JPMorgan (NYSE:JPM) and Wells Fargo (NYSE:WFC) missed earnings estimates leading to a premarket drop in the Financial Select Sector SPDR Fund (XLF) according to Bill Baruch.
E-mini S&P (ESH)
Yesterday’s close: Settled at 2580.50, down 14.50
Fundamentals: U.S benchmarks are holding onto green territory but have given back overnight gains. The S&P traded to a high of 2600.25 after China announced additional stimulus measures. Last Monday, the People’s Bank of China said they will broadly cut their Reserve Requirement Ratio for the first time since March 2016 on Jan. 15. They announced a “larger scale tax cut” to stimulate the economy last night; the Shanghai Composite is up 1.3% and the Hang Seng is up 2.0%. European equity markets have led the way lower after gaping higher on their open. This comes as we await U.K Prime Minister May’s Brexit vote in Parliament. She is expected to lose, but the ongoing question is, how badly? Ultimately though, the market has not shown tremendous concern for a hard-Brexit with speculation the March deadline could be extended and even this morning Germany’s Foreign Minister said the EU could hold fresh talks with the U.K.
Earnings have added early pressure to the tape after JPMorgan (JPM) missed estimates; the stock is down about 3%. Wells Fargo (WFC) didn’t do much better and the Financial Select Sector SPDR Fund (XLF) has given back yesterday’s gains premarket. The banks will remain front and center and tomorrow we look to reports from Bank of America (NYSE:BAC) and Goldman Sachs (NYSE:GS).
Despite the government shutdown, today’s Producer Price Index (PPI) and NY Empire State Manufacturing, missed expectations. Given the slimmer calendar, these reports hold additional weight especially the Manufacturing read which missed sharply in December. Minneapolis Fed President Kashkari speaks at 10:30 am CT and Dallas Fed President Kaplan speaks at noon CT, but it is Kansas City Fed President George who will be most closely watched at noon CT as she is a voting member in 2019. ECB President Mario Draghi speaks at 9:00 am CT.
Crude Oil (CLV)
Yesterday’s close: Settled at $50.51, down $1.08
Fundamentals: Crude oil got a boost last night from additional policy measures out of China. Still, the hurdle is quickly coming to the limelight; weekly inventory data. First, PPI and NY Empire State Manufacturing missed expectations which typically should not favorable to risk-assets, especially coming on the heels of unfavorable trade data from China Sunday night. However, the freshly announced stimulus coupled with a softer dollar immediately following the U.S data is favorable. Through today’s session, analysts’ inventory expectations are sure to knee jerk prices, the private API survey is due after the bell.
Gold (GCV)
Yesterday’s close: Settled at $1,291.3, up $1.80
Fundamentals: Gold has been consolidating in an extremely healthy manner within the same range since Jan. 3. The dollar is stronger this morning on weakness in the euro, yen and pound. However, U.S PPI and NY Empire State Manufacturing both missed and this is favorable for the metal.