By Joe Wallace
U.S. stock futures declined Friday, signaling a muted end to a
strong week on Wall Street as investors awaited data on how the
economy performed at the start of 2021.
Futures tied to the S&P 500 fell 0.7%, indicating the
benchmark gauge may open lower after megacap technology companies
pushed it to its fourth record close of the new year Thursday.
Futures for the technology-focused Nasdaq-100 index lost 0.6% and
contracts tied to the Dow Jones Industrial Average declined
Markets appeared to be pausing after rallying for much of
January, with money managers saying there was no clear catalyst for
the decline. Investors have been cheered in recent days by a solid
start to earnings season, though some are concerned that high
valuations in corners of the market will leave stocks vulnerable in
the coming months.
"With a lack of new ammunition, people are simply stopping off,"
said Lars Skovgaard Andersen, investment strategist at Danske Bank
Investors are cautious of adding new positions ahead of the
Federal Reserve's decision on monetary policy and earnings from
major companies including Facebook, Apple and Tesla next week, he
Ahead of the opening bell in New York, shares of International
Business Machines fell 7.9% after the company said it expected to
return to revenue growth this year, following a 4.6% decline in
2020. Intel fell 4.9% after the chip maker posted net income for
2020 of $20.9 billion, down from $21.1 billion a year earlier.
Paint maker PPG Industries said sales volumes fell in the fourth
quarter, pushing shares down 3.9% premarket. Kansas City Southern
predicted double-digit revenue growth in 2021, lifting shares in
the railroad company by 1.9%.
Of the 62 companies on the S&P 500 that had reported results
by the end of Thursday, 89% have beaten analysts' expectations,
according to FactSet.
"So far, so good," said Fredrik Öberg, chief investment officer
for private banking at SEB, highlighting results from Netflix,
BlackRock and several banks.
In the bond market, yields on 10-year U.S. Treasury notes
slipped to 1.084% from 1.107% Thursday. Yields fall as prices rise.
The WSJ Dollar Index added 0.3%.
Stocks broadly retreated in overseas markets and oil prices
dropped amid worries that coronavirus restrictions were crimping
demand for crude. Surveys of purchasing managers in Europe showed
that high coronavirus rates and government curbs were increasing
the risk of the second recession since the pandemic struck.
Parallel IHS Markit surveys due at 9:45 a.m. ET are expected to
show that the U.S.'s manufacturing and services sectors continued
to grow in January. Also Friday, data on existing-home sales are
predicted to show a decline for a second-consecutive month in
The pan-European Stoxx Europe 600 index fell 1%, led lower by
energy companies and travel-and-leisure firms, whose profits are
closely tied to the fortunes of the economy. Brent-crude futures,
the benchmark in international energy markets, slid 2.8% to $54.53
a barrel and West Texas Intermediate, the U.S. oil benchmark, fell
3.1% to $51.48 a barrel.
Political uncertainty pressured assets in Italy, where the
benchmark FTSE MIB index dropped 1.9% after a local newspaper
reported that Prime Minister Giuseppe Conte was considering a snap
election. Mr. Conte is under pressure to strengthen parliamentary
support for his government, a task that appears increasingly
difficult, raising the prospect of fresh elections in the
The probability of an election "has likely risen in the past few
days, and markets are discounting it," said Francesco Pesole,
foreign-exchange strategist at ING Groep.
Cautiously optimistic comments from European Central Bank
President Christine Lagarde about Europe's recovery also weighed on
Italian bonds, analysts said. Yields on 10-year Italian government
bonds rose to 0.734% from 0.687% Thursday.
Among individual European stocks, Siemens rose 6.2% after the
German engineering company said preliminary quarterly results were
broadly ahead of market expectations. Volkswagen said deliveries
rose in the fourth quarter, boosting shares in the German car maker
In Asia, Hong Kong's Hang Seng Index ended 1.6% lower after a
local newspaper reported that the city would place tens of
thousands of people in lockdown to control Covid-19. China's
Shanghai Composite fell 0.4%.
Mr. Andersen said he was closely watching outbreaks of
coronavirus in China and Hong Kong, after many Asian economies
rebounded quickly from the pandemic last year.
"It is of course a risk that this locomotive in Asia could be
hurt by this, but we think they have it under control," he
Gold futures fell 1.4% to $1,840.50 a troy ounce in New
Write to Joe Wallace at Joe.Wallace@wsj.com
(END) Dow Jones Newswires
January 22, 2021 09:22 ET (14:22 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.