U.S. stocks are moving higher despite looming key January inflation data this week, which will begin with tomorrow’s consumer price inflation report. Ahead of the inflation reports the economic calendar is dormant today, while Q4 earnings season continues down the back stretch, with Check Point Software Technologies topping estimates and announcing an increase to its share buyback plan, while Fidelity National Information Services offered disappointing guidance. Treasury yields are mixed, while the U.S. dollar is lower. Crude oil and gold prices are trading to the downside. Asia finished mostly lower ahead of the U.S. inflation data and as tensions between the U.S. and China remained, though Europe is rebounding from last week’s decline.
At 10:45 a.m. ET, the Dow Jones Industrial Average and the S&P 500 Index are up 0.7%, while the Nasdaq Composite is trading 0.8% higher. WTI crude oil is down $0.28 to $79.44 per barrel, and Brent crude oil is trading $0.67 lower to $85.72 per barrel. The gold spot price is declining $6.10 to $1,868.40 per ounce, and the Dollar Index is decreasing 0.3% to 103.35.
Check Point Software Technologies Ltd. (CHKP $128) reported adjusted Q4 earnings-per-share (EPS) of $2.45, above the $2.36 FactSet estimate, with revenues growing 7.0% year-over-year (y/y) to $638.5 million, topping the Street’s forecast of $636.1 million. The Information Technology security company said it delivered solid results for the quarter despite a volatile year-end macro-environment. CHKP also announced that it will expand its share repurchase program by $2.0 billion. Shares are choppy as the company on a conference call with analysts issued Q1 and full-year revenue and EPS guidance that had midpoints below the Street’s projections.
Fidelity National Information Services Inc. (FIS $64) posted Q4 EPS of $1.71, one penny above expectations, as revenues rose 1.0% y/y to $3.71 billion, compared to the forecasted $3.69 billion. The financial services technology company said it delivered results consistent with its expectations in its banking and capital markets businesses. However, FIS said revenues and margins in its merchant solutions business came under slightly more pressure than anticipated as a result of increasing recessionary impacts in the U.K. and shifting of consumer spend from goods to services in the U.S. The company issued Q1 and full-year guidance that came in below estimates. Shares are falling. Separately, FIS announced plans to spin-off its merchant solutions business, to be named Worldpay.
Q4 earnings season will continue this week and is heading down the back stretch. Of the 347 S&P 500 companies that have reported thus far, about 55% have topped revenue estimates and approximately 69% have exceeded earnings projections, per data compiled by Bloomberg. Results have been mixed, along with guidance as corporations try to determine the ultimate impact of the aggressive Fed monetary policy tightening on the economy and profit margins.
Treasury rates are mixed, as the yield on the 2-year note is up 3 basis points (bps) at 4.54%, and the yield on the 10-year note is dipping 1 bp to 3.72%, and the 30-year bond rate is decreasing 4 bps to 3.78%.
Treasury yields have jumped in the wake of this month’s monetary policy decision from the Federal Open Market Committee (FOMC), where it raised its target for the fed funds rate by 25 bps. In comments last week at the Economic Club in Washington D.C., Fed Chair Jerome Powell reiterated the Committee’s stance that future increases are likely, despite the welcome sign of inflation ebbing, noting that a still-tight labor market, along with persistent inflation, have been drivers in its rate hike campaign. In the latest WashingtonWISE podcast, Economy Is Thriving but Fed Not Ready to Let Go, Schwab’s Chief Fixed Income Strategist Kathy Jones and Managing Director of Legislative and Regulatory Affairs Michael Townsend discuss how the economy is thriving, jobs and wages are growing, but the Fed is promising more rate hikes, and what the markets and investors are to make of these mixed messages.