Stock Market Update

The S&P 500 futures are up 13 points and are trading 0.3% above fair value, the Nasdaq 100 futures are up 114 points and are trading 0.5% above fair value, and the Dow Jones Industrial Average futures are down 27 points and are trading 0.1% below fair value.

Contracts linked to the S&P 500 and Nasdaq 100 are higher, bolstered by responses to earnings results from Meta Platforms (META) and Tesla (TSLA). Microsoft (MSFT) is lower ahead of the open following its earnings report.

Treasury yields are lower, providing some support to equities. The 10-yr yield is down six basis points from yesterday at 4.50% and the 2-yr yield is down three basis points to 4.20%.

The European Central Bank is expected to announce a 25-basis point rate cut at 8:15 ET and likely hint at more easing to come.

In corporate news:

• Microsoft (MSFT 430.00, -19.33, -4.4%): beats by $0.12, beats on revs; Azure +31% CC vs +31-32% CC prior guidance; IC segment revs a bit light of guidance; Guides to MarQ revs
• Meta Platforms (META 684.08, +7.59, +1.1%): beats by $1.26, beats on revs; guides Q1 revs in-line, reiterates FY25 capex guidance; Trajectory for most long term initiatives to be a lot clearer by year's end
• Tesla (TSLA 395.30, +6.20, +1.6%): misses by $0.04, misses on revs; plans for new vehicles remain on track for start of production in 1H25; Cybercab scheduled for volume production in 2026
• American Airlines (AAL 16.92, -0.41, -2.4%): FAA says American Airlines Flight 5342 collided in midair with a Sikorsky (LMT) H-60 helicopter; no survivors have been found and 27 bodies have been recovered from the river
• Caterpillar (CAT 381.43, -11.80, -3.0%): beats by $0.12, misses on revs
• UPS (UPS 117.38, -16.40, -12.5%): beats by $0.22, reports revs in-line; guides FY25 revs below consensus
• ServiceNow (NOW 1,034.00, -109.63, -9.6%): beats by $0.02, reports revs in-line; guides Q1 revs below consensus; guides FY25 revs below consensus; announces buyback; expands strategic alliance with Visa (V); and Google Cloud expand partnership to deliver AI-powered tools to millions of users; unveils new agentic AI innovations to autonomously solve the most complex enterprise challenges
• IBM (IBM 247.12, +18.49, +8.1%): beats by $0.14, reports revs in-line; expects Q1 CC yr/yr revenue growth to be similar to Q4's +2% CC; and Telefónica Tech announce a collaboration agreement to develop and deliver security solutions that address security challenges posed by future cryptographically relevant quantum computers

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended Thursday on a higher note while markets in China, Hong Kong, Singapore, and South Korea remained closed for Lunar New Year. Japan's Nikkei: +0.3%, Hong Kong's Hang Seng: HOLIDAY, China's, Shanghai Composite: HOLIDAY, India's Sensex: +0.3%, South Korea's Kospi: HOLIDAY, Australia's ASX All Ordinaries: +0.5%.
  • In economic data:
    • Australia's Q4 Import Price Index 0.2% qtr/qtr (expected 1.5%; last -1.4%) and Export Price Index 3.6% qtr/qtr (last -4.3%)
    • New Zealand's December trade surplus NZD219 mln (expected deficit of NZD1.363 bln; last deficit of NZD435 mln). January ANZ Business Confidence 54.4 (last 62.3)
  • In news:
    • SoftBank is looking to invest up to $25 bln in OpenAI in addition to its commitment to the Stargate AI fund, according to FT.
    • Toyota is reportedly planning a 10.4% increase to its production target for February through April.
    • Japan and the U.S. are making preparations for a leaders meeting on February 7.
• Major European indices trade in the green despite weak flash Q4 GDP readings from Germany, France, and Italy that left the eurozone's flash GDP flat for Q4. 
  • In economic data:
    • Eurozone's flash Q4 GDP 0.0% qtr/qtr (expected 0.1%; last 0.4%); 0.9% yr/yr (expected 1.0%; last 0.9%). January Business and Consumer Survey 95.2 (expected 94.1; last 93.7). December Unemployment Rate 6.3%, as expected (last 6.2%)
    • Germany's flash Q4 GDP -0.2% qtr/qtr (expected -0.1%; last 0.1%); -0.2% yr/yr (expected 0.0%; last -0.3%). December Import Price Index 0.4% m/m (expected 0.5%; last 0.9%); 2.0% yr/yr (expected 1.9%; last 0.6%)
    • U.K.'s December BoE Consumer Credit GBP1.045 bln (expected GBP950 mln; last GBP905 mln). December Mortgage Approvals 66,530 (expected 65,000; last 66,060) and Mortgage Lending GBP3.57 bln (expected GBP2.60 bln; last GBP2.55 bln)
    • France's flash Q4 GDP -0.1% qtr/qtr (expected 0.0%; last 0.4%); 0.7% yr/yr (last 1.2%). December Consumer Spending 0.7% m/m (expected 0.1%; last 0.2%)
    • Italy's flash Q4 GDP 0.0% qtr/qtr (expected 0.1%; last 0.0%); 0.5% yr/yr (expected 0.6%; last 0.4%). December Unemployment Rate 6.2% (expected 5.7%; last 5.9%)
    • Spain's January CPI 0.2% m/m (expected 0.0%; last 0.5%); 3.0% yr/yr (expected 2.9%; last 2.8%). January Core CPI 2.4% yr/yr (last 2.6%). January Business Confidence -5.1 (last -4.5)
    • Swiss January KOF Leading Indicators 101.6 (expected 100.3; last 99.6). December trade surplus CHF3.49 bln (expected CHF4.50 bln; last CHF6.11 bln)
  • In news:
    • Deutsche Bank reported a decrease in quarterly profit, contributing to a 36% decrease in net profit for the full year.
    • The European Central Bank is expected to announce a 25-basis point rate cut at 8:15 ET and likely hint at more easing to come.