Morning in New York: the "bulls" will face a test of strength

Daily review and forecast of events on the U.S. stock market from Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

In the center of attention of the participants of the upcoming session will be the preliminary data of the business activity index (PMI) from S&P Global for January. The consensus for the manufacturing PMI suggests that it will remain at the December level of 51.8 points. It is important for investors to see if the trend of expanding activity continues and if industrial demand is stable. The consensus for the service PMI suggests an increase from December's 52.5 points to 53 points. If the actual result is higher than forecast, it will confirm the sustainability of domestic demand, support cyclical market sectors and overall risk appetite.

An additional benchmark will be the final consumer sentiment index from the University of Michigan for January (preliminary value: 54 points). If the release does not present any surprises, it will be taken by investors as a background confirmation of stabilization of households' expectations, and the market will react neutrally to it.

Schlumberger (SLB), Booz Allen Hamilton (BAH) and Comerica (CMA ) will present quarterly results before the main session opens.

US stock index futures are showing weak negative dynamics. We believe that the correction of Intel (INTC) shares after reporting is related to internal corporate dynamics, so it will not affect sentiment in the broad semiconductor sector, where the uptrend remains strong. We assess the balance of risks for the upcoming trades as neutral with moderate volatility. We focus on S&P 500 fluctuations in the range of 6870-6970 points (from -0.6% to +0.8% to the previous session's closing level).

-Amazon (AMZN) will cut its workforce by about 30k next week as part of a crackdown on red tape. The company's shares are showing slight growth on the premarket.

- Quotes of Intel (INTC) before the start of the main trading fall by more than 11%. This dynamics was triggered by the forecast of revenue and earnings per share for the current quarter, which turned out to be weaker than the average market expectations. The corporation reported for October-December better than expected, but investors were alarmed by the continuing pressure on costs, which put pressure on margins.

-Netflix (NFLX) says its offer to Warner Bros. Discovery (WBD) to buy it for $82.7 billion in cash is more secure than Paramount Skydance's (PSKY) $108 billion offer with overwhelming debt. The deadline for the latter's hostile offer runs through Feb. 20.

- NVIDIA (NVDA) CEO Jensen Huang will meet with potential buyers from the People's Republic of China amid slowing sales growth and U.S. restrictions on shipments of advanced AI chips to the country.

- Shares of Capital One (COF) are down about 2% on the premarket. The market is reacting negatively to higher expenses and loan loss provisions while net interest margins are declining. The Brex deal is perceived as short-term profit dilution.

- Intuitive Surgical (ISRG) shares are gaining more than 4% on the back of a strong report recording double-digit growth in da Vinci revenue and procedures, as well as the successful deployment of da Vinci 5 systems despite tougher price competition in China.

Trades on January 22 on American stock exchanges closed in plus. S&P 500 grew by 0.55%, NASDAQ 100 added 0.76%, Dow Jones strengthened by 0.63%, and Russell 2000 rose by 0.76%, having updated the historical maximum.

Most sectors included in the broad market index were trading in the green zone. Telecoms (XLC: +1.41%) were the leaders of growth. The main outsider was the real estate industry (XLRE: -0.99%).

All of the Magnificent Seven, most notably Tesla (TSLA: +4.17%), buoyed by Elon Musk's Davos speech, and Meta Platforms (META: +5.66%), ended the session in positive territory.

Investors continued to play down Donald Trump's softening rhetoric on the topic of Greenland annexation, as well as additional details of a potential NATO deal emerging.

The number of initial applications for unemployment benefits amounted to 200 thousand with a consensus of 215 thousand. The result of the previous week was revised to 199 thousand. The number of repeated applications from 1875 thousand a week earlier dropped to 1849 thousand with average expectations of 1894 thousand. Relatively low figures signal the stabilization of the labor market and the stability of the U.S. economy as a whole.

- Elon Musk said Tesla (TSLA: +4.2% at the close of trading on Jan. 22) is providing consumers with FSD cab service in driverless mode in Austin, which is perceived by the market as progress in the adoption of autonomous driving technology.

-Uber (UBER: -2%) faces fears of increased competition in the robotaxi service segment from Tesla.

- The US and China have agreed a deal to sell TikTok's US business to a consortium led by Oracle (ORCL: +2.5%) and Silver Lake.

-GE Aerospace (GE: -7.4%) reported better-than-average EPS, revenue, operating income and free cash flow for the latest quarter. At the same time, its operating profit guidance was more cautious than consensus, and the bar for expectations ahead of the results release was overstated.

- Abbott Laboratories (ABT: -10%) revenue, gross margin and organic growth were below estimates due to pressure from the Nutrition and Diagnostics segments in October-December. The company's EPS guidance for the current quarter fell short of consensus.

This article was AI-translated and verified by a human editor