Stock futures steady after Fed update, Facebook earnings

Traders work on the floor of the NYSE in New York
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., January 30, 2019. REUTERS/Brendan McDermid

January 31, 2019

By Sruthi Shankar

(Reuters) – U.S. stock index futures steadied on Thursday after the Federal Reserve signaled a potential end to its interest rate hike cycle, with stellar results for Facebook Inc looking to brighten the mood on Wall Street.

The benchmark S&P 500 closed at the highest level since Dec. 12 on Wednesday after the U.S. central bank said it would be patient in raising rates further this year, pointing to a cloudy outlook for the U.S. economy.

The Fed’s reassurance on rates along with heartening results from tech companies including Apple Inc and Facebook set the main U.S. indexes for their best month in about three years.

Facebook jumped 11.7 percent in premarket trading as its quarterly profit topped analysts’ estimates, showing that digital advertisers were still flocking to spend money on the service even after a series of high profile embarrassments.

Microsoft Corp fell 1.9 percent as its Azure cloud computing sales grew more slowly than a year earlier, although quarterly results and forecast topped Wall Street estimates.

Fourth-quarter earnings reports have largely exceeded market expectations so far, helping U.S. stocks recover from a December selloff that was fueled by concerns about trade disputes, rising interest rates and fears of diminishing corporate profits.

Investors are anxiously awaiting the outcome of U.S.-China trade talks which began in Washington on Wednesday. Details of the closed-door talks were scant, with official statements seen as unlikely before they conclude on Thursday.

After the latest Fed announcement, market expectations of future rates fell further. Contracts tied to the Fed’s policy rate continued to price in a one-in-four chance of a hike in 2019.

At 7:29 a.m. ET, Dow e-minis were down 24 points, or 0.1 percent. S&P 500 e-minis were up 2.75 points, or 0.1 percent and Nasdaq 100 e-minis were up 36.5 points, or 0.53 percent.

Among stocks, Tesla Inc dropped 4.1 percent after the electric carmaker missed Wall Street profit targets for the end of 2018 and announced the departure of its chief financial officer.

General Electric Co jumped 6.7 percent after the industrial conglomerate reported a profit from continuing operations for the fourth quarter, recovering from a $22.8 billion loss three months ago as it accelerated restructuring under a new chief executive.

Chipmaker Qualcomm Inc rose 2.9 percent after posting quarterly earnings that beat Wall Street targets.

DowDuPont Inc fell 5.9 percent after the chemicals maker’s quarterly revenue fell short of estimates, hurt by currency effects and reduced sales of chemicals used in packaging and brake fluids.

(Reporting by Sruthi Shankar and Shreyashi Sanyal in Bengaluru; Editing by Shounak Dasgupta)

Source link