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Stock-index futures point to a lower start for Wall Street Friday, with pressure tied to continued concerns over the spread of a coronavirus outbreak that began in China and a round of softer-than-expected economic data in Europe.
A busy week for corporate earnings was also set to come to an end. Shares of Amazon.com Inc. AMZN, +0.68% are set to jump after delivering strong quarterly results following Thursday’s close.
What are major indexes doing?
Futures on the Dow Jones Industrial Average YMH20, -0.42% fell 106 points, or 0.4%, to 28,685, while S&P 500 futures ESH20, -0.42% were off 11.45 points, or 0.3%, at 3,278.25. Nasdaq-100 futures NQH20, -0.36% declined 21.75 points, or 0.2%, to 9,193.50.
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Stocks staged a big turnaround on Thursday, erasing early losses to finish in positive territory. The Dow Jones Industrial Average DJIA, +0.43% was down roughly 245 points at its session low but ended the day up 124.99 points, or 0.4%, at 28,859.44. The S&P 500 SPX, +0.31% rose 10.26 points, or 0.3%, to finish at 3,283.66, while the Nasdaq Composite COMP, +0.26% gained 23.77 points, or 0.3%, to close at 9,298.93. All three major indexes saw their largest intraday rebound since Oct. 3, according to Dow Jones Market Data.
What’s driving the market?
Renewed worries over the spread of the coronavirus appeared to help cut short any follow-through on Thursday’s rebound, analysts said. The U.K. Department of Health and Social Care on Friday confirmed the country’s first two cases of coronavirus, both from the same family.
The U.S. stock rebound on Thursday came after the World Health Organization declared the outbreak a global emergency, with analysts tying the bounce to relief over the lack of a recommendation by the body to restrict travel to or trade with China. Beijing has reported over 9,600 cases of coronavirus, while the death toll has climbed to 213.
The WHO’s declaration of a health emergency during the SARS epidemic signaled the”bottom of the emotional response” by investors in 2003, said Jeff deGraaf, chairman of Renaissance Macro Research, in a note. Thursday’s announcement by WHO regarding the coronavirus may be similar, but the duration of the epidemic has been shorter than SARS and without the jumps in trading volume that imply investors have thrown in the towel, he said.
“We love buying when policy makers hit the panic button, but few of the markers from Mr. Market have shown capitulation,” he said.
Data from the eurozone showed the region grew a seasonally adjusted 0.1% in the fourth quarter, with gross domestic product expanding by 1% year over year. Economists were looking for 0.2% quarterly growth.
Which companies are in focus?
- Shares of Amazon.com Inc. were up 8.9% in premarket trade after the e-commerce and cloud-computing juggernaut defied its own disappointing forecast late Thursday to report renewed earnings growth in the holiday quarter, netting more than $3 billion in profit.
- Dow component Caterpillar Inc. CAT, -0.30% reported a fourth-quarter profit that came in well above expectations but sales fell short and the construction- and mining-equipment maker offered a downbeat outlook. Shares rose 1% in premarket trade.
- International Business Machines Corp. IBM, -0.67% late Thursday said Chief Executive Ginni Rometty will retire at the end of the year and would be replaced by Arvind Krishna, currently IBM senior vice president for cloud and cognitive software. Shares were up 3.5% in premarket action. Opinion:IBM’s Gini Rometty leaves behind a mixed legacy as CEO
- Honeywell International Inc. HON, +1.52% on Friday reported consensus-beating fourth quarter profit while sales fell a bit shy. Shares of the aerospace and industrial company’s shares were little changed ahead of the bell.
- More earnings were expected ahead of the opening bell, including results from energy giants Exxon Mobil Corp. XOM, +1.06% and Chevron Corp. CVX, +0.93%, both of which are Dow components.
What’s on the economic calendar?
Investors will see the fourth-quarter employment cost index at 8:30 a.m. Eastern, with economists surveyed by MarketWatch forecasting a 0.7% rise.
At the same time, December data on personal income and consumer spending is due. Economists expect spending and income to each show a 0.3% rise, while the core price index is expected to show a 0.2% increase.
The Chicago-area purchasing managers index for January is set for release at 9:45 a.m. Eastern, while a January consumer sentiment index reading is scheduled for 10 a.m. Eastern.
