5 things to know before the stock market opens on Friday, January 28
Here are the most important news, trends and analysis that investors need to start their trading day:
1. Wall Street’s worst selloff since March 2020 continues
Traders on the floor of the NYSE, January 27, 2022.
Volatility continued on Friday, with Dow futures swinging wildly. Dow Chevron stock fell more than 4% pre-market, falling to a record high after a shortfall. Apple, also a constituent of the Dow Jones, was a bright spot in what’s shaping up to be another crazy day, up nearly 3% pre-market after strong earnings. Nasdaq futures oscillated between gains and losses.
The Nasdaq and S&P 500 gave up intraday gains on Thursday and closed negative. They are now both in correction territory, sitting 17.6% and 10.2% below their respective highs. The S&P 500 is heading for its worst month since March 2020. The Dow Jones closed slightly lower on Thursday, giving up a lead of more than 600 points earlier in the session. The 30-stock average was 7% lower than its most recent all-time high close.
The Federal Reserve’s favorite inflation gauge posted its biggest year-over-year increase since September 1983. December’s core PCE price index, excluding the food and oil sectors energy, jumped 4.9% compared to a year ago. The November number was up 4.7% year over year. Following the Fed’s two-day January meeting earlier this week, central bankers signaled the first Covid-era interest rate hike as early as March to combat rising inflation.
2. Dow Chevron shares, Caterpillar hit Dow futures after earnings
A sign is displayed in front of a Chevron gas station on July 31, 2020 in Novato, California.
Justin Sullivan | Getty Images
On Friday, shares of Chevron retreated from a record high in the previous session. Before the bell, the energy giant reported lower-than-expected fourth-quarter adjusted profit. Revenue of $48.13 billion exceeded expectations. The results come as oil has rebounded from its pandemic-era lows, with international crude prices and U.S. oil prices trading at more than seven-year highs.
Caterpillar Inc. excavators go on sale at Whayne Supply Co. dealership in Louisville, Kentucky, U.S., Monday, Jan. 27, 2020. Caterpillar is expected to release earnings numbers Jan. 31.
Bloomberg | Bloomberg | Getty Images
Another Dow stock, Caterpillar, fell 4% premarket, contributing to the overall market malaise. Rising costs weighing on the company’s profit margins overshadowed better-than-expected earnings and revenue in the fourth quarter. The heavy equipment maker’s sales rose 23% from a year earlier despite supply chain constraints.
3. Apple shares hold on to gains after strong quarterly results
Apple CEO Tim Cook attends the new Apple Store Opening Event at The Grove on November 19, 2021 in Los Angeles, California.
mario tama | Getty Images
After Thursday’s bell, Apple reported record revenue for its December quarter, despite supply chain disruptions that reduced sales. Apple beat analyst estimates for sales in all product categories except iPads. Adjusted earnings per share also exceeded expectations.
CEO Tim Cook told CNBC that supply chain challenges were showing signs of improving. He also addressed rising prices: “I think everyone sees inflationary pressure. There’s no two ways about it.” Apple ended its December quarter with net cash of $80 billion. Management once again reiterated the objective of achieving a “neutral net cash position over time”.
4. Robinhood shares fall after trading app warns of Q1 earnings
Vlad Tenev, CEO and co-founder of Robinhood Markets, Inc., is shown on a screen during his company’s IPO on the Nasdaq Market site in Times Square in New York, United States, July 29 2021.
Brendan McDermid | Reuters
Robinhood shares fell nearly 12% in premarket Friday morning after the stock-trading app reported a bigger-than-expected quarterly loss. While revenue for the last three months of 2021 was slightly above estimates, Robinhood warned that revenue in the current quarter could drop significantly from a year ago. The newly public online brokerage is set to face its toughest comparisons in the first and second quarters of 2022, following record highs in early 2021 from the stock meme mania that was kicked off by the epic GameStop short squeeze.
5. Home Depot appoints a company veteran to become its next CEO
Ted Decker, Home Depot
Home Depot shares held steady in premarket trading after announcing Thursday night that Chief Operating Officer Ted Decker will assume the role of CEO, effective March 1. The retailer’s current CEO, Craig Menear, 64, will continue as chairman of the board. Menear has been with the retailer for more than 20 years and started as CEO in November 2014. Decker, 58, has risen through the ranks at Home Depot since joining the company in 2000. Home Depot has experienced phenomenal growth during the Covid pandemic.
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