Stock Market Update

The S&P 500 futures are down eight points and are trading 0.2% below fair value, the Nasdaq 100 futures are down 18 points and are trading 0.1% below fair value, and the Dow Jones Industrial Average futures are down 97 points and are trading 0.3% below fair value.

There isn't a lot of conviction on the part of buyers this morning, outside of individual stocks like Twilio (TWLO), which impressed with guidance at its Investor Day, and Novo-Nordisk (NVO), which shared some upbeat results for an early stage weight loss drug trial, but there also isn't much conviction on the part of sellers who have seen the stock market turn in a solid showing for the second week in a row.

The lull in the buying action this morning is being traced in large part to some disappointing guidance from Texas Instruments (TXN) and Dow component Boeing (BA). Additionally, fellow Dow components American Express (AXP) and Verizon (VZ) are also lower in pre-market trading following their better-than-expected reports.

There is a festering sense that the market is due for a consolidation period given how far it has come in a short time. The S&P 500, which set a record closing high yesterday, is up 6.0% from its low on Jan. 13 (a span of just eight trading sessions) while the Nasdaq Composite is up 6.5%.

Separately, the Bank of Japan raised its key policy rate by 25 basis points to 0.50%, as expected. The U.S. Dollar Index is down 0.4% to 107.62 while the 10-yr note yield is unchanged at 4.64% in front of today's economic data, which will include the preliminary January S&P Global US Manufacturing and Services PMIs at 9:45 a.m. ET, and the December Existing Home Sales and final January University of Michigan Consumer Sentiment reports at 10:00 a.m. ET.

In corporate news:

• American Express (AXP 318.53, -7.34, -2.3%): beats by $0.01, reports revs in-line; guides FY25 EPS in-line, revs in-line; Plans to increase dividend by 17% to $0.82/share
• Boeing (BA 176.15, -2.35, -1.3%): projects Q4 revenue below consensus; recognizes impacts related to the IAM work stoppage and agreement alongside other charges and costs
• CSX Corp. (CSX 32.44, -1.23, -3.7%): reports EPS in-line, revs in-line; operating margin was 31.3% for the quarter, and adjusted operating margin was 34.3%
• Novo-Nordisk (NVO 92.50, +11.40, +14.1%): completes phase 1b/2a trial with subcutaneous amycretin; people treated with amycretin achieved an estimated body weight loss of 9.7% on 1.25mg (20 weeks), 16.2% on 5mg (28 weeks) and 22.0% on 20mg (36 weeks)
• Texas Instruments (TXN 192.23, -8.38, -4.2%): beats by $0.07, beats on revs; guides Q1 EPS below consensus, revs in-line
• Twilio (TWLO 132.60, +19.20, +16.9%): projects Q4 revs above consensus; authorizes up to $2.0 bln for repurchases; plan to expire on December 31, 2027
• Verizon (VZ 39.12, -0.06, -0.2%):  beats by $0.01, beats on revs; guides FY25 EPS in-line

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended the week on a mostly higher note with Japan's Nikkei (-0.1%) showing a limited reaction to the Bank of Japan's 25-basis point rate hike, which was anticipated by the market. Japan's Nikkei: -0.1%, Hong Kong's Hang Seng: +1.9%, China's Shanghai Composite: +0.7%, India's Sensex: -0.4%, South Korea's Kospi: +0.9%, Australia's ASX All Ordinaries: +0.4%.
  • In economic data:
    • Japan's December National CPI 0.6% m/m (last 0.4%); 3.6% yr/yr (last 2.9%). December National Core CPI 3.0% yr/yr, as expected (last 2.7%). Flash January Manufacturing PMI 48.8 (expected 49.7; last 49.6) and flash Services PMI 52.7 (last 50.9)
    • India's flash January Manufacturing PMI 58.0 (expected 56.7; last 56.4) and flash Services PMI 56.8 (expected 59.5; last 59.3)
    • Singapore's Q4 URA Property Index 2.3% qtr/qtr (last -0.7%). December Industrial Production -0.7% m/m (expected -1.2%; last 1.7%); 10.6% yr/yr (expected 6.4%; last 10.8%)
    • Australia's flash January Manufacturing PMI 49.8 (last 47.8) and flash Services PMI 50.4 (last 50.8)
    • New Zealand's December Credit Card Spending -1.4% yr/yr (last -3.1%)
  • In news:
    • The BOJ indicated that more rate hikes will be made if there is no change in the outlook.
    • The People's Bank of China left its one-year medium term lending facility rate at 2.00%. Elsewhere, the Monetary Authority of Singapore announced a slight easing of its policy for the first time since 2020.
    • President Trump said that he would prefer not to implement tariffs on imports from China.
    • Flash Manufacturing PMI reading from Japan (48.8) and Australia (49.8) remained in contraction while Services readings pointed toward continued expansion.
• Major European indices are on track for a mostly higher finish to the week. STOXX Europe 600: +0.3%, Germany's DAX: +0.3%, U.K.'s FTSE 100: -0.3%, France's CAC 40: +0.8%, Italy's FTSE MIB: +0.4%, Spain's IBEX 35: -0.4%.
  • In economic data:
    • Eurozone's flash January Manufacturing PMI 46.1 (expected 45.6; last 45.1) and flash Services PMI 51.4, as expected (last 51.6)
    • Germany's flash January Manufacturing PMI 44.1 (expected 42.7; last 42.5) and flash Services PMI 52.5 (expected 51.1; last 51.2)
    • U.K.'s flash January Manufacturing PMI 48.2 (expected 46.9; last 47.0) and flash Services PMI 51.2 (expected 50.8; last 51.1). January CBI Distributive Trades Survey -24 (expected -11; last -15)
    • France's flash January Manufacturing PMI 45.3 (expected 42.4; last 41.9) and flash Services PMI 48.9 (expected 49.3; last 49.3)
    • Spain's December PPI 2.3% yr/yr (last 0.9%)
  • In news:
    • Flash January Manufacturing PMI readings from Germany (44.1), France (45.3), and the U.K. (48.2) remained in contraction, but they were a bit better than expected, while Services PMI readings were little changed from December, pointing to ongoing expansion in Germany (52.5) and the U.K. (51.2) and a slight contraction in France (48.9).
    • Luxury goods names are having a good showing after solid comparable sales data from Burberry.