Stock Market Futures Advanced Despite Persistent Inflation & Omicron Uncertainties
U.S. stock futures edged higher in early morning trading on Wednesday. This comes as investors take Powell’s hawkish comment in their stride. At the same time, they are continuing to assess the potential economic impact from the Omicron variant. Speaking before a Senate panel, Powell said tapering could wrap up “a few months sooner” than anticipated. Before we jump straight to any conclusion, Powell stressed that the tapering should not be seen as an indication that rate increases are looming.
“Markets appear to be having trouble digesting the combo of elevated uncertainty around the impact of the Omicron variant and a hawkish Fed pivot in the context of persistently elevated inflation,” said Gregory Daco, chief U.S. economist at Oxford Economics.
This morning, investors will be looking at a slew of economic data. These include ADP’s private payroll data, November’s Manufacturing PMI, ISM Manufacturing print and October’s construction. As of 6:24 a.m. ET, the Dow, S&P 500, and Nasdaq futures are rising by 0.84%, 1.16%, and 1.35% respectively.
US Panel Backs First COVID Pill From Merck; Pfizer’s Next?
A panel of U.S. health advisors on Tuesday narrowly backed a closely watched COVID-19 pill from Merck (NYSE: MRK), setting the stage for a likely authorization of the first drug that Americans could take at home to treat the coronavirus. The pill, also known as molnupiravir, is an oral antiviral drug designed to treat adults with mild to moderate symptoms who are at high risk of severe disease.
Many members of the advisory committee described the vote as a difficult one. They had to carefully weigh the pros and cons of the antiviral pill. The backing came despite questions about the drug’s effectiveness. Merck originally said the drug was more than 50% effective in preventing hospitalizations and death. But a recent comprehensive set of data presented to the FDA on Tuesday showed that the drug is just 30% effective.
Meanwhile, Pfizer (NYSE: PFE) is on track to post its best monthly gains in three decades. And it shouldn’t take an expert to guess what contributed to its recent success. Over the past 12 months, PFE stock has climbed nearly 40%, well outperforming the broader stock market. But what’s putting PFE stock in the limelight in the stock market today is its experimental COVID-19 pill, Paxlovid. Despite the emergence of the Omicron variant, Pfizer’s CEO Albert Bourla believes that Paxlovid will likely still be effective. In his own words, “The good news is when it comes to our treatment, it was designed with that in mind, it was designed with the fact that most mutations are coming in the spikes.”
Apple (AAPL) Stock Marches Higher Amid A Volatile Stock Market
Apple (NASDAQ: AAPL) stock bucked the trend on Tuesday as other major tech stocks tumbled on concerns of the Omicron variant. Why could this be the case, you ask? Well, according to Needham analyst Laura Martin, investors may be turning to Apple because the company has prodigious cash flow. And that will allow it to weather any slowdown that is coming on their way. If anything, this shows that investors see the company as a safe haven when there’s a heightened volatility in the stock market.
Sure, some of you may argue that innovation is no longer the company’s forte. But if you look at the product pipeline, there are still reasons to be excited about its future. Recently, the company announced that they are going to introduce augmented reality glasses. According to top analyst Ming-Chi Kuo from TFI Asset Management, Apple’s computerized glasses will be as powerful as its Mac computers and launch at the end of 2022.
Apart from that, it’s reassuring to investors that Apple not only uses its cash to invest in new products. The company also returns capital to shareholders through dividends and buybacks. Yes, you heard that right. Many investors are not aware that Apple offers a dividend to its shareholders. The tech giant currently has a quarterly dividend of $0.22 per share. Admittedly, Apple’s dividend might not seem particularly attractive today. But it’s worth pointing out that its latest quarterly dividend is over 7% higher than what it was a year ago. In light of the strong dividend growth rate and the ongoing share repurchase plan, do you have AAPL stock on your watchlist right now?
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Salesforce (CRM) Stock Tumbling Despite Strong Earnings
Software giant Salesforce.com (NYSE: CRM) reported third-quarter earnings and revenue that topped Wall Street’s estimates on Tuesday. But its stock is edging lower after earnings guidance for the upcoming quarter fell short of expectations. For the quarter, the company’s revenue came in 27% higher year-over-year to $6.86 billion. On a non-GAAP basis, the company earned $1.27 a share. That includes a gain of 28 cents for mark-to-market accounting of strategic investments.
“We delivered another phenomenal quarter, fueling strong revenue growth, margin and cash flow. With the tremendous strength of our Customer 360 platform and Slack, we’re on track to reach $50 billion revenue in FY ‘26.”- Marc Benioff, co-CEO of Salesforce.com
The company also announced it promoted Bret Taylor to the role of co-CEO, alongside Marc Benioff. To those new to the company’s management, Taylor has served as Salesforce’s president and chief operating officer since 2019. Before that, he was chief product officer. Before joining Salesforce, Taylor helped create Google Maps, sold social media networking start-up FriendFeed to Facebook, and spent three years as Facebook’s technology chief.
Earnings On Tap In The Stock Market Today
Amidst all the exciting stock market news today, there are also plenty of earnings to consider. In the pre-market, we have Royal Bank of Canada (NYSE: RY), Patterson Companies (NASDAQ: PDCO), and Donaldson (NYSE: DCI).
Aside from that mixed bag, there is a notable focus on software earnings after today’s closing bell. This is evident as CrowdStrike (NASDAQ: CRWD), Snowflake (NYSE: SNOW), C3Ai (NYSE: AI), Okta (NASDAQ: OKTA), and Splunk (NASDAQ: SPLK) are reporting their earnings during after-market hours. Whether it is assessing the potential impact from the Omicron variant, anticipating the pace of Fed tapering, or simply following a barrack of earnings, there is a lot to digest as the stock market looks to rebound.