Morning in New York: waiting for the sentiment to stabilize

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

The publication of the report of the Ministry of Labor, including revised statistics on the number of new jobs outside agriculture for 2025, as well as similar January data and information on the dynamics of unemployment, has been postponed to February 11 due to the shutdown. In this regard, the release of the preliminary estimate of the consumer sentiment index from the University of Michigan for February (consensus: 54.3 points, January: 56.4) will be in the center of attention of the participants of the upcoming trades. This statistic is interesting for market participants in terms of additional signals regarding consumer expectations.

The talks scheduled for this Friday in Oman between the U.S. and Iran on its nuclear program and risks to global energy security may have a certain impact on the course of trading. Visible progress in resolving these issues will affect oil prices, easing fears of energy instability.

In Asian trading, WTI crude oil is up 1.5%, gold and silver are recovering after a sharp fall the day before. Bitcoin is also growing after testing the psychologically significant level of $60,000. Its correction from the historical maximum is approaching 50%.

U.S. stock index futures are trading in the green zone, showing a rebound after declining in overnight trading. A negative reaction to the Amazon (AMZN) report could put pressure on high-tech companies and the Nasdaq 100. Meanwhile, market-wide sentiment is able to stabilize amid a strong technical oversold condition in software developer stocks (IGV ETF), which represent the most talked-about segment of the market this week. The S&P 500 is near its 50-day moving average, which has historically provided support. We are positive on the full redemption of the drawdown in Alphabet (GOOGL) shares during yesterday's session, despite an initial 7% drop.

We assess the balance of risks for the upcoming trades as neutral with increased volatility. The assessment may change to positive in case the broad market index fixes above the previous session's maximum of 6860 points. We consider the level of 6720 as a key support for the benchmark.

Philip Morris International (PM), Centene Corporation (CNC), Biogen (BIIB), and Cboe Global Markets (CBOE) will present quarterly results before the main session opens.

- Amazon's (AMZN) premarket stock is down more than 7% amid investor concerns over its plans to increase capital expenditures to $200 billion in 2026. The funds will be used to develop AWS and AI solutions, but most market participants believe the massive investment will put pressure on the corporation's earnings in the short term.

-Intel (INTC) and Advanced Micro Devices (AMD) have notified Chinese customers of a shortage of server processors, which could delay Intel's shipments by up to six months and AMD's by up to 10 weeks. This is due to high demand for AI infrastructure and problems with production capacity. Against this background, prices for Intel server products are already going up.

- Roblox (RBLX) shares are up 17% ahead of the start of main trading, reacting to the release of strong results. The company's revenue exceeded forecasts, increasing by 36%. The number of active users reached 45 million; the audience is expanding in the US and Asia. At the same time, the management is cautious in forecasts, anticipating difficulties with margins due to the growth of DevX and AI expenses with insufficient support from the advertising segment, the development of which is at the initial stage. Immediately after the release, the issuer's shares soared by more than 25%, but this growth was replaced by a deep correction in the post-market.

-Reddit (RDDT) reported a 69% increase in quarterly revenue on a 19% rise in net income, and announced a $1 billion buyback program. Against this backdrop, the stock was up more than 16% before the main session opened.

- Rio Tinto 's (RIO) Australian shareholders supported its decision to end merger talks with Glencore (GLNCY). While the deal could have created a major mining company, Rio Tinto felt it would not deliver sufficient value to shareholders.

-Toyota Motor (TM) raised its operating profit forecast for the fiscal year ended March by 11.8% to $24.26 billion, thanks to a weak yen and cost cuts.

Trading on February 5, most U.S. stock indices ended not far from the lows of the day. The S&P 500 fell by 1.23%, the Nasdaq 100 fell by 1.38%, the Dow Jones declined by 1.2%, the Russell 2000 corrected by 1.79%. Of the 11 sectors included in the broad market index, only utilities (XLU: +0.05%) stayed near zero due to its defensive status. The list of outsiders was headed by producers of raw materials (XLB: -2.68%).

Most representatives of the "Magnificent Seven" showed negative dynamics. Microsoft (MSFT: -4.95%) was under the greatest pressure due to the ongoing correction in the securities of software developers.

The main driver of the correction was weaker-than-forecast JOLTS statistics for December. According to the data, the number of open job vacancies fell to the lowest since September 2020 and amounted to 6.542 million against the consensus of 7.146 million. The previous result was also revised downward. Initial jobless claims rose to 231,000 with average forecasts at 211,000. This information was seen by the market as a sign of continued cooling of the labor market.

Against this background, US treasury bonds finished trading near the highs of the day. Yields on the short end of the curve fell by about 9-10 bps. Simultaneously, the market began to lose the momentum of expanding growth beyond megacaps, which was previously supported by favorable macro backdrop and discussion of signals of an overheating economy. Pro-cyclical capital rotation until recently partially offset the negativity due to the increased focus on the technology sector and its role in the indices. The resilience of the semiconductor manufacturing sector relative to the S&P 500 has been supported by reports regarding Alphabet 's (GOOGL) capex plans. At the same time, a combination of updated CAPEX expectations and concentration of positions in systemic players pressured stock prices.

- Hims & Hers (HIMS: -3.8%) plans to sell an analog tablet form of Wegovy for $49 per month, while the branded drug from Novo Nordisk (NVO: -8.2%) is priced at about $199 per month.

-McKesson (MCK: +16.5%) beat its quarterly revenue and profit forecasts and improved its guidance for the year. The most pronounced positive dynamics was demonstrated by the company's North American pharma business.

-Arm Holdings (ARM: +5.7%) reported quarterly results and a strong outlook for the next comparable period. Rapid growth in data center revenue was viewed positively, despite weak demand in the smartphone chip segment.

- Cummins (CMI: -10.7%) reported revenue above average forecasts, but its earnings fell short due to a one-time write-down in the hydrogen production equipment segment amid optimization in that area and more conservative demand expectations.

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