MARKET WRAPS
Watch For:
Employment Report for January; Services PMI; ISM Report on Business Services; Canada Official International Reserves for January; Earnings from Cigna, Cboe Global Markets and Regeneron Pharmaceuticals
Today's Top Headlines/Must Reads:
- Jobs Report to Show Whether Labor Market Cooling Extended Into January
- Bitcoin Prices Rally as Larger Traders Take Charge
- Ryan Cohen Takes Stake in Nordstrom
- Elon Musk's Twitter Pushes to Win Back Advertisers During Super Bowl Weekend
- China Says It Is Looking Into Spy-Balloon Allegation by U.S.
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Opening Call:
Stock futures were stumbling Friday, with disappointing results from the Big Tech trio of Apple, Amazon and Alphabet weighing on Nasdaq futures in particular.
Today's jobs report will give investors another read on the labor market.
Economists expect nonfarm payrolls grew by 187,000 in January and the unemployment rate rose to 3.6% from 3.5%.
Stocks to Watch
Alphabet reported slowing revenue growth in the fourth quarter and an earnings miss, sending the stock down 3.9% in premarket trading.
Amazon.com was falling 5.5% after reporting better-than-expected fourth-quarter sales growth but weaker-than-anticipated profit.
Apple was down 3.1% premarket after it reported fiscal first-quarter earnings and sales that missed estimates.
Clorox reported better-than-expected profit in its fiscal second quarter. Shares increased 3.6% in after-hours trading.
Ford's fourth-quarter earnings missed analysts' expectations and the stock was falling more than 5% in premarket trading.
Magenta Therapeutics said it could be up for sale as part of review of strategic alternatives. Shares rose 47% in after-hours trading.
Nordstrom rose more than 31% after WSJ reported activist investor Ryan Cohen has taken a big stake in the retailer.
Qualcomm was down 3.6% after the chip company issued a revenue outlook below expectations.
Starbucks was down 2% after reporting fiscal first-quarter earnings that missed forecasts.
Economic Insight
With the end of central banks' interest rate rises in sight, it seems like investors no longer worry about inflation or about going long duration, Societe Generale said.
"This seems premature in Europe, with core inflation still rising and showing no signs of a turn. A pause [in interest rate rises] beyond the summer is highly likely, but the pricing of rate cuts from late 2023 relies on inflation quickly returning to sensible levels."
Societe Generale continues to underweight EUR rates versus U.S. rates, seeing a bullish outlook more plausible in Treasurys as the Federal Reserve is approaching the pivot, while the European Central Bank is lagging.
Forex:
The dollar could fall if the nonfarm payrolls data for January are weaker, Unicredit Research said.
"A slide in the number of nonfarm payrolls (we expect 190,000 from the previous 223,000) is not too heavy but, coupled with a rise in the unemployment rate to 3.6%, might still weigh on the greenback [dollar] and allow EUR/USD to steady back above 1.10 as the week concludes."
The recovery in EUR/USD might be even more evident if the ISM non-manufacturing survey disappoints expectations with the index remaining below 50, signaling a contraction in sector activity, as Unicredit expects, it said.
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Sterling faces further weakness after the Bank of England signalled Thursday that further interest-rate rises should only be expected if inflationary pressures persist, Commerzbank said.
"A further rate hike in March is no longer that certain, and it is possible that the BOE has already reached the end of the rate hike cycle."
While the BOE left the door open to further rate rises, the forex market would have liked to see a more decisive approach given high uncertainty so it's hardly surprising that sterling fell, Commerzbank said.
Read Sterling Drops as UK Rate Rise Bets Fall More Than Elsewhere
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The ECB's unclear communications at yesterday's policy meeting is causing the euro to weaken, ING said.
Lagarde's press conference brought "more fog than clarity" about the rate path beyond March, ING said.
"We remain of the view that at least 75bp of extra tightening will be delivered by the ECB, which still puts EUR/USD in a position for a big rally in the second quarter--when U.S. short-term rates may come off more steadily."
"The ECB communication troubles may cap EUR/USD before then," ING added.
Energy:
Oil prices ticked lower in Europe despite an impending EU ban on Russian oil product exports which is expected to tighten crude markets further.
The EU's ban is set to come into force Sunday. Ample time to prepare and strong Russian exports of crude and oil products ahead of the ban are keeping prices in check, ING said.
"Despite this imminent disruption to flows, the market appears relatively calm...the market has had a significant amount of time to prepare for the ban. We have seen strong inflows of middle distillates into Europe ahead of Feb. 5,"
Metals:
Base metals were mixed in early London trade, with gold slightly lower, ahead of the nonfarm payroll data due later.
This week has been a bumper data week, with more positive data out of China meeting Western central banks indicating more monetary tightening may be needed in March as they seek to taper inflation.
"Despite Chinese growth outperforming, slowing economic growth elsewhere globally will result in muted global demand growth for metals," Fitch Solutions said.
It sees metal prices climbing this year on Chinese demand but elsewhere the picture looks less clear.
TODAY'S TOP HEADLINES
Ryan Cohen Takes Stake in Nordstrom
Activist investor Ryan Cohen is amassing a sizable stake in Nordstrom Inc. and intends to urge the upscale department-store chain to make changes to its board following a steep share-price decline, according to people familiar with the matter.
Mr. Cohen, known for helping ignite big rallies in so-called meme stocks including GameStop Corp., is one of the top-five nonfamily shareholders of Nordstrom, the people said.
Big Tech Didn't Quite Clear the Bar
Big tech just closed out a rough year. The current one won't get much better soon.
Apple, Amazon.com and Google parent Alphabet Inc. all reported December quarter results Thursday afternoon that showed the effects of the weakening global economy across most of the companies' diverse business lines. These include online advertising, cloud-computing services, e-commerce and tech gadgets such as smartphones, laptops and smartwatches. These are big businesses, totaling nearly $1.2 trillion in revenue for the three companies in 2022.
Activist Investor Nelson Peltz Steps Up Pressure on Disney Board
Activist investor Nelson Peltz escalated his criticism of the Walt Disney Co.'s board and advocated for the removal of director Michael B.G. Froman, blaming him for backing governance and compensation decisions that Mr. Peltz says have harmed the company.Mr. Peltz's Trian Fund Management LP said Thursday in a letter that Disney's board was responsible for the company's recent share-price declines, falling income and other examples of "destruction of value," because it had failed to plan properly for CEO succession and align the incentives of management and the board with those of shareholders."We cannot sit idly by," Trian said in the letter, part of its proxy battle that seeks to add Mr. Peltz, an 80-year-old corporate-raider-turned-activist-investor, to Disney's board. Trian pushed shareholders to demand "an ownership mentality in the boardroom," or risk further stock-price declines.
Elon Musk's Twitter Pushes to Win Back Advertisers During Super Bowl Weekend
Twitter Inc. is leveraging its most important night of the year to help it win back the long list of advertisers that ditched the social-media platform after Elon Musk's $44 billion takeover of the company.
The San Francisco-based company has been ramping up its Super Bowl pitch to advertisers, offering a last-minute deal on one of its most high-profile, big-game ad packages, according to an email viewed by The Wall Street Journal. It is also telling advertisers that the number of conversations on its platform about the Super Bowl and the National Football League is up significantly from a year earlier, according to other emails sent to advertisers and ad agencies.
Adani Group Selloff Deepens, Taking Flagship Company's Weekly Losses Above 50%
Shares in Adani Group companies were trading lower Friday, extending a weeklong selloff that has wiped out more than $100 billion in market value and forced its flagship business to cancel a share sale that would have raised more than $2.0 billion.
Adani Enterprises Ltd. fell 15% in early trading, taking its losses this week to 52%. Adani Transmission Ltd. and Adani Green Energy Ltd. both lost 10%, while Adani Power Ltd., Adani Total Gas Ltd. and Adani Wilmar Ltd. all dropped 5.0% and Adani Ports & Special Economic Zone Ltd. fell 9.7%.
Ford Posts $1.3 Billion Fourth-Quarter Profit, Misses Full-Year Profit Guidance
Ford Motor Co. posted disappointing quarterly results Thursday, leading the U.S. auto maker to miss its full-year profit guidance for 2022, as supply-chain snags, quality problems and structural inefficiencies continued to drag on earnings.
The Dearborn, Mich. auto maker posted $1.3 billion in net income for the fourth quarter, an 89% drop from the prior-year period, when its profits were lifted by one-time items, items, such as a multibillion paper gain on its investment in EV startup Rivian Automotive Inc.
Starbucks Reports Record Quarterly Revenue While Costs Rise
Starbucks Corp. said Thursday it generated record revenue during its last quarter, though higher costs ate into its profit.
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02-03-23 0626ET
