U.S. equity futures (/ES) are lower following the heaviest day of earnings reports so far this quarter. Investors will attempt to gain insights from many earnings reports and conference calls, along with the University of Michigan's consumer confidence index, as they decide if the downturn is another buying oppportunity. The market is poised to finish higher for the third consecutive week, unless sellers take control and push the market lower, which may be overdue. Option volatility finished Thursday relatively flat as stocks traded in a wide range early on. The CBOE Volatility Index (VIX) is at $13.30 and should firm up if stocks stay in the red for the session. The one catalyst to watch for more volatility is the issues in Ukraine as tensions continue to increase.
Bonds are rallying this morning amid the issues in Russia. Many are predicting a rise in interest rates this year but Treasuries continue to be in demand which has yields trading in a tight range elevated levels. The 10-year yield is near 2.65% and remains low despite the recent rally in stocks. Stocks are lower in Europe by almost 1% on the tensions increasing with Russia and Ukraine. Asian stocks were also down over 1% except for Japan, which finished Friday relatively flat. With little economic news due, it will be interesting to see if investors take profits or buy protection ahead of the weekend. The U.S. and Europe is expected to announce more sanctions against Russia, which is now performing military exercises near the Ukraine border.
Stock Stories:
Ford (F) – Stalled – The auto-maker misses on EPS on its quarterly results this morning but does post better than expected Revenue. The company’s results were adversely affected by several significant factors that were not representative of its underlying business run rate. These included warranty reserve increases for field service actions for prior models, including safety recalls and other product campaign. The company also blamed Currency issues and weather-related costs. The shares are down 2% this morning ahead of the opening bell.
Amazon.com (AMZN) – Flat – The online retailer posted in-line EPS numbers last night but beat on Revenue for the quarter. . The company also provided second quarter revenue outlook that was in-line with expectations and shares of the online retailer were roughly flat after the report. The option market predicted a move of $21 or about 6% on the report. Fortunately for our position, the stock is down only 2% in the pre-market.
