The Wednesday Market Minute
- Global stocks move higher heading into the start of the U.S. earnings season, with investors shrugging off inflation concerns in favor of near-term growth prospects.
- S&P 500 first quarter earnings are expected to rise 24% from last year to a share-weighted $338 billion, with a 55% surge forecast for the three months ending in June.
- Benchmark 10-year note yields ease 1.611% overnight after a solid 30-year auction and muted reaction the the March inflation data.
- CDC data shows 75.3 million Americans have now been fully vaccinated against the coronavirus, with around 192.2 million doses administered as of Monday.
- U.S. equity futures suggest a modestly firmer open on Wall Street following first quarter earnings from JPMorgan, Goldman Sachs and Wells Fargo and ahead of a speech from Fed Chair Jerome Powell at 4:00 PM Eastern time
U.S. equity futures edged higher Wednesday, while Treasury bond yields eased to the lowest levels in three weeks, as investors shrugged off inflation pressures and set their focus on the unofficial start to the first-quarter earnings season.
JPMorgan Chase (JPM) - Get JP Morgan Chase & Co. Report, Goldman Sachs (GS) - Get Goldman Sachs Group Inc. (The) Report and Wells Fargo (WFC) - Get Wells Fargo & Company Report reported first-quarter updates prior to the start of trading as analysts look for the broader financial sector to pace S&P 500 earnings gains - along with consumer discretionary stocks - to around 24% when compared to last year.
JPMorgan used the release of $5.2 billion in previous provisions for bad loans to boost its first quarter earnings to a Street-beating $4.5 per share, while Goldman Sachs benefited from the strongest global markets revenues in 10 years to post forecast-beating earnings of $18.90 per share.
The near-term profit forecasts will also play a significant role in the market's reaction to the numbers, particularly given the way stocks were able to stride through Tuesday's March inflation reading, which showed the fastest increase in monthly consumer price pressures in nearly nine years.
A stronger-than-expected auction of 30-year bonds that afternoon -where investors bid for nearly two-and-a-half times more than the $24 billion on offer - suggested markets weren't unsettled by the headline inflation reading and remain comfortable with the Federal Reserve's pledge to keep interest rates at record lows for at least another two years.
That leaves stock market direction largely dictated by corporate earnings and valuations, both of which continue to march forward on the strength of trillions in government stimulus, accelerated vaccine rollouts and planned state and business re-openings in the months ahead.
Tuesday's decision by the CDC and the FDA to pause the use of Johnson & Johnson's (JNJ) - Get Johnson & Johnson Report single-shot coronavirus vaccine notwithstanding, herd immunity is likely to develop by the summer with nearly 200 million Americans have received at least one dose of the Pfizer (PFE) - Get Pfizer Inc. Report or Moderna (MRNA) - Get Moderna Inc. Report treatment.
U.S. equity futures suggest a modest set of gains to start the trading day, however, with contracts tied to the Dow Jones Industrial Average indicating a 35 point opening bell gain and those linked to the S&P 500 suggesting a 5 point bump for the broader benchmark.
Nasdaq Composite futures are priced for a 45 point gain that will take the tech-focused benchmark to a fresh record high, although investors are likely more focused on the direct listing of Coinbase Global (COIN) - Get Coinbase Global Inc Report later this morning, which could reach a $100 billion market value when it begins trading.
Bitcoin prices, in fact, hit yet another all-time high of $64,230 in overnight trading ahead of the listing, while the dollar slipped 0.15% against a basket of its global peers and benchmark 10-year note yields traded at a three-week low of 1.611%.
Oil prices jumped more than $1 a barrel in overnight trading after the American Petroleum Institute reported a 3.6 million decline in domestic crude stocks, pegging WTI futures contracts at $61.11.
Solid earnings in Europe lifted the Stoxx 600 to an early 0.17% gain, with Britain's FTSE 100 rising 0.33%, while the region-wide MSCI ex-Japan benchmark jumped 1.05% in overnight trading on the strength of solid gains in Hong Kong and Shanghai.