Stock futures were mixed Wednesday morning on the heels of a meandering day for the three major indexes, with investors digesting an onslaught of corporate earnings results and looking ahead to a monetary policy decision from the Federal Reserve.
Contracts on the S&P 500 ticked higher, after the index ended just short of a record high during the regular trading day on Tuesday. Shares of Alphabet (GOOGL) gained more than 5% in early trading after the company posted first-quarter sales and profit that easily exceeded estimates, fueled by a resurgence in advertising spending among customers. Shares of peer tech giant and Dow component Microsoft (MSFT), however, declined even after earnings topped expectations across virtually all major metrics. Apple (AAPL) and Facebook (FB) are poised to report results after market close on Wednesday.
A monetary policy decision from the Federal Open Market Committee on Wednesday will punctuate what has otherwise been a busy week full of corporate earnings results. Many pundits expect the April FOMC meeting will yield virtually no new developments, with policymakers waiting until more data emerges on the economic recovery to determine the timing for an adjustment to their ultra-accommodative policy.
“We expect no major developments for the Fed’s core policies at the April FOMC meeting. Fedspeak since the March meeting has been consistent in acknowledging improved activity amid accelerating vaccinations, re-opening and fiscal stimulus,” Lewis Alexander, U.S. chief economist at Nomura, said in a note Tuesday.
“However, participants have also been clear that they are likely to remain patient in removing accommodation,” he added. “As a result, we expect the post-meeting statement to acknowledge better economic activity but do not look for changes to the Fed’s key forward guidance for interest rates and asset purchases. We think April is likely too early for conversations around tapering to accelerate.”
But the likely uneventfulness of the April FOMC meeting will belie the significant role the central bank has continued to play in underpinning markets over the course of the pandemic. As a result, even the slightest hints at tweaks to current policies – whether in the form of tapering the central bank’s $120 billion per-month asset purchase program or raising rates – have been closely eyed by market participants.
“The main directional driver for equities is the fact that the Fed continues to pump money into the market,” Interactive Brokers’ Steve Sosnick told Yahoo Finance on Tuesday. “That is what’s putting a floor under things and that’s what’s providing the ammunition so to speak for the market rally that we’re seeing.”
But in the very near-term, many noted that the economy, at least, remains well positioned to continue on its current, stimulus- and vaccine-fueled trajectory.
“I think right now we’re seeing the perfect equation for near-term growth. We see trillions of dollars in stimulus flooding into the economy, creating a stimulus-fueled consumer that’s anxious to rush into the markets and businesses that are anxious to open up and welcome those consumer back in with open arms,” Lindsey Piegza, Stifel chief economist, told Yahoo Finance on Tuesday. “So what we’re seeing is this flurry of demand prompting a flurry of production, and in fact production now is falling short of that surge in demand which is likely to continue to carry growth forward, not only through the first quarter, but much of 2021.”
8:42 a.m. ET: Boeing shares dip as losses mount in Q1, free cash flow burn comes in greater than expected
Boeing (BA) posted first-quarter results that still reflected a deep hit in the company’s commercial airplanes business, with the ongoing pandemic and lingering fallout from its 737 Max crisis weighing on results. Losses and negative free cash flow were larger than expected.
“While the global pandemic continues to challenge the overall market environment, we view 2021 as a key inflection point for our industry as vaccine distribution accelerates and we work together across government and industry to help enable a robust recovery,” Boeing CEO David Calhoun said in a statement.
Negative adjusted free cash flow for the first three months of the year totaled $3.68 billion, with this cash burn coming in greater than the $3.34 billion expected. Revenue of $15.22 billion was greater than expected, but was still down 10% over last year. This came as commercial airplanes revenue fell 31%, more than outweighing a 19% gain in defense, space and security revenue.
Core losses per share were $1.53, whereas a loss of 90 cents per share had been expected. On the 737 Max jet specifically, Boeing said it has delivered more than 85 of these aircraft since it was given approval to fly by the Federal Aviation Administration in November.
7:23 a.m. ET: Mortgage applications resume declines as low inventory weighs on purchases
U.S. mortgage applications sank during the week ended April 23, with tight housing inventory weighing on purchase activity even as mortgage rates dipped in recent weeks.
Mortgage applications fell 2.5% week-on-week, according to the Mortgage Bankers Association. This followed a jump of 8.6% last week, which had marked the first rise in seven weeks. Refinance applications were down 1% week-over-week and were 18% lower year-over-year. Purchase applications were down 4% on an unadjusted basis, but were still 34% higher than the same week last year.
“Even with a few weeks of lower rates, most borrowers have likely already refinanced, which is why activity has decreased in seven of the last eight weeks,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a press statement. “The purchase market’s recent slide comes despite a strengthening economy and labor market. Activity is still above year-ago levels, but accelerating home-price growth and low inventory has led to a decline in purchase applications in four of the last five weeks.”
7:18 a.m. ET Wednesday: Stock futures drift sideways
Here’s where markets were trading ahead of the opening bell Wednesday morning:
S&P 500 futures (ES=F): 4,183.50, up 4.50 points or 0.11%
Dow futures (YM=F): 33,848.00, down 35 points or 0.1%
Nasdaq futures (NQ=F): 12,943.75, down 9.25 points or 0.07%
Crude (CL=F): +$0.39 (+0.62%) to $63.33 a barrel
Gold (GC=F): -$12.70 (-0.71%) to $1,766.10 per ounce
10-year Treasury (^TNX): +1.9 bps to yield 1.641%
6:13 p.m. ET Tuesday: Stock futures edge higher
Here’s where markets were trading late Tuesday:
S&P 500 futures (ES=F): 4,180.75, up 1.75 points or 0.04%
Dow futures (YM=F): 33,817.00, down 66 points or 0.19%
Nasdaq futures (NQ=F): 12,966.75, up 13.75 points or 0.1%
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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