from the Reserve Bank of Australia showed that a 25-bps rate hike was considered at the January meeting.
    • Thailand's prime minister is calling for a rate cut in the wake of weak GDP data.
• Major European indices trade on a mostly higher note while Germany's DAX (-0.2%) underperforms. STOXX Europe 600: -0.1%, Germany's DAX: -0.2%, U.K.'s FTSE 100: +0.2%, France's CAC 40: +0.3%, Italy's FTSE MIB: +0.2%, Spain's IBEX 35: +0.6%.
  • In economic data:
    • Eurozone's December Current Account surplus EUR32.0 bln (expected surplus of EUR20.3 bln; last surplus of EUR22.5 bln). December Construction Output 0.8% m/m (last -1.0%)
    • Swiss January trade surplus CHF4.738 bln (expected surplus of CHF2.35 bln; last surplus of CHF1.271 bln)
  • In news:
    • Bayer will reduce its dividend by 95% in order to reduce debt.
    • EU Foreign Minister Borrell said that a maritime security operation will begin in the Red Sea to reduce threats to shipping vessels.
    • The European Central Bank noted that wage growth slowed to 4.5% in Q4 from 4.7% in Q3.
    • Barclays announced strategic changes aimed at improving shareholder returns.