Dow Jones Industrial Average Futures Dip With Fed in Focus

Dow's Dance With 20K Just Set Off a Bearish Signal

Jan 12, 2017 at 9:06 AM
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Dow Jones Industrial Average (DJIA) futures are pointed lower ahead of the bell, suggesting a run to the 20,000 level will have to wait yet another day. After yesterday's market-shaking speech by President-elect Donald Trump, stocks could react to comments from Fed officials today. Already this morning, St. Louis Fed President James Bullard advocated against dramatically increasing interest rates, while Philadelphia Fed President Patrick Harker called for three rate hikes in 2017, provided the economy stays strong. On the data front, import prices posted their biggest year-over-year gain since 2012, and jobless claims rose less than expected.

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dow futures jan 12

Futures on the Dow Jones Industrial Average (DJIA) are more than 36 points below fair value.

5 Things You Need to Know Today
  1. The Chicago Board Options Exchange (CBOE) saw 656,952 call contracts traded on Wednesday, compared to 411,845 put contracts. The resultant single-session equity put/call ratio slipped to 0.63, while the 21-day moving average remained at 0.64.
  2. Delta Air Lines, Inc. (NYSE:DAL) reported earnings in line with estimates -- despite a 36.5% year-over-year drop in profit -- while revenue registered above expectations. Additionally, the airline forecast early 2017 passenger unit revenue will be between flat and 2% higher.
  3. Fiat Chrysler Automobiles NV (NYSE:FCAU) is poised to open at another annual high, up 2.3% pre-market after CEO Sergio Marchionne allegedly told analysts the automaker's chances of hitting its 2018 financial benchmarks are "significantly greater than 50%." However, FCAU has not formally commented on the reported remark.
  4. After recently selling a majority stake in its Chinese business, McDonald's Corporation (NYSE:MCD) is requesting bids for its Japan unit, according to The Wall Street Journal (subscription required). MCD owns nearly half of the business, and is willing to part with up to a 33% stake.
  5. Fed speeches fill the day's docket. Chicago Fed President Charles Evans will speak in the morning, followed by afternoon speeches by Bullard, Atlanta Fed President Dennis Lockhart, and Fed Chair Janet Yellen. In addition, the Treasury budget and Fed balance sheet will be released. On the earnings front, FuelCell Energy (FCEL) and Taiwan Semiconductor (TSM) will report.

Buzz Stocks Jan 12

Overseas Trading

Stocks in Asia were mostly lower at today's close. Japanese shares were the worst off, with the Nikkei falling 1.2%, pressured by a strengthening yen and yesterday's comments from U.S. President-elect Donald Trump suggesting the island nation is benefiting from a trade imbalance with the U.S. Elsewhere in Asia, China's Shanghai Composite dropped 0.6%, and Hong Kong's Hang Seng gave back 0.5%. South Korea's Kospi, though, managed a 0.6% gain.

Trump is making an impact in Europe, too, where stocks are mostly lower, led by sharp declines in the healthcare sector. This comes after Trump on Wednesday said more bidding is needed on drug prices. On the flip side, luxury goods stocks are rallying, thanks to strong quarterly results from Richemont. Traders are also sifting through the minutes from the European Central Bank's (ECB) December meeting, and digesting a bigger-than-expected rise in eurozone industrial output for November. Still, the German DAX is down 0.6%, the French CAC 40 is off 0.1%, and London's FTSE 100 is trading just below breakeven. 

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