Thursday January 31st

31-01-2019

US stock futures fall slightly after monster rally on Wednesday, Tesla and Microsoft shares decline

U.S. stock index futures pointed to a mixed start to trading on Thursday after the Federal Reserve kept interest rates unchanged.  At 8:56 a.m. ET, Dow Jones Industrial Average futures implied a drop of about 90.86 points at the open. Futures for the S&P 500 pointed to a flat open while Nasdaq 100 futures indicated a slightly higher open. On Wednesday, the Fed said it will be “patient” with raising rates moving forward. In a statement, the central bank said: “The Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate. ” The statement also dropped the word “gradual.” The Fed addressed the balance sheet, which had been a concern for investors, in a separate statement. The Fed said it “is prepared to adjust any of the details for completing balance sheet normalization in light of economic and financial developments.” Stocks shot up on the back of the statement, with the major indexes rising at least 1.55 percent on Wednesday. Those gains put the S&P 500 on track to post its best January performance since 1989. The broad index is up nearly 7 percent this month. The central bank’s statement came in the middle of the busiest week of the earnings season. When the week is over, more than 100 S&P 500 companies will have reported earnings. On Thursday, General Electric posted weaker-than-expected earnings but its shares surged 7 percent on strong revenue. Facebook shares jumped nearly 12 percent in the premarket after the company reported better-than-expected earnings. Microsoft and Tesla, however, both fell after reporting quarterly results. Amazon and Yum China are among the companies scheduled to report after the bell Thursday. Investors also monitored a meeting between U.S. and China trade officials taking place in Washington. President Donald Trump said in a series of tweets Thursday that talks are going well between the two countries, noting “China does not want an increase in Tariffs and feels they will do much better if they make a deal. They are correct.” He also said, however, that no deal will be final until he meets with Chinese President Xi Jinping. Major stocks in Asia closed mixed on Thursday on the back of official data from China showing that the Chinese economy contracted for the second month in a row in January. The mainland Chinese markets ended their trading day mixed. The Shanghai composite gained around 0.35 percent to 2,584.57 and the Shenzhen component rose 0.117 percent to 7,479.22. The Shenzhen composite, however, slipped 0.698 percent to 1,274.74. Meanwhile, Hong Kong’s Hang Seng index gained about 1 percent, in its final hour of trading. Elsewhere in Asia, Japan’s Nikkei 225 rose 1.06 percent to close at 20,773.49 while the Topix saw gains of 1.08 percent to finish its trading day at 1,567.49, as shares of Japanese conglomerate Softbank Groupjumped 4.77 percent. South Korea’s Kospi, however, saw slight losses to close at 2,204.85. Oil prices steadied on Thursday after two days of gains, keeping U.S. crude on track to break a three-month losing streak and post its best January performance on record. Crude futures have powered through a steady flow of weak economic data from China, the world’s second biggest oil consumer. The energy complex has been boosted by OPEC-led production cuts aimed at draining oversupply and U.S. sanctions on Venezuela, which threaten to disrupt global trade flows and bolster prices. U.S. West Texas Intermediate crude prices were last up 14 cents at $54.37 a barrel, trading just below a two-month high struck in the previous session. WTI is heading for a nearly 20 percent gain, its strongest monthly performance since April 2016 and its best January since the contract began trading in 1983. Brent crude, the international benchmark for oil prices, rose 38 cents, or about half a percent, to $62.03 a barrel around 8:45 a.m. (1345 GMT). Brent is currently up about 15 percent in January, also its best monthly gain since April 2016. Gold inched up on Thursday, holding near a multi-month peak after the U.S. Federal Reserve paused its monetary tightening cycle, denting the dollar and putting bullion on track for its fourth straight monthly gain. Spot gold was up 0.43 percent to $1,325.17 per ounce at 8:58 a.m. ET. Prices rose to their highest since May 11 at $1,323.34 on Wednesday. U.S. gold futures rose 1.09 percent to $1,329.90. Spot gold has risen 3.1 percent so far this month.