Morning Minutes

Stock Market Retreat Resumes Despite Positive Earnings

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Yesterday’s afternoon rebound in the US, which saw some indices erase midday losses of 2.0% or more to finish with gains of 0.3% for the Dow and 0.6% for the NASDAQ, unravelled overnight. In Asia Pacific trading both the Nikkei and the Hang Seng losing 1.6%. This morning, US index futures have come under pressure again with NASDAQ futures plunging 2.0% and Dow Futures falling 0.8%. Cryptocurrencies have also turned back downward with Bitcoin falling 0.8%. Commodities are mixed with WTI crude oil up 0.15% and copper down 0.15%.

Investors appear to still be nervous about what the Fed and the Bank of Canada may have to say about interest rates at their meetings tomorrow. The Fed’s asset purchase program ends in March and there has been widespread speculation in the press that the US central bank could hint toward a rate hike as soon as it’s March meeting. The Bank of Canada has previously suggested the middle months of 2022 for its first interest rate hike so investors may be watching for signs of that timetable potentially being moved up or not. The US treasury note yield has crept back up above 1.75% indicating investors are still anticipating a hawkish Fed.

Meanwhile, overnight earnings reports across a number of sectors have been positive. In Canada, grocer Metro reported earnings growth ($0.88 vs year-ago $0.79), but a 1.4% decline in same store sales which management blamed on the Omicron wave. Several senior US companies beat expectations today including General Electric ($0.92 vs street $0.85), American Express ($2.19 vs street $1.87), IBM ($3.35 vs street $3.30), and 3M ($2.31 vs street $2.01). Canadian National Railway and Texas Instruments are scheduled to report after the close this afternoon.      

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

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