Watch For:

New Home Sales for December; EIA Weekly Petroleum Status Report; Bank of Canada rate decision; results from AT&T, Boeing, Intel, Tesla

Opening Call:

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.

Market Insight:

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 risks.

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."

The Fed:

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 March.

" 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 earnings call.

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 analysts said.

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 EUR/USD.


Treasury yields edged lower in Europe, with investors awaiting a statement from Fed rate-setters that could set the tone for trade in 2022.

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 too soon."

"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 end."


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 uncertainty."

Read A Rare Oil Bear Thinks $100 Predictions Are Premature

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 this month.

"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."




Intel Wins EU Antitrust Appeal as Court Annuls $1.2 Billion Fine

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 cases.


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 Says

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 strains.

The San Francisco-based company operates warehouses around the world for customers such as e-commerce giant 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 Billion

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 years.

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 supply-chain initiatives.


Companies Prepare for Fallout From Cyberattacks Against Ukraine

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 industries.

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 elections.

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 businesses.

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 regarding Covid-19.




AGF Mgmt 4Q

Celestica 4Q

Champion Iron 3Q

Methanex 4Q

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 Pole emploi

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 4Q.

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 for 2Q.

Boeing Company (BA) is expected to report $0.25 for 4Q.

Brinker International (EAT) is expected to report $0.53 for 2Q.

Capital Bancorp Inc (CBNK) is expected to report $0.68 for 4Q.

Central Pacific Financial Corp (CPF) is expected to report $0.65 for 4Q.

Coastal Financial Corp (CCB) is expected to report $0.53 for 4Q.

Corning Inc (GLW) is expected to report $0.50 for 4Q.

Fidelity D&D Bancorp Inc (FDBC) is expected to report for 4Q.

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 4Q.

General Dynamics Corp (GD) is expected to report $3.39 for 4Q.

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 4Q.

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 4Q.

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 for 4Q.

Norfolk Southern Corp (NSC) is expected to report $3.05 for 4Q.

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 4Q.

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 4Q.

TE Connectivity Ltd (TEL) is expected to report $1.58 for 1Q.

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.

Powered by Kantar Media and Dow Jones.



Allscripts Raised to Outperform From Market Perform by SVB Leerink

American Airlines Group Cut to Neutral From Buy by Redburn Partners

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 Global

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 Stanley

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 Partners

Kroger Cut to Underweight From Equal-Weight by Wells Fargo

Marathon Petroleum Cut to Neutral From Overweight by Piper Sandler

New Relic Raised to Overweight From Equal-Weight by Morgan Stanley

Nike Raised to Overweight From Equal-Weight by Wells Fargo

NiSource Raised to Outperform From In-Line by Evercore ISI Group

OGE Energy Cut to In-Line From Outperform by Evercore ISI Group

Pacific Premier Bancorp Cut to Equal-Weight From Overweight by Stephens & Co.

PBF Energy Raised to Overweight From Neutral by Piper Sandler

Pinterest Cut to Mixed From Positive by OTR Global

Plains All American Raised to Outperform From Market Perform by Bernstein

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 Scott

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 Group

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 Keybanc

Wrap Technologies Cut to Hold From Buy by Maxim Group

Xcel Energy Raised to Outperform From In-Line by Evercore ISI Group

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.