US markets look set to open lower today following yesterday’s jump after earnings from Citigroup and US retail sales were better than expected. Upcoming there are earnings from Dow heavyweights Coco-Cola and Johnson & Johnson as well as tech behemoths Intel and Yahoo. Futures suggest the S&P500 will open 2 points lower at 1,828 with the Dow Jones expected to open 28 points lower at 16,145. There are a number of important earnings today; most attention will likely be paid to tech, financial and other growth stocks given the recent sell-off concentrated in those sectors. Today the two to watch will be Intel and Yahoo! Intel is expected to report earnings of $0.37 on revenue of $12.81bn. The company continues to fall behind the curve as the PC market slows. Its biggest rival has become ARM holdings which is the preferred chip for 95% of smartphones and tablet-makers. The company is building partnerships in China and expanding its range of chips for mobile devices but they are currently way over-priced when compared with offerings from ARM. The stock price has failed to move above $27 so far in 2014 and it seems unlikely these earnings will be the catalyst needed to break higher. Analysts are expecting Yahoo! to report earnings of $0.37 per share on revenue of $1.08bn. Yahoo has become all about its 21% stake in Chinese e-commerce site Alibaba which is valued at almost the entire Yahoo! current market cap. The payout from selling their stake in the Alibaba IPO later this year is largely priced in. What remains to be seen is CEO Marissa Meyer’s planned use of the cash to add value for Yahoo going forward. Recent evidence would suggest the tactic will be acquisitions. Meyer has bought 37 companies in 20 months. This is obviously the advantage of having a big pile of cash dumped on your desk; you don’t need to grow organically. As long as Yahoo! can integrate the various businesses efficiently, the purchases should help the company push into areas of high growth in the tech sector and perhaps shed any unprofitable units in the current business. The stock price has been ranging between 32 and 41, price is at the bottom of the range so any positive earnings surprise or higher guidance could see the price push back to the top of the range. Johnson & Johnson report earnings today with an expected EPS of $1.48 per share on revenue of $18bn. The Coca-Cola Company is expected to report earnings of $0.44 per share on revenue of $10.55bn The US consumer price index is expected to show a third month of 0.1% growth in both the headline and core numbers. The low levels of inflation in official calculations have been present for a prolonged period and as such have lost a lot of their importance for markets. If US retail sales continue to improve at the same pace seen in the results yesterday, CPI should begin to tick higher again. While inflation is at such low levels, there is no need for the Fed to raise rates. CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
CMC Markets Singapore may provide or make available research analysis or reports prepared or issued by entities within the CMC Markets group of companies, located and regulated under the laws in a foreign jurisdictions, in accordance with regulation 32C of the Financial Advisers Regulations. Where such information is issued or promulgated to a person who is not an accredited investor, expert investor or institutional investor, CMC Markets Singapore accepts legal responsibility for the contents of the analysis or report, to the extent required by law. Recipients of such information who are resident in Singapore may contact CMC Markets Singapore on 1800 559 6000 for any matters arising from or in connection with the information.