Stocks Edge Up as Traders Await Earnings Boost

Updated: Jan 31, 2021

U.S. stock fu­tures edged up on Mon­day, as in­vestors awaited a busy week of cor­po­rate earn­ings, eco­nomic data and cen­tral-bank de­ci­sions. Fu­tures tied to the S&P 500 added 0.1% af­ter the bench­mark stocks gauge posted its big­gest one-week loss since late Oc­to­ber. U.S. stock and bond mar­kets are closed Mon­day for Mar­tin Luther King Day.

Stocks have wob­bled in re­cent days af­ter a strong start to the year fu­eled by hopes of a vac­cine-in­duced eco­nomic re­cov­ery that could be aided by fur­ther fis­cal stim­u­lus un­der the in­com­ing ad­min­is­tra­tion. Though many in­vestors ex­pect the rally to con­tinue, they say stocks are likely to re­main bumpy in the com­ing weeks amid signs that high coro­n­avirus case rates are hurt­ing eco­nomic ac­tiv­ity.

“The mar­kets are in a way front-run­ning the re­cov­ery and the nor­mal­iza­tion of eco­nomic ac­tiv­ity,” said Ag­nès Be­laisch, chief Eu­ropean strate­gist at the Bar­ings In­vest­ment In­sti­tute. Stocks are bound to pause in­ter­mit­tently given the dis­con­nect be­tween the mar­ket and the way Covid-19 re­stric­tions are crimp­ing the eco­nomic re­cov­ery, she said.

In­vestors this week will parse quar­terly earn­ings from dozens of big com­pa­nies, in­clud­ing J.B. Hunt Trans­port Ser­vices, Unit­ed­Health Group and In­tel, for guid­ance about the out­look for prof­its and rev­enue over the course of 2021. Mon­e­tary-pol­icy de­ci­sions by the Eu­ropean Cen­tral Bank and Bank of Japan are also on tap, as well as sur­veys that will give an in­di­ca­tion of busi­ness ac­tiv­ity at the start of the year and Pres­i­dent-elect Joe Biden’s in­au­gu­ra-tion. In over­seas mar­kets, the pan-con­ti­nen­tal Stoxx Eu­rope 600 edged up 0.2%.

Shares of Car­refour slid 6.9% af­ter the French gro­cer and Cana­dian con­ve­nience-store op­er­a­tor Al­i­men­ta-tion Couche-Tard called off takeover talks. The de­ci­sion came af­ter the French gov­ern­ment shot down Couche-Tard’s of­fer to buy Car­refour, say­ing it threat­ened jobs and food se­cu­rity.

“The mar­ket is fo­cus­ing back on some of the neg­a­tives,” said Em-manuel Cau, head of Eu­ropean eq­uity strat­egy at Bar­clays. Ex­ec­u­tives will be cau­tious in of­fer­ing guid­ance for the rest of the year given the de­gree of un­cer­tainty and the wide-rang­ing re­stric­tions still in place to con­trol coro­n­avirus, he said.

Among other in­di­vid­ual stocks, Stel­lan­tis rose 6% as the auto maker, newly formed from the merger of Fiat Chrysler Au­to­mo­biles and PSA Group, made its trad­ing de­but. Thyssenk­rupp rose 7% af­ter the Ger­man in­dus­trial con­glom­er­ate said it had been awarded a con­tract to build an elec­trol­y­sis plant in Canada and Bloomberg re­ported that it was con­sid­er­ing list­ing its steel di­vi­sion on the stock mar­ket.

Air­line stocks in­clud­ing Ryanair and Deutsche Lufthansa slipped, in­di­cat­ing ner­vous­ness among in­vestors about the speed at which the travel sec­tor will re­open. The U.K. on Mon­day im­posed new rules re­quir­ing peo­ple ar­riv­ing from abroad to self-iso­late.

“If we’re not get­ting a sense of a re­turn to nor­mality any time soon then clearly a lot of those kind of re­fla­tion trades that every­one got on board with late last year will come un­der a bit of pres­sure,” said Charles Hep­worth, an in­vest­ment di­rec­tor at Swiss as­set man­ager GAM.