Stock slide, housing data, P&G, American Airlines – 5 things to know

Five things you need to know before the market opens on Thursday, January 19:

1. — Stock futures lower on Fed forecasts, recession worries weigh

U.S. stock futures edged lower on Thursday, while Treasury yields extended their recent decline as investors adjust to a potential U.S. recession amid another round of hawkish rate hike comments from three Federal Reserve officials.

A double set of disappointing economic data on Wednesday, including weaker-than-expected December retail sales data and a slowdown in manufacturing activity in the New York region, helped push stocks into the close as investors continue to worry that the Fed might overestimate your abilities. ways to raise the interest rate and blunt growth prospects in the world’s largest economy.

Follow-up comments from Fed officials, including Cleveland Fed President Loretta Mester, heightened those concerns after she told The Associated Press that “I just think we need to keep” raising rates and predicted a peak federal funds rate. which is in the north. five%.

This view, echoed by Philadelphia Fed President Patrick Harker and St. Louis Fed President James Bullard in a media briefing yesterday, challenged moves in the bond market, where price rallies continued to drive down yields as lower Fed rate hikes continue. accelerate as traders see weaker growth, lower corporate earnings and slower inflation as signs of a possible Fed pullback.

Benchmark 10-year Treasury yields slipped another 2 basis points in overnight trading to 3.361%, while 2-year bonds were pegged at 4.061% and the US dollar index fell 0.19% versus global peers to 102.711.

FedWatch CME Group points to a 942% chance of a 25 basis point Fed rate hike on Feb. 1, up from about 76.7% this time last week, with traders expecting the federal funds rate to peak in a range of 4.75 %. and 5% in early spring.

Ahead of the start of Wall Street trading, S&P 500 futures are priced up 17 points to open, while Dow Jones industrial index futures are set to pull back 160 points from yesterday’s 600 pullback points. decline. The technology-focused Nasdaq is down 50 points.

In overseas markets, the MSCI ex-Japan regional index fell 0.3% by the close of trading, while the Tokyo Nikkei 225 fell 1.44% after yesterday’s sell-off on Wall Street.

The European Stoxx 600 was down 0.73% in early trading in Frankfurt and is likely to break its six-win streak, the longest since November 2021.

2. — Housing in focus as mortgage rates continue to fall

The US Census Bureau is due to release key housing market data on Thursday, and investors are anticipating an increase in potential new supply as builder sentiment slowly starts to recover and mortgage rates continue to fall.

Economists are expecting another 4.7% decline in new home builds likely to fall to 1.359 million a year in December, but factor in a modest rise in building permits of around 1.4% as builders race to get started in a much-needed single market . furnishing the family home.

The National Home Builders Association said yesterday that its closely watched sentiment index improved for the first time in 12 months in January, helped in part by continued cuts in domestic mortgage rates, which could help dampen demand. The Mortgage Bankers Association actually said that 30-year fixed rates fell to 6.23% last week, almost 20 basis points lower than the previous period and almost a full percentage point below the end-October peak of 7.16%. the highest level since 2001.

“As we enter the start of spring shopping season, lower mortgage rates and more homes on the market will help make housing affordable for first-time homebuyers,” said MBA Chief Economist Mike Fratantoni.

3. — Procter & Gamble profits on deck with price hikes in the spotlight

Procter & Gamble (PG) – Get a free report Shares slipped in pre-market trading ahead of the brand giant’s earnings report for the second quarter before the open.

Procter & Gamble is expected to have core earnings of $1.59 a share, down 4.2% year-over-year, as sales fell about 1% to $20.73 billion. forecast core earnings growth of 4% to 4%, noting that organic sales are likely to grow 3% to 5%.

Key for the group, whose brands include Tide cleanser, Head & Shoulders shampoo and Pampers diapers, will be its ability to pass on price increases to its customer base as consumer price inflation remains sharply elevated in the face of seven Federal Reserve rate hikes.

Prices were up 9% compared to the September quarter, while sales fell 3%, and it was noted that further markups were planned for the three months ending in December.

Shares of Procter & Gamble shed 0.72% in premarket trading, indicating a starting price of $145.36 a share.

4. — American Airlines looks to follow rival carriers with solid fourth-quarter earnings.

american airlines (AAL) – Get a free report shares declined in pre-market trading due to the carrier’s fourth-quarter earnings report ahead of the open.

Earlier this month, American reported adjusted earnings for the three months ended December of $1.12 to $1.17 per share, almost double its previous guidance of 50 to 70 cents per share, and margin jumped to 10.25-10.5%. .

Revenues are also likely to be significantly higher than previous estimates, up 16% to 17% from 2019 levels on the back of rising domestic travel.

Competing Carriers Delta Air Lines (DAL) – Get a free report and United Airlines (UAL) – Get a free report both outperformed Street’s fourth-quarter earnings guidance, which was combined with bullish short-term forecasts, but investors remain wary that the tourism boom will continue if the US slides into recession.

American Airlines shares were down 1.32% in premarket trading, indicating a starting price of $16.42 a share.

5. — Bed Bath & Beyond Edges grows despite renewed risk of bankruptcy

Bed Bath and more (BBBI) – Get a free report shares rose in pre-market trading even as reports continue to suggest the struggling home seller is close to filing for Chapter 11 bankruptcy protection.

CNBC reported late Wednesday that the group is seeking to sell its business operations, including its BuyBuy Baby division, while raising about $100 million in new loans as it moves closer to filing a Chapter 11 petition. According to CNBC, the owner Forever 21, an Authentic Brands company, was involved in preliminary sales negotiations.

Earlier this month, Bed Bath & Beyond posted a larger-than-expected $393 million loss for the November quarter and said it was exploring “multiple avenues,” including bankruptcy, as part of its recovery effort under CEO Sue Gove.

Shares of Bed Bath & Beyond rose 2.5% in premarket trading, indicating a starting price of $4.04 a share.

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