LDN - Business

Futures dip after five-day surge

[January 11, 2019] By Sruthi Shankar

(Reuters) - U.S. stock index futures dipped on Friday, after rallying for the past five sessions on hopes of a resolution in the U.S.-China trade dispute and assurances from the Federal Reserve that it would be patient on interest rate hikes.

The steady start to 2019 has lifted the S&P 500 <.SPX> by over 10 percent from a 20-month low it touched around Christmas on hopes of a trade deal, strong data on U.S. jobs growth and dovish views from the Fed. The benchmark index's five-day winning streak is its longest since September.

Futures pointed to slight opening losses for the main three indexes, but the Nasdaq Composite index <.IXIC> closed at a level on Thursday that was only a couple of points away from its 50-day moving average, a level seen important for short-term momentum.

U.S. officials expect China's top trade negotiator may visit Washington this month, signaling that higher-level discussions are likely to follow this week's talks with mid-level officials in Beijing.

With big U.S. banks kicking off fourth-quarter earnings next week, investors will watch for companies' views on economic growth in 2019. Concerns about a slowdown in growth, in the wake of the U.S.-China trade war and rising interest rates drove a selloff in stocks in the final quarter of 2018.

S&P 500 companies on average are seen posting 14.5 percent growth in earnings per share as they report December-quarter results, according to IBES data from Refinitiv. However, expectations for growth in 2019 are at 6.4 percent, down from an expectation of 7.3 percent on Jan. 1.

At 7:37 a.m. ET, Dow e-minis <1YMc1> were down 21 points, or 0.09 percent. S&P 500 e-minis <ESc1> were down 4.25 points, or 0.16 percent and Nasdaq 100 e-minis <NQc1> were down 15.75 points, or 0.24 percent.

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Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., January 10, 2019. REUTERS/Brendan McDermid

Stocks got a small boost on Thursday after Powell reiterated that the U.S. central bank can be patient in approving any further rate increases as officials gauge whether the U.S. economy will slow this year, as some in financial markets worry.

Investors will watch for signs of inflation in the latest Labor Department report that is likely to show consumer prices dipped 0.1 percent in December after a flat reading the previous month.

Among stocks, Starbucks Corp <SBUX.O> fell 2.4 percent after Goldman Sachs downgraded the stock to "neutral", citing concerns about China. Goldman also cut rating on Yum Brands Inc <YUM.N> to "sell", pointing to peak valuation. Its shares slipped 3.0 percent.

Activision Blizzard Inc <ATVI.O> declined 6.5 percent after the video game publisher transferred full publishing rights for its "Destiny" game franchise to video game developer Bungie.

Netflix Inc's <NFLX.O> shares, which have leapt more than 20 percent this year, were up 2.7 percent, with Credit Suisse raising quarterly subscriber additions estimates ahead of its earnings next week.

PG&E Corp <PCG.N> dropped 4.6 percent after Moody's joined S&P in lowering the utility's credit rating deeper into junk territory as the California power provider faces billions of dollars in liabilities related to wildfires.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta)

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