Stock-index futures point to a lower start for Wall Street Friday, with pressure still tied to concerns about global economic growth resulting from the coronavirus epidemic that began in China.
A busy week for U.S. corporate earnings was also preoccupying investors. Shares of Amazon.com Inc. AMZN, +8.22% are set to jump, taking its market capitalization to around $1 trillion after delivering strong quarterly results following Thursday’s close.
What are major indexes doing?
Futures on the Dow Jones Industrial Average YMH20, -0.63% fell 149 points, or 0.5%, to 28,642, while S&P 500 futures ESH20, -0.61% were off 14.45 points, or 0.4%, at 3,275.25. Nasdaq-100 futures NQH20, -0.85% declined 31 points, or 0.3%, to 9,185.25.
Stocks staged a big turnaround on Thursday, erasing early losses to finish in positive territory. The Dow Jones Industrial Average DJIA, -0.88% was down roughly 245 points at its session low but ended the day up 124.99 points, or 0.4%, at 28,859.44. The S&P 500 SPX, -0.60% rose 10.26 points, or 0.3%, to finish at 3,283.66, while the Nasdaq Composite COMP, -0.31% gained 23.77 points, or 0.3%, to close at 9,298.93. All three major indexes saw their largest intraday rebound since Oct. 3, according to Dow Jones Market Data.
What’s driving the market?
Renewed worries over the spread of the coronavirus will likely help cut short any Friday follow-through on Thursday’s rebound, analysts said.
The U.S. stock rebound on Thursday came after the World Health Organization declared the outbreak a global emergency, with analysts tying the bounce to relief over the lack of a recommendation by the body to restrict travel to or trade with China. Beijing has reported over 9,600 cases of coronavirus, while the death toll has climbed to 213.
The WHO’s declaration of a health emergency during the SARS epidemic signaled the”bottom of the emotional response” by investors in 2003, said Jeff deGraaf, chairman of Renaissance Macro Research, in a note. Thursday’s announcement by WHO regarding the coronavirus may be similar, but the duration of the epidemic has been shorter than SARS and without the jumps in trading volume that imply investors have thrown in the towel, he said.
“We love buying when policy makers hit the panic button, but few of the markers from Mr. Market have shown capitulation,” he said.
China’s financial markets will reopen Monday after the extended Lunar New Year holiday, but many Chinese provinces announced a further extension of the holiday which may dampen economic activity further.
Which companies are in focus?
- Shares of Amazon.com Inc. were up 11.4% in premarket trade after the e-commerce and cloud-computing juggernaut defied its own disappointing forecast late Thursday to report renewed earnings growth in the holiday quarter, netting more than $3 billion in profit.
- Dow component Caterpillar Inc. CAT, -1.29% reported a fourth-quarter profit that came in well above expectations but sales fell short and the construction- and mining-equipment maker offered a downbeat outlook. Shares fell 0.7% in premarket trade.
- International Business Machines Corp. IBM, +3.94% late Thursday said Chief Executive Ginni Rometty will retire at the end of the year and would be replaced by Arvind Krishna, currently IBM senior vice president for cloud and cognitive software. Shares were up 4% in premarket action. Opinion:IBM’s Gini Rometty leaves behind a mixed legacy as CEO
- Honeywell International Inc. HON, -1.88% on Friday reported consensus-beating fourth quarter profit while sales fell a bit shy. Shares of the aerospace and industrial company’s shares were down 1.8% ahead of the bell.
- Shares of Dow component Chevron CVX, -3.27% fell 1.1% after revenues fell short of Wall Street estimates. While, oil giant Exxon Mobil Corp’s XOM, -3.12% stock, also a member of the Dow, was down 2% after its fourth-quarter profit and revenues came below analyst forecasts.
What’s on the economic calendar?
In economic data, the eurozone showed the region grew a seasonally adjusted 0.1% in the fourth quarter, with gross domestic product expanding by 1% year over year. Economists were looking for 0.2% quarterly growth.
Meanwhile the U.S. consumer spending rose modestly in December to cap off a decent holiday shopping season, but the increase in outlays in 2019 was the smallest in three years, the government reported.
Investors will see the fourth-quarter employment cost rose 0.7% in the fourth quarter, but the increase in wage and benefits for the full year of 2019 slowed to a 2.7% pace.
The Chicago-area purchasing managers index for January is set for release at 9:45 a.m. Eastern, while a January consumer sentiment index reading is scheduled for 10 a.m. Eastern.