9.50am: AI stocks soar on social media popularity
US stocks slipped at the open as investors proceeded with caution amid speculation over the Fed’s interest rate hike path following Friday’s blowout jobs report.
Around 20 minutes after the Wall Street open, the Dow Jones Industrial Average had shed 164 points or 0.6% at 33,758 points, with the S&P 500 index and the Nasdaq Composite both off 0.5%.
Scope Markets global head of brand James Hughes commented that Friday’s significantly better-than-expected non-farm payroll figures certainly rattled equity market sentiment heading into the weekend break.
“Speculation is once again rising that the Fed has further to go in terms of policy tightening and that has once again put the brakes on the bull market rally, with Wall Street selling off into the close and looking to extend the downside as the new trading week gets underway,” Hughes said.
“Asian markets largely took their lead from those rate hike fears too and with little in the way of macroeconomic news due out of the US today, finding a floor to the sell-off may take some time.”
In terms of major movers, SoundHound AI Inc soared 37.6%, BigBear.ai Holdings Inc added 15.4% and C3.ai Inc was up 7.7% as AI-related stocks trended on social media.
On the flip side, Tyson Foods Inc shed 5.8% as falling beef and chicken prices due to softer demand impacted the food production company’s fiscal first quarter profits, while Dell Technologies Inc fell 2.7% on the news it is laying off 5% of its workforce.
6.30am: Focus returns to corporate earnings
Wall Street is expected to open lower after stronger-than-expected non-farm payrolls data for January, released on Friday, rattled investors and prompted a rethink around the Federal Reserve’s next policy move.
Futures for the Dow Jones Industrial Average (DJIA) fell 0.7% in Monday pre-market trading, while those for the broader S&P 500 index dropped 0.9%, and contracts for the Nasdaq-100 shed 1.1%.
“Against expectations for 185,000 jobs to have been added, the figure of 517,000 caused initial consternation as it brought into question once more whether the aggressive hiking policy thus far has achieved its desired objective,” commented Richard Hunter, head of markets at interactive investor.
The DJIA finished 0.4% lower at 33,926 points on Friday, while the S&P 500 was down 1% at 4,136 and the Nasdaq Composite lost 1.6% to 12,007.
“Losses were stemmed by an element of good news, with wage increases seemingly under control,” Hunter added. “The rise of 0.3%, at least for the moment, has eased inflationary concerns.”
Adding to the confusion is a decidedly mixed corporate reporting season, noted Hunter.
“Some of the big tech shares caught up with disappointing numbers which had previously been released after the bell, with Amazon and Alphabet, in particular, being subjects of selling pressure,” he said. “The fourth quarter season is now halfway through, with earnings having generally declined as expected, and with an increasingly cautious tone coming from boardrooms on the outlook.”
Disney is the biggest name reporting this week, although there will also be indicators from the consumer space, with updates from the likes of Under Armour, Ralph Lauren and Chipotle, while Royal Caribbean will give a taste of the current travel market, Hunter said.
Companies reporting quarterly earnings on Monday include Pinterest, Activision Blizzard, Loews Corporation and ZoomInfo Technologies.