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Dow Futures Higher on Apple Earnings Strength, Boeing Report

Dow futures are getting support from Apple's blowout first quarter earnings ahead of another busy session of corporate reporting and a Fed rate decision.

The Wednesday Market Minute

  • Global stocks build cautious gains after stronger-than-expected Apple earnings lift investor sentiment, offsetting concerns for the rapidly-spreading coronavirus.
  • Apple sees overall revenues rise to $91.8 billion thanks to a rebound in iPhone sales and steadying demand in China, while forecasting a Street-beating $63.0 billion to $67.0 billion in current quarter sales. 
  • China confirms 132 deaths from the virus, which has now affected at least 6,000 people, a figure that tops the number afflicted by the SARS outbreak in 2003.
  • European stocks open modestly firmer thanks in part to weaker regional currencies, while Britain's FTSE 100 edges higher heading in the final Bank of England policy meeting in Governor Mark Carney.
  • The U.S. dollar trades at a two-month high against its global peers as investors await the Fed's January rate statement at 2:00 pm Eastern time
  • U.S. equity futures suggest an opening bell rebound on Wall Street ahead of pending home sales data at 10:00 am Eastern time and earnings from Boeing, General Electric, AT&T, Mastercard, and McDonald's before the start of trading.

U.S. equity futures edge higher again Wednesday, while markets around the world followed with caution, as investors looked to support from a much stronger-than-expected quarterly earnings report from Apple that, at least for the moment, looks to have offset concerns for the spread of the coronavirus in Asia.

Apple's blowout quarter, which included $56 billion in iPhone sales and a record $10 in revenues from its wearables products, lifted shares in the world's biggest tech company to a record high in extended-hours trading and boosted sector and broader market sentiment at the same time. 

Apple did caution, however. that it's monitoring the spread of the virus "very closely" in China, where around 380 manufacturing facilities that feed into its supply chain, and noted some impact from China's decision to extend some Lunar New Year business re-openings until February 10.

The coronavirus spread, however, shows no signs of abating, with the number of confirmed cases rising past 6,000, according to China's National Health Commission, a figure that overtakes the total number of infections from the SARS outbreak in 2003. The number of fatalities has also risen sharply, to 132, over the past twenty-four hours.

Apple's earnings-lead momentum, however, looks solid enough to keep Wall Street in the green heading into another busy reporting session, with fourth quarter updates expected from Boeing  (BA) - Get The Boeing Company Report, General Electric  (GE) - Get General Electric Company Report, AT &T  (T) - Get AT&T Inc. Report, McDonald's  (MCD) - Get McDonald's Corporation Report and Mastercard  (MA) - Get Mastercard Incorporated Report before the opening bell. 

Futures contracts tied to the Dow Jones Industrial Average suggest a 145 point gain at the start of trading, following its first gain in six sessions yesterday, while those linked to the S&P 500 indicate a 15 point advance for the broader benchmark. 

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Apple shares are poised to open at an all-time high of $324.65 each, giving the Cupertino, California-based tech giant a market value of just over $1.4 trillion while adding around 50 points to the Dow's opening bell gain.

Boeing was also supporting the Dow, adding around 40 points after it posted its first quarterly loss since 1997 but kept the costs figures related to the grounded 737 MAX within the range of analysts' forecasts.

Markets will also be looking to the Federal Reserve's policy statement at 2:00 pm Eastern time, and although economists are expecting no change in the Fed's key rate range of 1.5% to 1.75%, Chairman Jerome Powell could signal tweaks to the central bank's schedule of $60 billion a month in bond purchases, which it has been conducting in an effort to stabilize overnight and short-term lending market rates.

European stocks were firmer at the open, as well, supported by a multi-month low of 1.1003 for the single currency against the U.S. dollar that helped lift the Stoxx 600 to an early 0.36% gain in Frankfurt.

Britain's FTSE 100 was also in the green, rising 0.15% as the pound slipped to 1.3015 against the dollar heading into the Bank of England's January rate decision later today -- the last under the leadership of Governor Mark Carney.

Following a brief moment of inversion yesterday -- during which benchmark 10-year U.S. Treasury note yields slipped under 3-moth bill rates -- government bond yields bumped higher in overnight trading, taking 10-year paper to 1.636%. and the U.S. dollar index to a two-month high of 98.06.

Global oil prices rose for a second consecutive session amid speculation that OPEC could extend its pact to cut production by 1.7 million barrels per day until the middle of the year in order and data from the American Petroleum Institute showed a surprise 4.3 million barrel reduction in domestic crude stocks.

Brent crude futures contracts for March delivery, the global benchmark for pricing, were last see seen 37 cents higher from their Tuesday close in New York and trading at $59.88 per barrel, while WTI contracts for the same month were marked 37 cents lower at $53.85 per barrel.