1. U.S. stock futures lower
U.S. stock futures pointed into the red on Tuesday, with investors preparing for a fresh batch of results from major banks.
By 05:29 ET (10:29 GMT), the Dow futures contract had edged down by 185 points or 0.5%, S&P 500 futures shed 31 points or 0.6%, and Nasdaq 100 futures had shed 127 points or 0.7%.
The main U.S. averages were closed on Monday for the Martin Luther King Jr. holiday.
Traders will likely be keeping tabs on corporate earnings, which will include quarterly figures from large lenders Goldman Sachs and Morgan Stanley. Both companies rely on their investment banking divisions, meaning much attention will likely be paid to how these operations fared during the final months of 2023.
Last week, Wall Street giant JPMorgan said it had a “robust” pipeline for its investment banking unit thanks to hopes for imminent interest rate cuts by the Federal Reserve, which fueled a broader market rally late last year. Signs of life in recently dormant mergers and acquisitions activity also emerged as industry-wide deal volumes jumped by 19%, according to Dealogic numbers cited by Reuters. Investment banking fees at JPMorgan surged by 13% in the fourth quarter, while fixed income markets revenue increased by 8%.
2. Fed’s Waller to speak
Traders will also be focusing on a speech from Federal Reserve Governor Christopher Waller later on Tuesday that could provide clues into how the Fed plans to approach policy decisions in the coming months.
Despite unveiling a forecast for interest rates that was more dovish than prior projections in December, several Fed officials have pushed back against market optimism that they will begin to slash borrowing costs as soon as March. Policymakers have instead signaled that they would like to see more evidence that the rate of inflation in the U.S. is steadily cooling down to their stated 2% target.
Markets will likely be eager for Waller to explain his own expectations for price growth and rates when he delivers comments at the Brookings Institution in Washington, D.C. at 11:00 ET (16:00 GMT).
Typically a more hawkish voice at the Fed, Waller said in November that he was “increasingly confident” that policy was well-positioned to both “slow the economy and get inflation back to 2%.” But he noted that there was “no reason” to say that the U.S. central bank will keep rates at more than two-decade highs should prices pressures continue to ease over “the next three to five months.”
3. Musk asks for increased Tesla stake
Elon Musk has said that he would be “uncomfortable” participating in Tesla’s development of artificial intelligence and robotics unless he had nearly double his stake in the electric carmaker.
Musk, considered to be the world’s richest man by Forbes, said in a post on his social media platform X that he would like to gain about 25% voting control of Tesla.
He added that this move, which would almost double his current holdings in the company, would allow him to be “influential, but not so much that I can’t be overturned.” Musk flagged that, should his stake not increase, he would prefer to build products “outside of Tesla.”
The tech tycoon has long backed Tesla’s development of “Full Self-Driving” software and prototype humanoid robots, although much of the business’ revenue still derives from its automotive operations.
Musk currently owns roughly 13% of the firm after he sold a portion of his stake in 2022 to help fund his takeover of Twitter, which was later renamed X.
4. Trump wins Iowa caucuses in rout
Donald Trump notched a key victory in the Iowa caucuses on Monday, all but cementing his position as the front-runner in the race to secure the 2024 Republican presidential nomination.
According to the Associated Press, the former president scored about a 30-point win, well above his closest rivals: Florida Gov. Ron DeSantis and ex-U.N. Ambassador Nikki Haley. The AP called the result just a half-hour after the caucuses convened, underlining Trump’s dominance on the night.
Turnout at the first major Republican nominating contest of the year was lower than levels seen in the last round of GOP caucuses in 2016, partly due to participants facing bitterly cold temperatures and dangerous driving conditions.
But the result still gives Trump a massive surge of momentum heading into the first Republican primary in New Hampshire later this month. The competition facing the former president has also narrowed — biotech entrepreneur Vivek Ramaswamy suspended his campaign and backed Trump.
5. Oil higher amid profit-taking, Middle East violence
Oil prices were higher on Tuesday, as traders noted that violence in the Middle East has not adversely impacted oil supplies.
By 05:29 ET, the U.S. crude futures traded up 0.6% at $73.46 a barrel, while the Brent contract added 1.2% to trade at $79.14 per barrel.
Signs that recent attacks on shipping vessels by Iran-backed Houthi rebels in Yemen — and subsequent strikes by the U.S. and U.K. — were not denting oil supplies spurred on some profit-taking on Monday, Reuters reported. However, volumes were limited due to the U.S. market holiday.
The delayed start to the U.S. trading week will mean that official inventory data from the Energy Information Administration will be pushed back by one day to Thursday, while industry data from the American Petroleum Institute is set to arrive on Wednesday.
Source: Economy - investing.com
