US Stocks Slump as Earnings Season Approaches
As the U.S. stock market began a new week of trading, all three major U.S. stock index futures experienced a decline. The Dow futures fell 0.43%, S&P 500 futures fell 0.11%, and Nasdaq futures fell 0.01% prior to the market opening on January 8, 2024. Meanwhile, across the Atlantic, the European stock market saw the German DAX index rise 0.09%, while the British FTSE 100 index fell 0.30%, the French CAC 40 index fell 0.07%, and the European Stoxx 50 index fell 0.06%. The drop in European stocks comes as WTI crude oil slumped 2.74% to US$71.79 per barrel and Brent crude oil fell 2.51% to US$76.78 per barrel.
The U.S. stock market is bracing itself for the commencement of earnings season and the release of crucial inflation data this week. This season will kick off with financial reports from major banks including JPMorgan Chase, Wells Fargo, Bank of America, BlackRock, and Citigroup. Additionally, economic indicators like the US Consumer Price Index (CPI) and Producer Price Index (PPI) data for December are expected to be released, with both considered areas of focus for investors.
Dallas Fed President Logan has warned that another rate hike should not be ruled out, in efforts to curb the worst inflation in decades. However, Bloomberg’s latest MLIV survey indicates that S&P 500 earnings expectations are possibly too high, with concerns of an economic slowdown presenting the biggest risk.
The outlook for the U.S. economy is also leading to caution and speculation from economists and investors. Dallas Fed president Logan has warned about the need for potential rate hikes depending on the inflation outlook, while there is concern about the upcoming Federal Reserve interest rate policies.
In company news, Akoya Biosciences is expecting to achieve operating cash flow breakeven by the end of the year and has reached an agreement with Thermo Fisher. Alphabet’s Isomorphic laboratory will also collaborate with Novartis and Eli Lilly in strategic research, while Shell anticipates significant growth in natural gas trading, but losses in chemical and petroleum products. Additionally, Nintendo is expected to release its new game console, Switch 2, this year.
Investors are eagerly waiting for the Bitcoin spot ETF. Approval from the SEC will determine the outcome of the ETF that will enable investors to trade Bitcoin.
The U.S. stock market outlook is facing many uncertainties this week, as investors await crucial earnings reports and inflation data. This comes on the heels of a week where the S&P 500 started 2024 with weekly losses and the tech-heavy Nasdaq fell nearly 4% over the past five trading days, raising questions about the stock market’s ability to resume its rally this week.