Stock Market Today-4/19: Dow Higher Amid Fed Risks, Mixed Earnings
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U.S. equity futures edged higher Tuesday, while the dollar extended gains and Treasury bond yields bumped to multi-year peaks, as investors reacted to hawkish comments from an influential Federal Reserve President, a resurgence in fighting in eastern Ukraine and the start of a wave of corporate earnings reports on Wall Street.
Federal Reserve Bank of St. Louis President James Bullard told an event in Washington Monday that he wouldn’t “rule out” a 75 basis point rate hike in any of the central bank’s upcoming meetings, adding that he’d like to see faster moves from his colleagues in order to tamp-down the inflationary pressures building in the world’s biggest economy.
While not his “base case”, Bullard’s comments nonetheless lifted bets on the Fed’s policy path, with the CME Group’s FedWatch tool now pricing in a 91% chance of a 50 basis point increase next month, with a 62% chance of a similarly-sized moved in June.
Russia’s sudden re-grouping of troops and tanks in the Donbas region of eastern Ukraine has also unsettled markets, as reports suggest a renewed push into the front established by Ukrainian soldiers early last month that would make a worrying escalation of the nearly two-month long conflict.
Europe’s Stoxx 600 was marked 1.2% lower by mid-day trading in Frankfurt as investors returned from the region’s four-day Eastern holiday celebrations, while stocks in Asia were marked 0.4% lower in the session amid concern over the Covid-triggered weakness in China. Japan’s Nikkei 225 posted a 0.7% gain as the yen printed a fresh 20-year low of 128.42 against the dollar.
In U.S. markets, benchmark 10-year Treasury note yields nudged higher, to just over 2.9% — the highest since late 2018 — while 30-year yields passed the 3% mark for the first time in three years. The dollar index was last seen 0.2% higher against a basket of six major global currencies at 100.902.
Stock futures were mixed, with contracts tied to the Dow Jones Industrial Average indicating a modest 22 point opening bell gain and those linked to the S&P 500 priced for a 2 point bump. Higher yields were again pressuring tech stocks, with the Nasdaq called 15 points higher at the start of trading.
Twitter (TWTR) – Get Twitter, Inc. Report shares were active again Tuesday, rising 0.1% in pre-market trading as investors looked to reports of potential takeover interest in the social media group from private equity firms as billionaire Elon Musk continues his attack on the board.
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Multiple media reports suggest that Apollo Global Management has expressed willingness to use its credit investment platform to support any move to buy the micro-blogging website, including Musk’s unsolicited $43 billion take-private proposal.
Several stocks were also on the move amid a parade of first quarter earnings reports, with Johnson & Johnson (JNJ) – Get Johnson & Johnson Report falling 1% after it posted stronger-than-expected first quarter earnings but lowered its full-year profit forecast, and suspended its guidance for vaccine sales amid what it called a global surplus and waning demand.
Hasbro (HAS) – Get Hasbro, Inc. Report gained 0.6% as it posted weaker-than-expected first quarter earnings but noted that higher toy prices and solid demand will deliver better profits by the end of the year as it looks to see-off pressure from activists investors.
Lockheed Martin (LMT) – Get Lockheed Martin Corporation Report fell 1.4% after stronger-than-expected second quarter earnings Tuesday as investors reacted to light revenues as supply chain snarls clipped overall sales in all four of its business divisions apart from aeronautics.
U.S. Airline shares edged higher after most major carriers dropped their in-flight mask mandates late Monday following a ruling from a Federal judge in Florida.
U.S. District Judge Kathryn Kimball Mizelle said the 14-month old mandate, established by the Centers for Disease Control as well as the U.S. Department of Transportation, was unlawful in a case filed by a non-profit interest group called Health Freedom Defense Fund.
United Airlines (UAL) – Get United Airlines Holdings, Inc. Report shares were marked 0.9% higher at $44.05 each while Delta (DAL) – Get Delta Air Lines, Inc. Report rose 0.69% to $42.50 Southwest (LUV) – Get Southwest Airlines Co. Report gained 0.3% to $46.39 each.
Netflix (NFLX) – Get Netflix, Inc. Report shares were also in focus ahead of the online streaming group’s first quarter earnings report after the close of trading, with investors focused on its near-term outlook for customer additions and content spending.
Collective S&P 500 profits are expected to rise 6.3% from last year to $408.3 billion over the first quarter, according to Refinitiv data, before improving only modestly to a growth rate of 6.4% over the three months ending in June.