Futures linked to the DOW JONES index rose 0.46% to 46,894.80 points, while those of the S&P 500 advanced 0.43%, to 6,701.30 points. NASDAQ 100 futures rose 0.45% to 24,643.60.
Wall Street is coming off a negative day yesterday Thursday due to growing concern about news from the Middle East. Dow Jones (-1.56%), S&P 500 (-1.52%) and Nasdaq (-1.78%) closed very close to their low levels of the day, with fear that the war in Iran would last longer than expected, leading investors to reduce their risk positions.
The three major indices, found in lows since November last yearpoint to heavy losses this week. The S&P 500 is down 1% through Thursday’s close, while the Dow Jones is headed for a 1.7% drop. The technological Nasdaq is the one that has held up best, but is down 0.3% so far this week.
All eyes continue to point to the Strait of Hormuzthrough which a fifth of the world’s oil passes and which has become one of the main assets of the ayatollah regime in the conflict with the US and Israel. This has been confirmed the new supreme leader of Iran, Mojtaba Khamenei, who has declared that this commercial route must remain closed as a “tool to pressure the enemy”.
At the moment it does not seem that there can be a solution in the short term. Yesterday the US acknowledged that its Navy is not yet ready to escort ships that want to pass through this artery of world trade, although it hopes to be able to do so if necessary as soon as its forces in the region conclude the offensive on its main objectives.
Meanwhile, additional ways are being sought to relax the energy market, including release of strategic reserves. Additionally, the US Department of the Treasury has issued a license to allow the purchase of Russian oil that has already been loaded on ships, in an attempt to “increase the global reach of existing supply”, despite the sanctions imposed on Moscow due to the war in Ukraine.
Today the West Texas oil futures give a small respite, with a fall of 1.85% to 93.86 dollars per barrel, while Brent crude oil is paid at 98.72 euros (-1.56%) after having remained above 100 dollars during the early hours.
Rising crude oil prices and growing fears of inflation are also translating into lower investor expectations of the Federal Reserve’s interest rate cuts this year. Today the market has known the price index of personal consumption expenditure (PCE) for Januarywhich is the Fed’s preferred inflation indicator.
The PCE increases to 2.8% in annual rate and 0.3% in monthly rate with an underlying PCE, which excludes energy and food prices, remaining at 3.1% in annual and 0.4% in monthly, in line with estimates. The Dow Jones consensus expected the general PCE to have increased 0.3% month-on-month and 2.9% annually. The estimate of the underlying PCE, which excludes energy and food prices, is 0.4% in the month and 3.1% in the annual rate.
Also published today is the second estimate of the Fourth quarter GDPwhich has reached 0.7% compared to an estimate of 1.4%. Later the consumer confidence index from the University of Michigan will be known, although this last reference, already late in the day.
On a business level, the final blows of the results season continue. Among the latest companies to walk the runway, Ulta Beauty drops 8% after the beauty retailer disappointed with its report. In its fourth quarter, Ulta posted earnings of $8.01 per share, below the $8.03 per share expected by analysts surveyed. The income, of 3.9 billion, did manage to exceed the estimate of 3.8 billion that the market had managed.
Looking ahead to this year, Ulta forecasts earnings per share of $28.05 to $28.55, below Wall Street expectationswhich forecast earnings of $28.57.
The software giant Adobe falls almost 7% in the New York morning after learning that The company’s CEO, Shantanu Narayen, will step down once a successor is found. Narayen will remain as chairman of the company’s board of directors. He has been CEO of Adobe since 2007.
The news has overshadowed Adobe’s quarterly results, which beat expectations: the company posted adjusted earnings of $6.06 per share on revenue of $6.4 billion. Analysts had expected $5.87 per share in earnings and $6.28 billion in revenue.
Lennar has put on the table a second consecutive quarter of earnings below expectations. The construction company reported earnings of 93 cents per share on revenue of $6.62 billion, lower than the 96 cents per share and $6.88 billion expected by analysts. Its shares are down just over 2%.
Sentinel One estimates first-quarter adjusted earnings in a range of 1 to 2 cents per share, below the consensus of 5 cents per share. In the fourth quarter, the cybersecurity company posted earnings that slightly beat estimates, but revenue of $271 million was in line with expectations.