The last trading day of January finds bourses around the world in retreat once again. US index futures are all down about 1.2% including a 350 point drop in Dow futures. Overseas, the Dax and Hang Seng are down 1.0%, the FTSE is down 1.75%, the Nikkei fell 1.9%.
There are a number of factors that may potentially be dragging on major indices today including: month-end position squaring, profit-taking against earnings news or ahead of the weekend. A report from Johnson & Johnson that its COVID vaccine is about 66% effective, less than some of its rivals, may be easing speculation of a quick rollout and economic rebound. Meanwhile, we continue to see high volatility in some actively traded stocks. For example, Gamestop is up 75.6% in premarket action this morning after falling 44.2% yesterday.
In economic news today, US personal income (0.6% vs street 0.1% and previous -1.7%) and personal spending (-0.2% vs street -0.4% and previous -0.7) both beat expectations for December and showed some improvement. Canadian GDP increased by 0.7% in November, beating the $0.4% street estimate. US Chicago PMI is due at 10:45 am this morning (street 58.5) in a potential preview of Monday’s national report. Incoming US Treasury Secretary Janet Yellen is speaking at noon EST today which investors may look to for comments related to plans and progress on fiscal stimulus and other spending priorities.
Several US companies have reported earnings overnight and into this morning including: Caterpillar* ($2.12 vs street 1.49), Visa ($1.42 vs street $1.28), Chevron (-$0.01 vs street $0.08), and Honeywell ($2.07 vs street $2.00).
*Shares of Caterpillar are held in some portfolios managed by SIA Wealth Management.