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Investing.com – U.S. futures edged slightly in the green on Thursday, but remained subdued as hopes for Federal Reserve interest rate cuts earlier this year continued to fade. Elsewhere, Google boss Sundar Pichai is reportedly warning employees of further impending job cuts at the tech giant, while chipmaker TSMC says demand for artificial intelligence will fuel a year of “healthy growth”.
1. Futures slightly higher
U.S. stock futures mostly hovered above the zero line on Thursday, indicating a quiet start for stocks after slipping in the previous session.
At 05:00 ET (10:00 GMT), the contract was mostly unchanged, having gained 5 points, or 0.1%, and was up 59 points, or 0.4%.
Major indexes on Wall Street fell on Wednesday, dragged down by economic data that tempered speculation that the Federal Reserve will soon begin cutting interest rates from more than two-decade highs. Stronger-than-expected retail sales in December suggest the health of American consumers remains resilient despite recently elevated inflation and borrowing costs – a prospect that could persuade Fed officials not to make hasty cuts.
The interest rate-sensitive momentum stocks fell, which weighed on equities in particular. The tech-heavy index fell 0.6%, while the benchmark fell 0.6% and the 30-stock index fell 0.3%.
2. Construction begins, Philly Fed data available
Fed policymakers and traders will have a chance to analyze more economic data on Thursday as they look for further clues about the direction of price growth and overall activity.
Housing starts, a measure of new housing construction, are expected to have increased by 1.426 million in December, down slightly from 1.560 million the previous month. Housing starts are a key indicator of demand in the key U.S. real estate sector and can also give investors insight into consumer appetite for riskier, large-scale purchases.
Markets will also be eyeing the release of an index from the Philadelphia Federal Reserve, widely seen as a strong indicator of the health of America's manufacturing industry.
Meanwhile, Atlanta Fed President Raphael Bostic will deliver remarks where he may discuss his outlook for interest rates. Earlier this month, Bostic said inflation now appeared to be “on track” toward the Fed's stated 2% target, adding that he was “pleased” with the central bank's “restrictive” policies.
3. Google's Pichai warns of further job cuts – The Verge
According to a report from The Verge, which cited an internal memo, Google CEO Sundar Pichai has warned employees that the search giant will further reduce its headcount.
Pichai argued in the memo that the cuts were necessary to simplify operations and increase speed in some areas, the report said.
However, he reportedly claimed that the role eliminations won't be as big as last year and that they won't affect every team. Alphabet-owned Google announced last week that it would lay off hundreds of employees across several divisions, including its voice assistant division and the hardware business that supports devices like Nest and Fitbit.
Over the past few months, job cuts have hit companies across a wide range of industries. This reflects a push by many companies to rein in costs and focus their spending on developing artificial intelligence software.
4. TSMC's fourth-quarter profit falls but beats estimates
Taiwan Semiconductor Corp (TW:) posted a smaller-than-expected decline as revenue was boosted by increased sales of its most advanced chips.
The world's largest contract semiconductor maker forecast slightly weaker performance in the first quarter of 2024, but said chip demand next year would be bolstered by growing enthusiasm for artificial intelligence.
“We expect 2024 to be a healthy year of growth for TSMC, supported by […] robust AI-related demand. AI models must be supported by more powerful semiconductor hardware […] This increases the value of TSMC's technology position,” CEO CC Wei said in a post-earnings conference call.
Profit for the three months ended Dec. 31 fell to T$238.7 billion ($7.6 billion) from T$295.9 billion a year earlier. On a per-share basis, earnings fell to T$9.21, but still beat Investing.com's estimates of T$8.67.
5. Crude oil rises on OPEC outlook, US production falls
Oil prices rose on Thursday, driven by an upbeat demand outlook from OPEC and a production disruption due to a cold snap in parts of the country.
At 5 a.m. ET, U.S. crude oil futures were trading 0.8% higher at $73.02 a barrel, while the contract rose 0.5% to $78.28 a barrel.
In a monthly report, oil major OPEC said it expects crude oil demand to remain relatively robust over the next two years. Harsh winter conditions in North Dakota also caused oil production there to fall by 650,000 to 700,000 barrels per day, less than half of typical production.
In addition, Pakistan has launched retaliatory missile attacks on Iran in response to attacks by Iran on Pakistani territory. The violence heightened fears of a widening conflict in the Middle East, a development that could lead to a decline in crude oil supplies.
But price increases have been limited for now by an unexpected increase in U.S. crude inventories and difficult recovery conditions in China.
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