Stock Market Update

The S&P 500 futures are down five points and are trading 0.1% above fair value, the Nasdaq 100 futures are down 100 points and are trading 0.5% above fair value, and the Dow Jones Industrial Average futures are up 72 points and are trading 0.2% above fair value.

Contracts tied to the S&P 500 and Nasdaq 100 are lower after the former reached a fresh record high yesterday. The negative disposition is related to rising Treasury yields. The 10-yr yield is up four basis points to 4.64%, which is still well below its high yield (4.80%) last week.

Earnings season continues to roll on with results from Alcoa (AA) and American Airlines (AAL) receiving negative reactions from investors while GE Aerospace (GE) and Alaska Air (ALK) show pre-open gains in response to their results.

The economic lineup today includes weekly jobless claims at 8:30 ET.

In corporate news:

• Alcoa (AA 38.25, -0.47, -1.2%): beats by $0.09, beats on revs; Issues FY25 guidance, expects total Alumina segment production to range between 9.5 to 9.7 million metric tons
• American Airlines (AAL 17.25, -1.41, -7.6%): beats by $0.20, beats on revs; guides Q1 EPS below consensus; guides FY25 EPS in-line
• GE Aerospace (GE 199.49, +11.13, +5.9%): beats by $0.28, beats on revs; guides FY25 EPS in-line
• Kinder Morgan (KMI 30.92, +0.14, +0.5%): reports Q4 (Dec) results, misses on revs; guides FY25 EPS below consensus; to raise its annual dividend; announces $1.7 bln Trident Intrastate pipeline project
• Alaska Air (ALK 69.12, +1.72, +2.6%): beats by $0.50, beats on revs; guides Q1 EPS above consensus; guides FY25 EPS below consensus
• Discover Financial Services (DFS 200.00, +2.50, +1.3%): beats by $1.50, total loans down 6% yr/yr; Expects 2025 loan growth to align more closely with pre-pandemic norms
• Elevance Health (ELV 410.20, +19.47, +5.0%): beats by $0.03, reports revs in-line; guides FY25 EPS in-line; raises dividend

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region had a mixed showing on Thursday. Japan's Nikkei: +0.8%, Hong Kong's Hang Seng: -0.4%, China's Shanghai Composite: +0.5%, India's Sensex: +0.2%, South Korea's Kospi: -1.2%, Australia's ASX All Ordinaries: -0.6%.
  • In economic data:
    • Japan's December trade surplus JPY130.9 bln (expected deficit of JPY55.0 bln; last deficit of JPY110.3 bln). December Imports 1.8% yr/yr (expected 2.6%; last -3.8%) and Exports 2.8% yr/yr (expected 2.3%; last 3.8%)
    • South Korea's Q4 GDP 0.1% qtr/qtr (expected 0.2%; last 0.1%); 1.2% yr/yr (expected 1.4%; last 1.5%)
    • Singapore's December CPI 0.4% m/m (last 0.0%); 1.6% yr/yr (expected 1.5%; last 1.6%)
    • New Zealand's November External Migration & Visitors 5.9% m/m (last 6.3%)
  • In news:
    • South Korea's KOSPI (-1.2%) showed relative weakness after chipmaker SK Hynix reported record quarterly results coupled with somewhat cautious guidance.
    • China Securities Regulatory Commission announced that at least CNY100 bln will flow into A-shares from state-owned insurers each year with a pilot scheme starting during the first half of 2025.
    • Meanwhile, a People's Bank of China official said that liquidity tools will be enhanced and that requirements for share buyback loans are being lowered.
    • The Bank of Japan is widely expected to announce a 25-basis point rate hike tomorrow.
• Major European indices trade on a mostly higher note. STOXX Europe 600: +0.1%, Germany's DAX: +0.2%, U.K.'s FTSE 100: UNCH, France's CAC 40: +0.4%, Italy's FTSE MIB: +0.3%, Spain's IBEX 35: +0.5%.
  • In economic data:
    • U.K.'s January CBI Industrial Trends Orders -34 (expected -35; last -40)
    • France's January Business Survey 95 (expected 96; last 97)
  • In news:
    • U.K.'s FTSE (unch) lags with consumer stocks contributing to the underperformance.
    • British Chancellor Reeves said that she will find ways to meet fiscal rules and that any additional measures that may be needed will be announced on March 26.
    • European Central Bank President Lagarde warned that the region must prepare for potential trade policy shifts.
    • Norges Bank kept its policy rate at 4.50%, but hinted at a rate cut in March.