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Wall St set for muted open; earnings, rate-cut expectations in focus

Published 2024/02/06, 13:27
Updated 2024/02/06, 16:01
© Reuters. Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., January 29, 2024.  REUTERS/Brendan McDermid/File Photo
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By Johann M Cherian and Ankika Biswas

(Reuters) -Wall Street's main indexes were set for a flat open on Tuesday with big-ticket earnings on the radar, while investors looked ahead to commentary from policymakers for further clues on the timing of the Federal Reserve's first interest-rate cut.

Eli Lilly (NYSE:LLY) jumped 5% in premarket trading after forecasting 2024 profit above estimates, driven by demand for its blockbuster weight-loss drug Zepbound and diabetes medicine Mounjaro.

GE HealthCare (NASDAQ:GEHC) Technologies gained 5.1% after the medtech firm posted better-than-expected fourth-quarter earnings.

DuPont (NYSE:DD) de Nemours added 2.1% after the chemicals firm beat fourth-quarter profit estimates, announced a new $1 billion share-repurchase program and hiked its dividend.

Investors are actively monitoring forecasts from businesses against the backdrop of high borrowing costs and persistent slowdown concerns.

With around half of the S&P 500 companies having reported earnings, 80.4% have surpassed expectations, according to LSEG data last week. Overall S&P 500 earnings are now expected to have risen 7.8% in the fourth quarter from the year-ago quarter.

"Companies are telling us they see growth in six months to a year out and it could be growth in earnings or in the top line. But it's definitely growth, and it's not the recession that people were looking for last year," said Kim Forrest, chief investment officer at Bokeh Capital Partners.

"Certainly there have been winners and losers in certain categories, but overall, we're getting an economy that's growing."

Wall Street started the week on a glum note in the previous session on the heels of a blistering rally in the S&P 500, which notched 13 weekly gains out of 14. The benchmark index was aided by largely positive quarterly corporate earnings and optimism that a rate cut by the central bank might just be around the corner.

However, Fed officials, including Chair Jerome Powell, have actively talked down market expectations of a quick start to policy easing, a key theme in the central bank's interest-rate decision last week. Strong labor market and economic activity data have also fed into rate-cut speculations.

Remarks from the Fed's policymakers through the day, including voting member Cleveland's Loretta Mester, will be on investors' watch list.

Traders are betting with a nearly 65% chance that at least a 25-basis-point rate cut could be delivered in May, with the odds standing at around 94% for the first cut in June, according to the CME FedWatch Tool.

At 8:36 a.m. ET, Dow e-minis were down 8 points, or 0.02%, S&P 500 e-minis were up 5.25 points, or 0.11%, and Nasdaq 100 e-minis were up 35.75 points, or 0.2%.

© Reuters. Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., January 29, 2024.  REUTERS/Brendan McDermid/File Photo

Palantir Technologies jumped 19.4% after the data analytics firm forecast annual profit above estimates, reporting its "first profitable year" on strong demand for its AI offerings, while FMC Corp (NYSE:FMC) tumbled 13.6% after forecasting downbeat first-quarter profit.

Gartner lost 7.5% after the research and advisory firm forecast annual results below estimates, while Centene (NYSE:CNC) climbed 2.6% after the health insurer beat fourth-quarter revenue estimates on higher premiums in its commercial insurance business.

 

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