Steep Drop By Intel May Contribute To Pullback On Wall Street

(RTTNews) - The major U.S. index futures are currently pointing to a modestly lower open on Friday, with stocks likely to give back ground after trending higher over the past several sessions.

A steep drop by shares of Intel (INTC) is likely to weigh on the markets, with the semiconductor giant plunging by 9.8 percent in pre-market trading,

Intel is under pressure after reporting better than expected fourth quarter results but providing disappointing first quarter guidance.

Payments processor Visa (V) may also move to the downside after reporting fiscal first quarter earnings that beat estimates but forecasting a slowdown in revenue growth in the current quarter.

Meanwhile, shares of American Express (AXP) are likely to see initial strength after the financial services company reported fourth quarter results that missed estimates but forecast strong results in 2024.

The futures remained in the red even after the Commerce Department released a report showing a bigger than expected slowdown in the annual rate of core consumer price growth in the month of December.

The Commerce Department said consumer prices in December were up by 2.6 percent compared to the same month a year ago, unchanged from November and in line with economist estimates.

Meanwhile, the report said the annual rate of growth by core consumer prices, which exclude food and energy prices, slowed to 2.9 percent in December from 3.2 percent in November. Economists had expected core price growth to decelerate to 3.0 percent.

The annual inflation readings, which are said to be preferred by the Federal Reserve, were included in the Commerce Department's monthly report on personal income and spending.

Stocks gave back ground after an early advance but rebounded going into the close to end Thursday's trading mostly higher. The Dow and the S&P 500 once again reached new record closing highs, while the Nasdaq edged up its best closing level in well over two years.

The Dow ended the session just off its best levels of the day, climbing 242.74 points or 0.6 percent to 38,049.13. The S&P also rose 25.61 points or 0.5 percent to 4,894.16, while the tech-heavy Nasdaq crept up 28.58 points 0.2 percent to 15,510.50.

The early strength on Wall Street came following the release of a Commerce Department report showing stronger than expected U.S. economic growth as well as a slowdown in the pace of consumer price growth in the fourth quarter of 2023.

The report said gross domestic product shot up by 3.3 percent in the fourth quarter after surging by 4.9 percent in the third quarter, while economists had expected GDP to jump by 2.0 percent.

The stronger than expected GDP growth partly reflected a continued surge in consumer spending, which shot up by 2.8 percent in the fourth quarter after spiking by 3.1 percent in the third quarter.

On the inflation front, the Commerce Department said the personal consumption expenditures price index increased 1.7 percent in the fourth quarter compared with a 2.6 percent jump in the third quarter.

Excluding food and energy prices, the PCE price index increased 2.0 percent in the fourth quarter, the same as in the third quarter.

"The headline data are the perfect mix of strong consumption and dropping inflation," said Jamie Cox, Managing Partner for Harris Financial Group. "This is exactly what you want to see if you are running the Fed and want to move rates lower this year."

Meanwhile, the Commerce Department also released a report showing new orders for U.S. manufactured durable goods unexpectedly came in unchanged in the month of December.

The report said durable goods orders were virtually unchanged in December after surging by an upwardly revised 5.5 percent in November.

Economists had expected durable goods orders to jump by 1.1 percent compared to the 5.4 percent spike that had been reported for the previous month.

Excluding orders for transportation equipment, durable goods orders increased by 0.6 percent in December after climbing by 0.5 percent in November. Ex-transportation orders were expected to inch up by 0.2 percent.

A separate report released by the Labor Department showed first-time claims for U.S. unemployment benefits rebounded by more than expected in the week ended January 20th.

The Labor Department said initial jobless claims climbed to 214,000, an increase of 25,000 from the previous week's revised level of 189,000.

Economists had expected initial jobless claims to rise to 200,000 from the 187,000 originally reported for the previous week.

Buying interest waned over the course of the session, however, as traders looked ahead to the release of a closely watched report on personal income and spending on Friday.

The personal income and spending report includes readings on inflation said to be preferred by the Federal Reserve and could have a significant impact on the outlook for interest.

Among individual stocks, tech giant IBM Corp. (IBM) posted a standout gain, soaring by 9.5 percent after reporting fourth quarter results that exceeded analyst estimates on both the top and bottom lines.

Airline stocks moved sharply higher over the course of the session, with the NYSE Arca Airline Index soaring by 3.4 percent.

A substantial increase by the price of crude oil also contributed to significant strength among oil stocks, as reflected by the 2.3 percent gain jump by the NYSE Arca Oil Index.

Telecom stocks also saw considerable strength after falling sharply on Wednesday, driving the NYSE Arca North American Telecom Index up by 1.8 percent.

Interest-rate sensitive housing and utilities also moved notably higher, while strength was also visible among gold, natural gas and commercial real estate stocks.

Commodity, Currency Markets

Crude oil futures are sliding $0.81 to $76.55 a barrel after surging $2.27 to $77.36 a barrel on Thursday. Meanwhile, after inching up $1.80 to $2,017.80 an ounce in the previous session, gold futures are rising $3.30 to $2,021.10 an ounce.

On the currency front, the U.S. dollar is trading at 147.72 yen versus the 147.66 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.0870 compared to yesterday's $1.0846.

Asia

Equity markets in Asia closed on a mixed note on Friday as the euphoria generated by China's surprise announcement of a 50-basis point cut in the reserve requirement for banks faded. Fears of a monetary policy pivot by the Bank of Japan dampened sentiment in the Nikkei.

China's Shanghai Composite Index gained 0.1 percent to finish trading at 2,910.22. The day's trading ranged between 2,924.31 and 2,890.48. The Shenzhen Component Index, however, slumped 1.1 percent to close at 8,771.44.

The Japanese benchmark Nikkei 225 Index plunged 1.3 percent to end trading at 35,751.07. The day's trading range was between 36,060.40 and 35,687.58.

Ferro-nickel business Pacific Metals was the top gainer with a surge of 14.4 percent. Rakuten rallied 3.5 percent. Nippon Sheet Glass and JGC Corp. both added more than 2 percent. Panasonic Corp. also gained 1.6 percent.

Advantest Corp tumbled 5.5 percent, followed by SUMCO Corp. that slumped 4.5 percent. Tokyo Electric Power Co., Dainippon Screen Manufacturing, and Kawasaki Kisen Kaisha all fell more than 3 percent.

The Hang Seng Index of the Hong Kong Stock Exchange shed 1.6 percent from the previous close to finish trading at 15,952.23. The day's trading range was between a high of 16,240.96 and a low of 15,888.04.

The Korean Stock Exchange's Kospi Index rose 0.3 percent to close trading at 2,478.56. The day's trading range was between 2,453.45 and 2,502.61.

The NZX 50 of the New Zealand Stock Exchange edged down 0.1 percent to close trading at 11,875.03, versus the previous close of 11,889.63. Trading ranged between 11,816.91 and 11,889.63.

EROAD topped gains with a surge of 2.2 percent. Pacific Edge, Investore Property, Vital Healthcare Property Trust and Ryman Healthcare all gained more than 1 percent.

NZX slid 2.8 percent. Meridian Energy, EBOS and Manawa Energy all declined more than 2 percent. Chorus also declined 1.9 percent.

Europe

European stocks have moved sharply higher on Friday, with the French market outperforming its peers thanks to widespread buying following data showing a jump in consumer confidence in January. Signs of cooling inflation in the euro area has also contributed firm undertone in European markets.

While the French CAC 40 Index has surged by 2.2 percent, the U.K.'s FTSE 100 Index is up by 1.5 percent and the German DAX Index is up by 0.1 percent.

Strong fourth-quarter sales from LVMH has triggered hectic buying in the luxury sector across European markets. Shares from the banking sector are also faring well.

Among the top gainers in the U.K., Croda International and Diageo are climbing up 4.5 percent and 4.3 percent, respectively. St. James's Place is rising 3.5 percent and Burberry Group is up nearly 3 percent.

Barclays Group, Rentokil Initial, Prudential, Ocado Group, Natwest Group, Smurfit Kappa, Entain, Reckitt Benckiser, Lloyds Banking, Unilever, Royal Dutch Shell, BP, Standard Chartered, Fresnillo, AstraZeneca, RightMove and DS Smith are advancing 1.4 to 2.5 percent.

J Sainsbury is declining 1.7 percent. Tesco and BAE Systems are lower by about 1.4 percent and 1.1 percent, respectively.

In Germany, Sartorius is surging more than 7 percent. Merck is gaining about 5.5 percent and Porsche is up 3.1 percent. Brenntag, Mercedes-Benz, Fresenius Medical Care, Puma, BASF, Covestro, Fresenius and Siemens Healthineers are up 1.5 to 2.1 percent.

Bayer is down more than 2 percent. Deutsche Telekom, MTU Aero Engines, SAP and Infineon are down 0.8 to 1.4 percent.

In the French market, LVMH is soaring nearly 11 percent after the company reported a 10 percent jump in fourth-quarter sales. Pernod Ricard is gaining 7 percent and Kering is up 4.7 percent.

Hermes International, Alstom, Teleperformance, L'Oreal, Saint Gobain, TotalEnergies and Carrefour are up 1.5 to 3.3 percent.

STMicroElectronics is down 2.8 percent and Worldline is down with a loss of about 2.7 percent.

Data released earlier in the day showed the GfK Consumer Climate Indicator dropping to -29.7 in February, versus a revised -25.4 in the previous month and missing the market consensus of -24.5. The reading is also the lowest in 11 months.

Data released earlier in the day by INSEE had showed the Consumer Confidence indicator for France rising to 91 in January, versus previous month's reading of 89. Markets had expected a reading of 90.

Inflation expectations for the euro area were downgraded for this year and next on oil prices, weaker economic activity and lower out-turn of actual inflation figures, the Survey of Professional Forecasters from the European Central Bank showed.

Headline inflation for this year was lowered to 2.4 percent from 2.7 percent and that for next year to 2 percent from 2.1 percent. Inflation was forecast to remain unchanged at 2 percent in 2026. Longer-term expectations for headline HICP inflation were revised down to 2 percent.

U.S. Economic Reports

Annual U.S. consumer price growth came in unchanged in the month of December, according to a report released by the Commerce Department on Friday, although the report also showed a bigger than expected slowdown in the annual rate of core consumer price growth.

The Commerce Department said consumer prices in December were up by 2.6 percent compared to the same month a year ago, unchanged from November and in line with economist estimates.

Meanwhile, the report said the annual rate of growth by core consumer prices, which exclude food and energy prices, slowed to 2.9 percent in December from 3.2 percent in November. Economists had expected core price growth to decelerate to 3.0 percent.

The annual inflation readings, which are said to be preferred by the Federal Reserve, were included in the Commerce Department's monthly report on personal income and spending.

The report said personal spending rose by 0.3 percent in December after climbing by 0.4 percent in November. The increase in income came in line with economist estimates.

The Commerce Department also said personal spending advanced by 0.7 percent in December following an upwardly revised 0.4 percent increase in November.

Economists had expected spending to rise by 0.4 percent compared to the 0.2 percent uptick originally reported for the previous month.

At 10 am ET, the National Association of Realtors is scheduled to release its report on pending home sales in the month of December. Pending home sales are expected to jump by 1.5 percent in December after coming in unchanged in November.

Stocks In Focus

Shares of KLA Corp. (KLAC) are seeing notable pre-market weakness after the semiconductor equipment maker reported better than expected fiscal second quarter results but provided disappointing fiscal third quarter guidance.

Telecom company T-Mobile (TMUS) may also move to the downside after reporting fourth quarter earnings that fell short of analyst estimates.

On the other hand, shares of Snap (SNAP) are likely to see initial strength after Deutsche Bank upgraded its rating on the Snapchat parent's stock to Buy from Hold.

Cryptocurrency exchange operator Coinbase (COIN) may also move the upside after Oppenheimer upgraded its rating on the company's stock to Outperform from Perform.