(Bloomberg) — U.S. equity futures pared bullish gains from Amazon.com Inc. earnings ahead of the U.S. payrolls report, which could show a loss in jobs.
Contracts on the S&P 500 were little changed while the Nasdaq 100 held on to a 0.8% gain after rising as much as 2.3%. Amazon trimmed its premarket gains, driven by a price hike for Prime memberships. Meanwhile, Europe’s Stoxx 600 fell the most in a week as rate-hike bets reduced risk appetite. Treasuries gained and the dollar headed for its worst week since 2020.
Traders will be focused on wage growth in Friday’s official jobs report from the U.S. as a gauge of the health of the economy and the potential for a further surge in inflation.
The looming jobs report “is a reminder that expectations for Fed policy are the key influence on this market right now,” wrote Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter. A hot inflation print next week would “rekindle hawkish Fed concerns,” he added.
It’s been a volatile week in markets as investors were jolted by weak numbers at U.S. tech giants including Facebook owner Meta Platforms Inc., which wiped more than $250 billion from its market value on Thursday. Positive earnings from Amazon helped lift sentiment, however, with the online marketplace and tech company set to increase its market cap by $184 billion if its premarket gains hold in the regular session.
“Now we’re seeing a little bit of FOMO — all of a sudden, everyone’s seeing the numbers are good, ‘I’ve got to get my exposure back,’ and that’s what we’re seeing in the after-market moves right now,” Alon Rosin, Oppenheimer & Co.’s head of institutional equity derivatives, said by phone.
Dip buyers have hoped a stronger earnings season would keep equities attractive and counter some concerns about tighter monetary policy in the face of higher inflation. Of the 272 companies in the S&P 500 that have reported results, 82% have met or beaten estimate, with profits coming in 8.8% above projected levels.
Yet, signs of stubborn price pressures increased after data showed U.S. gasoline prices surged to the highest in more than seven years. Crude oil extended a fresh seven-year high in early trading with banks including Goldman Sachs Group Inc. forecasting Brent will reach $100 a barrel.
“We are getting late in the cycle. The market is becoming more selective,” wrote Wells Fargo’s Chris Harvey. “The tide will no longer lift all boats and the market will become less and less forgiving in our view. Going forward, we feel investors will need to cut loses quickly and to focus on margins rather than the top or bottom line.”
Hawkish comments from European Central Bank President Christine Lagarde and a Bank of England interest-rate hike underlined risks from inflation. While a selloff in the region’s bonds eased Friday, the mood in the stock market turned sour. Europe’s Stoxx 600 fell 1% as rate-hike bets reduced risk appetite. Makers of cars and parts were the worst-performing industry group, while gains for technology shares surrendered gains.
For more market analysis, read our MLIV blog.
What to watch this week:
- U.S. payrolls report for January, Friday
- Winter Olympics kick off in China, Russia’s President Vladimir Putin due to attend opening ceremony, Friday
Some of the main moves in markets:
Stocks
- Futures on the S&P 500 were little changed as of 8:24 a.m. New York time
- Futures on the Nasdaq 100 rose 0.8%
- Futures on the Dow Jones Industrial Average fell 0.3%
- The Stoxx Europe 600 fell 1%
- The MSCI World index was little changed
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro rose 0.2% to $1.1464
- The British pound fell 0.4% to $1.3547
- The Japanese yen was little changed at 114.89 per dollar
Bonds
- The yield on 10-year Treasuries declined two basis points to 1.81%
- Germany’s 10-year yield advanced three basis points to 0.17%
- Britain’s 10-year yield declined two basis points to 1.35%
Commodities
- West Texas Intermediate crude rose 1.9% to $91.98 a barrel
- Gold futures rose 0.6% to $1,814.10 an ounce
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