New Home Sales for December; EIA Weekly Petroleum Status Report;
Bank of Canada rate decision; results from AT&T, Boeing, Intel,
Stock futures climbed Wednesday, with the outcome of a Federal
Reserve meeting in the spotlight, along with a fresh batch of
earnings from Boeing, Tesla and other big names.
Investors have been whipsawed by recent volatility for markets,
driven by disappointment over the earnings season thus far,
geopolitical and Covid-19 worries and, most of all, apprehension
over Fed tightening to come.
Markets largely expect the first Fed interest-rate hike won't
arrive until March, but Wednesday's outcome and comments will still
garner close attention.
"It's probably soon time to chill for the Fed hawks, as the Fed
hasn't got anything to gain in sending out hawkish messages today:
slaughtered equity markets won't help them to get the inflation
situation straight," wrote Ipek Ozkardeskaya, senior analyst at
Swissquote, in a note to clients.
"On the contrary, a deep dive in the financial markets would
only refrain the Fed from doing what it's got to do and worsen
inflation," added Ozkardeskaya.
Read: How Powell May Try to Calm Market's Frazzled Nerves
Microsoft shares rose 3% in premarket following the tech giant's
results Tuesday. Its stock initially fell, then rebounded after the
company's strong revenue forecast for the current quarter.
Overseas, the pan-continental Stoxx Europe 600 jumped 1.6%,
while major stock indexes in Asia closed mixed.
The current correction in global equity markets is unlikely to
deepen much further and turn into a bear market, Goldman Sachs
said. It added, while higher interest rates are a concern to
investors, they are expected amid a transition from an era of
deflationary tail risks to one characterized by inflationary
Goldman Sachs forecasts rates will peak around 2.75% in the
U.S.--still around 100 basis points higher than market pricing--but
this would still be very low relative to history and unlikely to
generate a recession. "Rising interest rates are generally not
outright negative for equity markets."
Citi said the market has fully priced in a 25 basis point
interest rate rise by the Fed in March and it will be looking for a
confirmation of that at Wednesday's FOMC meeting. However, it added
that the Fed's hints on the terminal rate could be more of a mover
for euro duration.
Citi rates strategists' base case is four interest rate hikes in
2022, each for 25 bps. "For euro duration, what perhaps matters
more is not what the Fed signals for 2022--where the ECB
effectively has closed the hiking window--but if the Fed says
anything to prompt a re-pricing of the terminal rate for USD, to
which EUR is currently trading with a high beta," Citi said.
Abrdn said the Fed's meeting is likely to bring few surprises in
terms of direct policy moves, but will confirm its recent hawkish
pivot and heavily signal the start of interest rate increases in
" We think the risk of a short term hawkish surprise--such as
ending QE earlier than March--is relatively low, but further out
the forecast horizon the risks are skewed towards the Fed
delivering more than the 100bps in rate hikes we expect this year,"
said James McCann, deputy chief economist.
A faster withdrawal of monetary policy support will coincide
with a more abrupt tightening in fiscal policy as pandemic support
measures fully wind down, McCann added.
Stocks to Watch:
Hawaiian Airlines said the first two of its Boeing 787s due to
arrive this year will now come "no earlier" than the first half of
2023, with the delivery dates yet to be firmed. That bumped up cost
guidance for the year by half a percentage point.
The airline does plan to expand the premium cabin section on the
aircraft, in line with other carriers, and has pushed the ramp up
of flights to and from Japan into the second quarter, assuming the
country reopens to international travelers.
Texas Instruments' Dave Pahl said conditions in the latest
period were pretty much unchanged from the previous quarter, with
strong orders and backlog and lead times for most products stable
though "hot spots" continue to exist.
"Customers continue to be selective in their expedite requests,
increasingly focusing on products that complete a 'matched set'
rather than expediting products across the board," he said in an
Inventory days were 116, up four days sequentially but still
well below the company's target of 130 to 190 days, CFO Rafael
Lizardi said. "We went from draining inventory to now, the last two
quarters, we've actually increased inventory, albeit at a
relatively low level."
Lizardi added that additional capacity will give TI more
legroom. Days of inventory were 123 at the end of 2020 and 144 at
the end of 2019.
The dollar may weaken if the Fed refrains from suggesting it
will tighten monetary policy more aggressively than previously
indicated, said UniCredit.
The Fed should confirm expectations that it will raise interest
rates in March when the asset purchase program ends and that it
won't start quantitative tightening before the fourth quarter.
"An outcome of this type might disappoint those in the market
that had in mind a more active Fed today and this may trigger some
profit taking against the greenback," said UniCredit. Any declines
should be brief, however, offering investors opportunity to buy the
dollar at cheaper levels.
Concerns over Russia-Ukraine tensions are likely to prevent the
euro from rising considerably against the dollar even if the
greenback falls after the Fed's policy decision, said ING.
"The implications of forthcoming sanctions to Russia for the
EU-Russia relationships [in particular related to the gas supply]
are important factors for the EUR's short-term outlook," ING
Until these implications become clearer, the euro will "keep
feeling the drag" of Russia-Ukraine tensions so a weaker dollar
after the Fed's decision wouldn't be enough to significantly lift
Treasury yields edged lower in Europe, with investors awaiting a
statement from Fed rate-setters that could set the tone for trade
Fed policy makers "really need to get their arms around the
balance sheet and what the plan is there, in order to not do any
pre-emptive tightening, and come to a mind meld about what they are
doing in March and whether a 50-basis-point rate hike is on the
table," said Greg Staples, head of fixed income in North America
for DWS Group in New York. "They're not going to want to commit way
"The balance sheet would impact inflation and be far more
effective in terms of mortgage rates than hiking would be," Staples
said via phone. "They could signal there will be no more
reinvestment in agency MBS or choose to sell those assets, which
would impact the longer end of the curve - whereas a 25- or
50-basis-point hike in the fed-funds rate would affect the front
Oil prices ticked higher in Europe as supply remains tight and
tensions continue to linger in Ukraine, with market participants
concerned about dwindling spare capacity.
"With OPEC's effective spare capacity razor thin, any given
nation's underproduction is increasingly difficult to offset," said
TD Securities. It added: "The conflict between Russia and Ukraine
and tensions in the Middle East [is] the largest source of supply
Read Barron.com: A Rare Oil Bear Thinks $100 Predictions Are
Investors who bet on gold ahead of the recent market turmoil are
likely pleased to see that the precious metal has held on to recent
gains while most other asset classes have suffered. Comex gold
futures were down 0.4% Wednesday but have gained almost 1% so far
"With most asset classes losing money in recent days, even
standing still is helpful for an investor's portfolio, so gold has
still performed its role as a safe haven," said Rupert Rowling, an
analyst at Kinesis Money.
After shunning gold exchange-traded funds for months, investors
are flocking back to them amid the turbulence in stock markets. The
SPDR Gold Shares ETF saw its largest ever inflows of more than $1.6
billion on Friday, according to data from FactSet.
Inflows have continued this week with a further $273 million
flowing into the fund on Monday. The sizable inflows coupled with
more modest inflows into other, smaller funds means the 17 gold
ETFs tracked by FactSet have seen net inflows of $2.35 billion
dollars over the past 30 days.
Copper rose 1.5% on the LME as traders awaited the conclusion of
the Fed meeting for guidance on rate rises, with TD Securities
saying "a growing cohort of participants [are] hoping the Fed will
manage to provide a soothing tone for markets."
TD Securities said that with the central bank's stated goal to
dampen inflation, "it's unlikely the Fed will pivot from its plan
to start hiking rates as soon as March."
TODAY'S TOP HEADLINES
Intel Wins EU Antitrust Appeal as Court Annuls $1.2 Billion
BRUSSELS-Intel Corp. won an annulment of a $1.2 billion fine
issued by the European Union's antitrust regulator more than a
decade ago over allegations the microchip producer had used its
commercial power to squeeze out a competitor.
The court's decision is a blow to the European Commission, the
bloc's main antitrust regulator, which is seeking to expand its
reach through new regulations and a reinterpretation of its
existing powers. Lawyers said a ruling in favor of Intel could put
a greater burden on the commission in pursuing some antitrust
IBM Cloud Makeover Shows Results
International Business Machines Corp.'s yearslong makeover into
a hybrid cloud and artificial intelligence company is resonating
with customers whose information-technology strategies have been
reshaped by Covid-19, industry analysts said.
IBM reported higher earnings and revenue on Monday for the
fourth quarter ended Dec. 31, including a 16% increase in hybrid
cloud revenue and an 8.2% rise in software revenue, which includes
data and AI tools.
Tesla Poised for Record Annual Profit
Tesla Inc. is expected to cruise to a record annual profit after
increasing vehicle deliveries at its fastest pace in years.
Elon Musk's electric-vehicle maker delivered more than 936,000
vehicles globally last year, up 87% from 2020, despite global
computer-chip shortages that constrained vehicle production across
the auto industry.
Warehouse Giant Prologis to Offer More Peripheral Services, CFO
Warehouse giant Prologis Inc. plans to generate more revenue
from renting out equipment and providing other add-on services as
it benefits from strong demand amid ongoing supply-chain
The San Francisco-based company operates warehouses around the
world for customers such as e-commerce giant Amazon.com Inc.,
retailer Walmart Inc. and shipping firm FedEx Corp. Prologis, a
real-estate investment trust, generates about 84% of its revenue
from rental income from warehouses.
TD Bank Targets 2,000 Tech Hires in 2022
TD Bank Group on Wednesday announced plans to make more than
2,000 technology hires in 2022 as part of its goal to accelerate
the delivery of digital products.
The new objective represents an increase over the approximately
300 tech hires the company said it made in 2021. TD, which includes
The Toronto-Dominion Bank and its subsidiaries, is looking for
candidates with skills in cloud technology, cybersecurity,
artificial intelligence and data, said Greg Keeley, who heads the
bank's Platforms and Technology teams.
Supply-Chain Software Provider o9 Solutions Valued at $2.7
Supply-chain software provider o9 Solutions Inc. has raised a
new round of private funding that has more than doubled the
Dallas-based company's value to $2.7 billion in less than two
O9 said it received a $295 million equity investment from
growth-equity firm General Atlantic, its climate-focused investment
strategy BeyondNetZero and Generation Investment Management, a
sustainability investor co-founded by former Vice President Al
Gore. The latest funding comes as more companies focus on
Companies Prepare for Fallout From Cyberattacks Against
Businesses including utilities, manufacturers and
financial-services companies are bracing for potential spillover
from cyberattacks against Ukraine, as U.S. officials warn of
Russia-linked hacks that could ripple outward across borders and
Many companies are examining their ties to Ukrainian businesses,
as well as vendors with footprints in the country, as they shore up
computer systems against digital campaigns that could accompany a
Russian military advance into the country.
More Changes Loom for Online Marketers
Online marketers face a slew of changes affecting the way they
reach consumers online.
Fed Expected to Signal Rate Increases to Start in March
Federal Reserve officials are set to keep interest rates near
zero Wednesday, at the conclusion of their two-day policy meeting,
while likely signaling they are preparing to raise rates at their
following gathering in mid-March.
The central bank is also poised to approve one final round of
asset purchases and resume deliberations over how and when to
reverse the pandemic-driven expansion of its $9 trillion securities
portfolio later this year.
Derby's Take: Fed Likely to Use Job View in FOMC Statement to
Tee Up March Rate Hike
The Federal Reserve will likely work to prepare markets for the
start of interest rate increases by upgrading how it describes the
job market in the policy statement to be released at the end of its
monetary policy meeting Wednesday, economists say.
The forecasters believe that to tee up a widely expected March
increase in the now near-zero federal-funds rate target range, the
Federal Open Market Committee policy statement will likely move to
say that the economy has achieved full employment. In the last FOMC
statement from mid-December, the Fed said that the economy was
still working to achieve that level.
IMF Urges El Salvador to Ditch Bitcoin's Legal Tender Status
The International Monetary Fund urged El Salvador to strip
bitcoin of its status as legal tender because of its large risks to
financial stability, the latest twist in protracted talks between
the fund and the highly indebted Central American country to secure
a $1.3 billion loan.
The fund said on Tuesday that El Salvador's recent adoption of
bitcoin as a national currency also creates risks for financial
integrity, consumer protection and fiscal liabilities in a tiny
economy with limited government resources.
House Speaker Nancy Pelosi to Run for Re-Election, Doesn't
Address Leadership Plans
WASHINGTON-House Speaker Nancy Pelosi (D., Calif.) said she
plans to seek re-election this fall, but gave no indication of
whether she wants to remain her party's leader, as Democrats face
an uphill battle to keep control of the chamber in the midterms
To win backing for the speakership in 2018, Mrs. Pelosi made a
deal with party lawmakers that she would serve as speaker for just
two more terms. Since then, she has declined to talk about whether
she plans to step aside. While she has the firm backing of her
caucus, many have openly called for a change in leadership.
New York Mask Mandate Reinstated in State Appeal
An appellate judge reinstated New York's indoor mask mandate on
Tuesday after the state Health Department appealed a ruling that
struck down pandemic-related requirements for schools and
Judge Robert Miller stayed a Monday ruling that the state's
requirements for face coverings, adopted at the start of the school
year and extended in December to cover all indoor public places,
were unconstitutional because they didn't relate to a specific law
Write to firstname.lastname@example.org TODAY IN CANADA
AGF Mgmt 4Q
Champion Iron 3Q
Economic Indicators (ET):
1000 Bank of Canada interest rate announcement
Expected Major Events for Wednesday
00:01/UK: Jan REC JobsOutlook survey
05:00/JPN: Nov Indexes of Business Conditions - Revision
07:45/FRA: Jan Consumer confidence survey
09:00/ITA: Dec Foreign Trade non-EU
11:00/FRA: 4Q Claimant count and job advertisements collected by
12:00/US: 01/21 MBA Weekly Mortgage Applications Survey
13:30/US: Dec Advance Economic Indicators Report
15:00/CAN: Bank of Canada interest rate announcement
15:00/US: Dec New Residential Sales
15:30/US: 01/21 EIA Weekly Petroleum Status Report
19:00/US: U.S. interest rate decision
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Wednesday
AGF Management Ltd - Class B (AGF.B.T) is expected to report
$0.18 for 4Q.
AT&T Inc (T) is expected to report $0.64 for 4Q.
Abbott Laboratories (ABT) is expected to report $0.88 for
Amphenol Corp (APH) is expected to report $0.64 for 4Q.
Anthem Inc (ANTM) is expected to report $4.68 for 4Q.
Automatic Data Processing Inc (ADP) is expected to report $1.63
Boeing Company (BA) is expected to report $0.25 for 4Q.
Brinker International (EAT) is expected to report $0.53 for
Capital Bancorp Inc (CBNK) is expected to report $0.68 for
Central Pacific Financial Corp (CPF) is expected to report $0.65
Coastal Financial Corp (CCB) is expected to report $0.53 for
Corning Inc (GLW) is expected to report $0.50 for 4Q.
Fidelity D&D Bancorp Inc (FDBC) is expected to report for
First Citizens Bancshares Inc. Cl A (FCNCA,FCNCB) is expected to
report $10.69 for 4Q.
Freeport-McMoRan Inc (FCX) is expected to report $0.93 for
General Dynamics Corp (GD) is expected to report $3.39 for
Hess Corporation (HES) is expected to report $0.80 for 4Q.
Hess Midstream LP (HESM) is expected to report for 4Q.
Kimberly-Clark Corp (KMB) is expected to report $1.13 for
Knight-Swift Transportation Holdings Inc (KNX) is expected to
report $1.41 for 4Q.
Lakeland Bancorp (LBAI) is expected to report $0.38 for 4Q.
Marine Products (MPX) is expected to report $0.17 for 4Q.
MarketAxess Holdings Inc (MKTX) is expected to report $1.42 for
Monro Inc (MNRO) is expected to report $0.53 for 3Q.
NASDAQ Inc (NDAQ) is expected to report $1.63 for 4Q.
New York Community Bancorp (NYCB) is expected to report $0.31
Norfolk Southern Corp (NSC) is expected to report $3.05 for
Norwood Financial Corp (NWFL) is expected to report for 4Q.
Oshkosh Corp (OSK) is expected to report $0.20 for 1Q.
Progressive Corp (PGR) is expected to report.
Prosperity Bancshares (PB) is expected to report $1.37 for
Provident Financial Holdings Inc (PROV) is expected to report
$0.20 for 2Q.
RPC Inc (RES) is expected to report $0.02 for 4Q.
Rollins Inc (ROL) is expected to report $0.15 for 4Q.
Sharps Compliance (SMED) is expected to report $0.07 for 2Q.
Stifel Financial (SF) is expected to report $1.67 for 4Q.
Stock Yards Bancorp Inc (SYBT) is expected to report $0.66 for
TE Connectivity Ltd (TEL) is expected to report $1.58 for
TriCo Bancshares (TCBK) is expected to report $0.90 for 4Q.
Universal Stainless & Alloy Products Inc (USAP) is expected
to report $0.24 for 4Q.
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ANALYST RATINGS ACTIONS
Allscripts Raised to Outperform From Market Perform by SVB
American Airlines Group Cut to Neutral From Buy by Redburn
Anaplan Cut to Sector Weight From Overweight by Keybanc
BlackLine Cut to Sector Weight From Overweight by Keybanc
Blueprint Medicines Raised to Buy From Hold by Stifel
Calif Water Svc Grp Raised to Neutral From Sell by Seaport
Cognex Raised to Outperform From Neutral by Daiwa Capital
Confluent Raised to Buy From Neutral by DA Davidson
Datto Holding Raised to Overweight From Equal-Weight by Morgan
Delta Air Raised to Buy From Hold by Berenberg
eFFECTOR Therapeutics Cut to Hold From Buy by Stifel
Evergy Cut to In-Line From Outperform by Evercore ISI Group
Intuitive Surgical Cut to Neutral From Buy by Redburn
Kroger Cut to Underweight From Equal-Weight by Wells Fargo
Marathon Petroleum Cut to Neutral From Overweight by Piper
New Relic Raised to Overweight From Equal-Weight by Morgan
Nike Raised to Overweight From Equal-Weight by Wells Fargo
NiSource Raised to Outperform From In-Line by Evercore ISI
OGE Energy Cut to In-Line From Outperform by Evercore ISI
Pacific Premier Bancorp Cut to Equal-Weight From Overweight by
Stephens & Co.
PBF Energy Raised to Overweight From Neutral by Piper
Pinterest Cut to Mixed From Positive by OTR Global
Plains All American Raised to Outperform From Market Perform by
Public Service Enterprise Raised to Outperform From In-Line by
Evercore ISI Group
Q2 Holdings Cut to Sector Weight From Overweight by Keybanc
Sierra Bancorp Cut to Neutral From Buy by Janney Montgomery
SJW Group Raised to Buy From Neutral by Seaport Global
SmileDirectClub Raised to Hold From Sell by Craig-Hallum
Snowflake Raised to Buy From Hold by Loop Capital
Southern Co Raised to In-Line From Underperform by Evercore ISI
UiPath Raised to Outperform From Neutral by Macquarie
US Bancorp Raised to Buy From Hold by Odeon Capital
ViacomCBS Raised to Sector Weight From Underweight by
Wrap Technologies Cut to Hold From Buy by Maxim Group
Xcel Energy Raised to Outperform From In-Line by Evercore ISI
This article is a text version of a Wall Street Journal
newsletter published earlier today.
(END) Dow Jones Newswires
January 26, 2022 05:50 ET (10:50 GMT)
Copyright (c) 2022 Dow Jones & Company, Inc.