Futures fall as rate hike worries eclipse strong Apple results

[January 28, 2022]  (Reuters) - U.S. stock futures slipped on Friday and continued with its January rout, as the prospect of a series of interest rate hikes to tame inflation clouded stellar results from the world's largest company by market value, Apple Inc.

The iPhone maker gained 3.5% in premarket trading after posting record sales for its flagship phones in the holiday quarter.

Wall Street's main indexes are on course for their fourth straight weekly fall as traders and big banks raised their bets to nearly five rate hikes by December after the Federal Reserve hinted at a rate hike in March and warned of persistent inflation.

"While it doesn't feel fun, we are exiting a period of 0% interest rates and trillions of dollars in Fed asset purchases," said Darrell Spence, economist at Capital Group.

"We knew it had to happen sometime, and now that we are exiting that environment and moving into a different regime, we should expect a little bit more volatility."

Geopolitical tensions between Russia and West over Ukraine also increased market volatility, with the Wall Street's fear gauge last up 0.75 point at 31.24.

The benchmark S&P 500 narrowly avoided correction for the fourth time this week on Thursday. Small-caps have suffered the most, with the Russell 2000 index now down 20.8% from its record-closing peak of Nov. 8 and confirming a bear market.

Market participants will closely watch the Fed's favored inflation gauge, December core PCE price index data, which is due at 08:30 a.m. ET, to see if price growth is peaking.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., January 26, 2022. REUTERS/Brendan McDermid

At 7:15 a.m. ET, Russell 2000 futures were down 1.1%.

Dow e-minis were down 156 points, or 0.46%, S&P 500 e-minis were down 14.5 points, or 0.34%, and Nasdaq 100 e-minis were up 4 points, or 0.03%.

The fourth-quarter earnings season has been mixed so far. Of the 145 companies in the S&P 500 that have reported earnings as of Thursday, 79.3% beat profit expectations, according to Refinitiv data.

Visa added 4.5% after beating Wall Street's quarterly estimates as more international travel and e-commerce drove an increase spending volumes.

However, commission-free brokerage Robinhood Markets Inc dropped 13.2% after reporting a net loss, while storage hardware maker Western Digital fell 10.4% on downbeat revenue outlook.

(Reporting by Devik Jain and Bansari Mayur Kamdar in Bengaluru; Editing by Arun Koyyur)

[© 2022 Thomson Reuters. All rights reserved.]

This material may not be published, broadcast, rewritten or redistributed.  Thompson Reuters is solely responsible for this content.