Day Ahead: Top 3 Things to Watch for Jan. 29

28/01/2020 23:53:59 Stock Market

By Kim Khan

Here are three things that could rock the markets this week.

1. Apple’s Done, Here Comes Tesla

Apple (NASDAQ:AAPL) came through for investors with its results after the bell today, but there will be little time to dwell on numbers before another huge batch of big-name earnings reports drops.

And the hype will be all around Tesla (NASDAQ:TSLA), a stock that’s up more than 70% in the last three months and now sporting a market cap of more than $100 billin.

Tesla reports after market close Wednesday, with analysts expecting a fourth-quarter profit of $1.64 per share on sales of nearly $7 billion, according to forecasts compiled by Investing.com.

Oppenheimer, which has an outperform rating on the stock, said ahead of the results that the critical (long term) variables for the stock are whether the company can scale to 1 million vehicle deliveries, achieve double-digit margins at that level and seize a time-to-market advantage in autonomous vehicles.

As of Tuesday, Tesla options implied an 11% swing for the shares in either direction by Friday. Over the last eight quarters, the stock moved 9.5% on average after Tesla (NASDAQ:TSLA) reported results, according to options analytics company Trade Alert.

Joining Tesla in reporting postmarket are two tech giants, Dow components Microsoft (NASDAQ:MSFT) and Facebook (NASDAQ:FB).

Facebook is expected to have earned $2.52 per share in its latest quarter on revenue of nearly $21 billion.

Stifel reiterated its buy on Facebook on Monday and bumped up its price target to $250 from $240.

Analysts are looking for Microsoft to post earnings of $1.32 per share, with revenue of about $35.7 billion. Shares are up nearly 15% in the last three months.

Before the bell the Dow deluge continues, with component Boeing (NYSE:BA) probably garnering the most interest. It’s been in the headlines constantly with the grounding of its 737 Max jetliner after two fatal crashes and its high share price has big impact on the price-weighted blue-chip index.

Boeing is forecast to report an adjusted profit of 60 cents per share on revenue of about $21.7 billion.

Maybe even more important than the numbers, though, will be if the aerospace giant provides any more visibility on when the 737 Max could return to service. The company most recently said it expects regulatory approval sometime in the middle of this year.

Boeing will be joined by more Dow components when McDonald’s (NYSE:MCD) and Dow Chemical (NYSE:DOW) also weigh in ahead of trading.

General Electric (NYSE:GE) and AT&T (NYSE:T) are also on the calendar.

2. Fed Looks to Be on Hold, but Watch for Hints on Months From Now

It’s not often a Federal Reserve interest rate decision isn’t the big news of the day, but while tomorrow’s announcement will still be important, it’s also considered a foregone conclusion.

The Federal Open Market Committee will release its statement on the fed funds rate at 2:00 PM ET (19:00 GMT).

The press conference with Fed chief Jerome Powell will follow at 2:30 PM ET.

There is an 89% chance that the FOMC keeps rates at 1.5% to 1.75%, according to Investing.com’s Fed Rate Monitor Tool.

Investors will be looking for anything in the statement or Powell’s remarks that looks to take additional easing off the table for the rest of the year.

And don’t forget the specter of politics still hovers over Fed decisions.

President Donald Trump on Tuesday renewed his call for the Fed to lower interest rates, saying it would allow the United States to pay off debt.

“The Fed should get smart&lower the Rate to make our interest competitive with other Countries which pay much lower even though we are, by far, the high standard. We would then focus on paying off&refinancing debt! There is almost no inflation-this is the time (2 years late)!” Trump wrote in a tweet.

3. Home Sales, Oil Inventories Also on Tap

Among the last-minute data the Fed will get to consider before its decision will be the goods trade balance, which comes at 8:30 AM ET (13:30 GMT).

Economists expect it to have widened in December to $68.75 billion, according to forecasts compiled by Investing.com.

At 10:00 AM ET, the National Association of Realtors issues its numbers on December pending home sales.

Pending home sales are seen rising 0.5% for the month, below November’s 1.2% rise.

For the energy traders, the Energy Information Administration reports weekly oil inventory numbers at 10:30 AM ET.

Oil stockpiles are expected to have dropped by 482,000 last week, although the American Petroleum Institute reported a surprise draw of 4.3 million today in its measure.

-- Reuters contriubted to this report.