Thursday January 20th

U.S. stock market index futures posted a solid gain Thursday morning, with Nasdaq futures up nearly 1% the day after dipping into correction territory. Futures tied to the Dow Jones Industrial Average gained 132 points, or 0.4%. S&P 500 futures added 0.53% and Nasdaq 100 futures traded about 0.9% higher. The Nasdaq, which is home to many of the market’s biggest tech names, dipped more than 10% on Wednesday from its most recent high, indicating a technical correction. United Airlines shares fell about 1% in premarket trading after the company reported its quarterly results and warned that omicron has dented bookings and will delay its pandemic recovery. In early earnings results, Dow component Travelers posted beats on the top and bottom lines while American Airlines also beat estimates but lowered guidance. Travelers rose 4% in premarket trading and American Airlines add about 1.2%. Futures held their ground even as government bond yields again edged higher, part of a market repricing as the Federal Reserve gets set to tighten monetary policy. The central bank meets next week, with markets indicating just a slight chance of action on interest rates. However, traders have fully priced in the first of what is expected to be four 0.25 percentage point hikes through 2022. The two-year Treasury, which is most closely tied to Fed rate policy, most recently yielded about 1.04%, while the benchmark 10-year note was at 1.84%. Ford Motor shares dropped 2.5% in premarket trading. The stock is coming off a meteoric surge in 2021 on hopes for its electric vehicle development, but Jefferies analysts said in a downgrade that the rally, which sent shares up 130% for the year, has gotten overdone. Unemployment data on Thursday signaled the surge in omicron could be hurting the recovery. Jobless claims for the week ended Jan. 15 totaled 286,000 for the week, their highest level since October. The read was well above the Dow Jones estimate of 225,000 and a substantial gain from the previous week’s 231,000. In regular trading Wednesday, the Dow fell for the fourth day in a row, by 339 points, or 0.9%. The S&P 500 also fell 0.9%. The Nasdaq Composite closed down by 1.15% and now sits about 10% from its November record. This year’s turbulence in tech stocks, set off by a spike in yields in the first week of January, continued Wednesday as the 10-year U.S. Treasury yield hit a high of 1.9%. It started the year at about 1.5%. Brad McMillan, chief investment officer at Commonwealth Financial Network, acknowledged that the turbulence could last for some time but said investors shouldn’t panic about interest rate increases and that they’re normal as the economy returns to normal. “The economy and markets can and do adjust to changes in interest rates,” McMillan said. “This environment is a normal part of the cycle and one we see on a regular basis. The current trend is perhaps a bit faster than we’ve been seeing, but it is a response to real economic factors—and, therefore, normal in context.” Netflix is the big name to watch Thursday. The streaming giant is set to report its quarterly results after the closing bell. Markets in Asia-Pacific mostly rose on Thursday as China cut its key lending rates. Meanwhile, Wall Street fell with the Nasdaq closing in correction territory and U.S. yields retreating from their recent gains. Hong Kong’s Hang Seng index led gains, jumping 3.42% to close at 24,952.35, as tech and property stocks rose. Mainland China markets closed marginally in negative territory, with the Shanghai composite at 3,555.06 and the Shenzhen component at 14,198.30.  Japan’s Nikkei 225 also jumped, climbing 1.11% to close at 27,772.93, while the Topix was also up nearly 1% to 1,938.53. Elsewhere, South Korea’s Kospi rose 0.72% to 2,862.68. Oil slipped on Thursday as investors took profits after a recent price rally, but strong demand and short-term supply disruptions continue to support prices close to their highest since 2014. Brent crude futures were down 27 cents, or 0.3%, at $88.17 a barrel after dropping more than $1 in earlier trade. The global benchmark rose to $89.17 on Wednesday, its highest since October 2014. U.S. West Texas Intermediate (WTI) crude futures for February delivery were down 20 cents, or 0.2%, at $86.76 a barrel after dropping nearly $1 earlier. The contract, which expires on Thursday, climbed to $87.91 on Wednesday. The more active March WTI contract was down 15 cents, or 0.1%, at $85.65 a barrel. Gold prices on Thursday steadied near a two-month high hit in the previous session, with higher U.S. Treasury yields preventing any gains amid caution building around developments at the U.S. Federal Reserve’s meeting due next week. Spot gold was flat at $1,839.36 per ounce as of 0031 GMT, steadying near its highest since Nov. 22. U.S. gold futures were down 0.1% at $1,840.60.