Stocks Gain as Tech Rallies and Investors Await Fed Rate Decision

U.S. stock futures are moving higher, led by technology shares on the Nasdaq exchange, after another volatile day of trading ahead of an announcement from Federal Reserve policymakers about the future of monetary policy.

Key Takeaways

  • U.S. stock futures are moving sharply higher, led by technology shares on the Nasdaq exchange.
  • Traders are awaiting a 2 p.m. Eastern time announcement from Federal Reserve policymakers about the future of monetary policy. 
  • Cryptocurrencies' rally continued. Oil again marched higher, and the dollar strengthened against the euro. Bond yields fell.

Microsoft Corporation (MSFT) helped lead tech shares higher after reporting fiscal second quarter results that beat expectations while forecasting better-than-expected quarterly sales for the current quarter. Tesla, Inc. (TSLA), scheduled to report earnings after markets close today, is also gaining.

The Dow Jones Industrial Average (DJIA) was down more than 800 points yesterday, led by stocks sensitive to interest rates, before cutting the losses to end just 66 points lower. On Monday, the Dow had recovered from an over 1,100 point loss before closing higher. The S&P 500 and the Nasdaq also finished well off their session lows yesterday but were still 1.2% and 2.3% lower, respectively. 

The Federal Open Market Committee (FOMC) will announce its monetary policy decision at 2 p.m. Eastern Time. The central bank is expected to keep the federal funds rate unchanged near zero but point to a quarter-percentage-point rate hike at the FOMC's March meeting.  

Cryptocurrencies' rally continued. Bitcoin's (BTC) dollar value rose 3.5% from yesterday to $37,900. Still, the cryptocurrency has lost half its value since its November peak. Oil continued its upward march, and the dollar strengthened against the euro. The yield on the 10-year bond fell to 1.77%.

This morning, the Census Bureau releases its report on new home sales. The consensus estimate is for a seasonally adjusted annual rate of 762,500 new single-family homes sold in December, 2.5% more than in November.

Among companies reporting results today are Abbott Laboratories (ABT), AT&T Inc. (T), The Boeing Company (BA), General Dynamics Corporation (GD), and Intel Corporation (INTC).

Today's Headlines: Quick Hits

Mattel, Inc. (MAT) has won the rights to sell toys of popular characters from the films of The Walt Disney Company (DIS), The Wall Street Journal reported. The deal is a blow to rival Hasbro, Inc. (HAS), which has had the license since 2016, and will include Disney's princess lineup from the blockbuster Frozen franchise.

Shares of Texas Instruments Incorporated (TXN) are surging after the company reported earnings that were higher than expected, amid strong demand for computer chips. The results are often viewed as an indicator of what to expect from other chip makers.

Intel won an appeal of a European Union antitrust ruling that had resulted in a $1.2 billion fine. EU regulators had alleged that Intel used its market power to curb competitors.

NVIDIA Corporation (NVDA) is reportedly preparing to abandon plans to acquire U.K. chip maker Arm from SoftBank Group Corp. (SFTBY), after offering about $40 billion for the company in 2020, Bloomberg News reported. NVIDIA has reportedly told partners that it does not expect to close the deal, adding that SoftBank is working on plans for an initial public offering for Arm.

General Motors Company (GM) announced a $7 billion investment in a Michigan factory involved in electric vehicle production. The plans include building a new battery cell plant in Lansing and additional facilities to expand production of its electric Silverado pickup truck.

Bentley Motors plans to invest $3.4 billion over the next decade to become a fully electric luxury vehicle brand by 2030. Bentley's first electric vehicle is expected to be produced in 2025.

The International Monetary Fund (IMF) is urging El Salvador to drop Bitcoin as its national currency. IMF directors warned of financial risks to stability and consumer protections by using the volatile cryptocurrency as legal tender.

Will Tesla Deliver? The Big Story

Tesla will report its latest results today after the closing bell and hold a conference call with analysts. Tesla has already announced that it delivered a record 936,000 vehicles last year. With that number, analysts are estimating the electric vehicle maker posted just over $17 billion in sales for the latest quarter. Earnings per share (EPS) are projected to come in at $2.33 per share, according to FactSet. The highest estimate is for $3 per share.

Tesla CEO Elon Musk will be returning to the conference call after sitting out the call last quarter. He is expected to give a "product roadmap" for Tesla during the call, and address bringing production of the electric vehicle maker's Model Y sport utility vehicle to its new Texas and Berlin giga-factories.

Analysts are also anticipating an update on a production timeline for the Cybertruck. The truck was supposed to begin production this year but has reportedly delayed production until early next year. A recently leaked video of a prototype showed the truck with a giant wiper on its large front windshield and no door handles.

Tesla vs S&P 500
Tesla 2021-22 Stock vs. S&P 500.
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  1. Wall Street Journal. "Mattel Wins Disney Princess Toy Deal, Joining Elsa of ‘Frozen’ With Barbie."

  2. Bloomberg News. "Nvidia Quietly Prepares to Abandon $40 Billion Arm Bid."

  3. General Motors. "GM Accelerates Its Drive to Lead the EV Industry with $7 Billion Investment in Michigan, Creating 4,000 New Jobs and Retaining 1,000."

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