Stock Futures Mixed as Boeing Beats, GDP Shrinks
NEW YORK (TheStreet) -- Stock futures were trading mixed Wednesday as investors balanced better-than-expected Boeing (BA) earnings and jobs data against somewhat lackluster U.S. growth and housing data.
Investors were looking ahead to the latest Federal Open Market Committee's policy statement on Wednesday afternoon.
Futures for the Dow Jones Industrial Average were falling 13 points, or 3.58 points above fair value, at 13,895. Futures for the S&P 500 were down 2.75 points, or 0.44 points below fair value, at 1502. Futures for the Nasdaq were down 3.75 points, or 1.82 points above fair value, at 2739.
Major U.S. stock averages ended mixed Tuesday as Pfizer (PFE) shares popped on the drugmaker's quarterly report and Apple (AAPL) jumped following a product announcement. Data released Tuesday showed continued improvement in the housing market.Doreen Mogavero, founder of Mogavero Lee & Co., said there appears to be a change in trends surrounding the inflow of money into stock mutual funds. She said that up until today over the last four years funds have flowed out of mutual funds during market rallies. That means there wasn't much confidence in any of those previous rallies, she said. "Well now we're seeing people coming back into the market and I think that shows they're starting to feel better about the fact that our companies are very, very lean," said Mogavero. "Now the general thought on Wall Street is that once the retail investor gets back in, well maybe the party is over ... they're usually the last ones to find out the good news." "But I think in this case it might be slightly different," because companies are the leanest they have been in decades, which could point to some very good earnings ahead, she explained. The ADP report on private sector employment showed a gain of 192,000 jobs in January, versus a downwardly revised 185,000 the prior month. Economists, on average, were expecting an increase of 165,000 in January. "Despite a downsizing to the December reading ... we remain optimistic that Friday's official report will leave room for upside revision," said Andrew Wilkinson, chief economic strategist at Miller Tabak. The Bureau of Economic Analysis, meanwhile, reported that the advanced estimate on U.S. fourth-quarter gross domestic product showed that the economy shrank 0.1% during that period, compared with third-quarter growth of 3.1%. Economists were expecting growth of 1.1%. David Ader, a strategist at CRT, said that though the GDP data was disappointing, it does not point to a recession. Ader noted that much of the decline was attributable to weak defense spending. Government spending in that sector fell by the most since 1972. The Mortgage Bankers Association's seasonally adjusted index of mortgage application activity pointed to a decline of 8.1% for the week ended Jan. 26, compared with a rise of 7% the prior month. The Federal Reserve's policy setting committee at 2:15 p.m. EST will announce its interest rate decision. Economists generally are expecting little change in the Fed statement. Goldman Sachs economists said that after substantial policy changes announced at the December FOMC meeting, including a shift to outcome-based forward guidance and the introduction of open-ended Treasury purchases, the January meeting will likely be "relatively uneventful." The Nikkei in Japan settled ahead by 2.28% and Hong Kong's Hang Seng closed up 0.71%. The DAX in Frankfurt was down 0.13% and the FTSE was up 0.05%. Gold for February delivery was up $4 at $1,666.70 an ounce at the Comex division of the New York Mercantile Exchange, while March crude oil futures were rising 28 cents at $97.85 a barrel. The benchmark 10-year Treasury was down 7/32, raising the yield to 2.027%. The dollar was down by 0.21%, according to the U.S. dollar index. In corporate news, Amazon.com (AMZN) said fourth-quarter revenue rose 22% but the online retailer missed Wall Street's bottom-line estimate. Shares were surging more than 8%. Facebook (FB) is expected to issue its fourth-quarter earnings after the stock market closes on Wednesday and analysts expect the world's biggest social networking company to post profit of 15 cents a share on revenue of $1.51 billion. Shares were rising 0.78%. Bank of America Merrill Lynch reiterated its "buy" rating on Facebook on Monday, citing expected revenue acceleration and upside from mobile. TheStreet will be live-blogging Facebook's results beginning at 3:45 p.m. EST. Research In Motion (RIMM) unveils its eagerly anticipated BlackBerry 10 technology on Wednesday. TheStreet will be live-blogging the announcement beginning at 9:30 a.m. Shares were rising more than 1.5%. Boeing (BA) beat fourth-quarter earnings estimates and said it sees "no significant financial impact" from the ongoing grounding and regulatory review of its showcase 787 jet. Shares were gaining 1.5%. Chesapeake Energy (CHK) CEO Aubrey McClendon is leaving the company he founded 24 years ago amid philosophical differences with the company's new board. Shares were surging more than 10%. Broadcom (BRCM) beat analysts' fourth-quarter estimates but guidance from the key Apple (AAPL) partner came in below Wall Street's views. Shares were down 0.92%. Copano Energy (CPNO) shares were soaring by more than 19% after the company agreed to be acquired by Kinder Morgan Energy Partners (KMP) for about $5 billion, including the assumption of debt. Homebuilder Ryland Group (RYL) beat fourth-quarter expectations thanks to stronger home sales and prices. -- Written by Andrea Tse in New York.
>To contact the writer of this article, click here: Andrea Tse.
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