Stock Market Futures Edged Lower Ahead Of The Fed Policy Meeting
U.S. stock futures are declining yet again on Tuesday morning, after a wildly volatile session observed on Monday’s intraday trading. To recap, the Dow came back from a decline of over 1,100 points to close in the green. While it’s certainly gut wrenching, it shouldn’t come as a surprise as things may look a bit oversold. Following this volatile start on Monday, investors are likely looking ahead to the Federal Open Market Committee (FOMC) meeting. The first meeting of 2022 will kick off today.
In terms of the latest word from the FOMC meeting, analysts have their fair share of commentary as well. Weighing in on that is UBS (NYSE: UBS) Private Wealth Management’s Alli McCartney. She says, “We’re in what I call the triple threat of … rapidly rising rates, and the market has been working overtime, as have all of the algorithms, to try to figure out what that means, and what that pace means for valuations and global equities.”
Regarding Big Tech earnings, Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT) and Tesla (NASDAQ: TSLA) will be reporting their latest quarterly financials this week. Certainly, many tech stocks have benefited from the pandemic. But these same stocks have been hammered so far this year against the backdrop of rising yields. The Nasdaq Composite has notched a 12% decline year to date.
Thus, I can understand why investors are looking to Big Tech’s earnings for reassurance. At the same time, there is also no shortage of exciting stock market news for investors to digest today. As of 7:45 a.m. ET, the Dow, S&P 500, and Nasdaq futures are trading lower by 0.69%, 1.39%, and 2.02% respectively.
IBM Goes Into The Clouds With Strong Revenue Growth In Q4
IBM (NYSE: IBM) posted strong fourth-quarter results after the closing bell on Monday. The company reported earnings of $3.35 per share on revenue of $16.7 billion. This marks a 6.5% revenue growth from the prior year quarter. More impressively, this marks the company’s best sales growth in more than a decade. If anything, this suggests that CEO Arvind Krishna’s strategy for the company is beginning to pay off.
For the uninitiated, the company has been undergoing a long and massive restructuring. Over the past year, IBM has restructured its business to focus on its software and consulting units with its recent disposal of Kyndryls (NYSE: KD), an infrastructure services business. And it’s for the same reason that IBM has agreed to sell its Watson Health unit to private equity firm Francisco Partners.
“In 2021, we continued to invest for the future by increasing R&D spending, expanding our ecosystem and acquiring 15 companies to strengthen our hybrid cloud and AI capabilities,” IBM Chief Financial Officer James Kavanaugh said in written remarks. “With the separation of Kyndryl we now have taken the next step in the evolution of our strategy, creating value through focus and strengthening our financial profile.”
Oil Prices Rise On Supply Disruption Jitters As Geopolitical Tensions Grow
Oil prices climbed in the early morning on Tuesday. Concerns remain over possible supply disruptions amid rising geopolitical tensions in both Eastern Europe and the Middle East. This came after the sharp losses on Monday. The possibility of a quicker than expected interest rate hike by the U.S. Federal Reserve and a stronger dollar also put some pressure on the oil prices.
Nevertheless, the lower U.S. oil inventories are providing support. What’s more, Wall Street is also increasingly positive on energy. A growing number of analysts are bullish on this hot commodity in the near-term. For instance, Morgan Stanley (NYSE: MS) oil strategist Martijn Rats has raised its forecast to $100 for Q3 2022, following Goldman Sachs’ (NYSE: GS) upgrade to $105 earlier in the week. Following a series of upgrades, it’s not surprising why some of top oil stocks such as Chevron (NYSE: CVX), ExxonMobil (NYSE: XOM) and Occidental (NYSE: OXY) are weathering the stock market volatility relatively well.
Microsoft (MSFT) Earnings: What’s In The Cards?
In terms of blockbuster earnings, we have software giant Microsoft. After today’s closing bell, Microsoft will be reporting its fourth-quarter earnings. According to FactSet, Wall Street expects Microsoft to report quarterly earnings per share of $2.32 from $50.7 billion in sales. Some believe that strong earnings from Microsoft could help slow, or even reverse the sell-off we are seeing in the stock market today. The tech giant has recently been in the news for its planned acquisition of gaming giant Activision Blizzard (NASDAQ: ATVI) for nearly $69 billion.
Admittedly, the acquisition has gained the attention of investors. But the underlying growth story for Microsoft is built around the enterprise cloud segment of the company. Wedbush analyst Dan Ives believes that major cloud deals are up more than 50% with Microsoft, with “clear momentum” into 2022 as deal sizes also increase.
“This will be a ‘key print for the tech sector’ to watch as investors remain very skittish on tech stocks with the Fed tightening/jawboning narrative coupled by Netflix’s disaster guidance casting a dark shadow on the sector heading into this week,” Ives said. The good news here is Microsoft has a history of earnings beats. And investors are having high expectations heading into the report. With MSFT stock also taking a breather alongside the broader market, a strong report could send the stock higher. And that could also be great news for tech stocks at large.
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Notable Earnings To Watch In The Stock Market Today
Not forgetting, there are also a number of companies reporting earnings in the stock market today as well. For those looking to catch pre-market earnings, we have Johnson & Johnson (NYSE: JNJ), General Electric (NYSE: GE), Verizon Communications (NYSE: VZ), American Express (NYSE: AXP), Lockheed Martin (NYSE: LMT), Raytheon Technologies (NYSE: RTX) and NextEra Energy (NYSE: NEE) on tap.
Alternatively, there are also notable names in reporting earnings after the closing bell. This includes Microsoft, Texas Instruments (NASDAQ: TXN), Capital One (NYSE: COF) and F5 (NASDAQ: FFIV). Whether it is digesting corporate earnings, following updates from the Federal Reserve, or buying the dips in the recent sell-offs, there is enough to keep you busy as we start the second trading day of the week.
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