Stock Market Update

Equity futures point to a modestly higher opening after a flattish, mostly lower finish to the midweek session. The modest weakness snapped a three-day streak of fresh record highs for the DJIA.

Yesterday's action was largely defined by the January employment situation report, which saw an impressive 130K payrolls added in January (Briefing.com consensus 68K). The strong report initially lifted stocks, but it also weighed on the market's expectations for easing for the Fed, which saw the early gains erased.

Semiconductors, defensive sectors, and select cyclical sectors posted solid gains, while mega-cap tech, software, and financials lagged. 

The market will receive more labor market data this morning in the form of the weekly initial jobless claims report (Briefing.com consensus 230K). 

Additionally, a busy week of earnings reports continues to be a driver of some outsized moves this week. 

Still, action at the index level has been largely subdued after a volatile previous week. The major averages enter today's action within 0.2% of their unchanged levels for the week.

In Washington, Politico reports that the House voted 219-211 to override President Trump's tariffs on Canada, but the vote is largely symbolic because there is not enough support to override a presidential veto.

In corporate news:

• Applovin (APP 424.00, -32.81, -7.2%) beat EPS expectations by $0.29, beat revenue expectations, and guided Q1 revenues above consensus. 
• Cisco (CSCO 79.50, -6.04, -7.1%) beat EPS expectations by $0.02, beat on revenues, guided Q3 EPS in-line with revenues above consensus, raised FY26 guidance, and raised its dividend 2% to $0.42/share.
• McDonald's (MCD 324.97, +1.76, +0.5%) beat EPS expectations by $0.07 and beat revenue expectations. 
• Microsoft (MSFT 405.87, +1.50, +0.4%) wants to reduce its reliance on OpenAI, according to Financial Times. 

Reviewing overnight developments:

Equity indices in the Asia-Pacific region had a mixed showing on Thursday with South Korea's Kospi (+3.1%) settling at a fresh record high while Japan's Nikkei (-0.02%) touched a fresh record before ending little changed. Japan's Nikkei: UNCH, Hong Kong's Hang Seng: -0.9%, China's Shanghai Composite: +0.1%, India's Sensex: -0.7%, South Korea's Kospi: +3.1%, Australia's ASX All Ordinaries: UNCH.

In news:

• Longer-dated JGBs outperformed, sending yields on 20-, 30-, and 40-yr bonds to levels seen in early January.
• Reserve Bank of Australia Governor Bullock defended the RBA's recent rate hike in a parliamentary testimony.
• There was growing speculation that the Bank of Korea will launch a quantitative easing program.

In economic data:

• Japan's January PPI 0.2% m/m, as expected (last 0.1%); 2.3% yr/yr, as expected (last 2.4%)
• India's January CPI 2.75% (expected 2.40%; last 1.33%)
• Australia's February MI Inflation Gauge 5.0% (last 4.6%)

Major European indices trade on a mostly higher note. STOXX Europe 600: +0.4%, Germany's DAX: +1.3%, U.K.'s FTSE 100: +0.1%, France's CAC 40: +0.9%, Italy's FTSE MIB: +0.3%, Spain's IBEX 35: -0.1%.

In news:

• The U.K.'s GDP report for Q4 was a touch light relative to expectations due to weak industrial production in December.
• Siemens reported strong results and outlook while Mercedes-Benz reported pressure on margins and cautious guidance.
• Hermes reported strong revenue growth for Q4.
• French President Macron urged EU leaders to come up with a plan to improve competitiveness by the summer.

In economic data:

• U.K.'s Q4 GDP 0.1% qtr/qtr (expected 0.2%; last 0.1%); 1.0% yr/yr (expected 1.2%; last 1.2%). December Industrial Production -0.9% m/m (expected -0.1%; last 1.3%); 0.5% yr/yr (expected 1.5%; last 2.3%). December Manufacturing Production -0.5% m/m (expected -0.2%; last 1.9%); 0.5% yr/yr (expected 1.8%; last 1.3%). December Construction Output -0.5% m/m (expected 0.5%; last -0.8%); -0.3% yr/yr (expected 0.0%; last -0.3%). Q4 Business Investment -2.7% qtr/qtr (expected 0.4%; last 1.6%); 2.0% yr/yr (last 2.5%). December trade deficit GBP22.72 bln (expected deficit of GBP22.30 bln; last deficit of GBP23.58 bln)