Here are five things you must know for Wednesday, February 9:
1. -- Stock Futures Power Higher As Earnings Offset Inflation Concern
U.S. equity futures powered higher Wednesday, following on from solid rallies in Europe and Asia, as investors latched on to solid corporate earnings and fading geopolitical risks to turn markets positive for the month.
Inflation concerns continue to cap sentiment, however, ahead of tomorrow's January CPI reading that will likely show the fastest pace of consumer price gains in more than forty years and add further fuel to the Federal Reserve's hawkish turn on rates.
In fact, China's 'zero-Covid' health policy could continue to add to supply chain woes and input costs pressures, a senior Bank of Japan policy maker -- Toyoaki Nakamura-- cautioned late Tuesday, stoking concern that the expected slowing of inflation readings may not materialize until much later in the year.
Still, with S&P 500 companies reporting fourth quarter earnings that are largely ahead of forecasts -- beating estimates by more than 6% -- and bond yields easing from their recent three-year highs, stocks are set for solid opening bell gains Wednesday ahead of December quarter updates from CVS Health (CVS) and Yum! Brands (YUM) before the start of trading, and media giant Walt Disney after the bell.
Futures tied to the Dow Jones Industrial Average are indicating a 200 point opening bell gain while those linked to the S&P 500 are priced for a 32 point advance.
Nasdaq Composite futures are indicating a 125 point jump for the tech-focused benchmark as 10-year Treasury note yields hold at 1.918% in overnight trading.
2. -- McDonald's Shares Gain On Report Carl Icahn Seeking Board Seat
McDonald's (MCD) shares nudged higher in pre-market trading following a report that billionaire investor Carl Icahn is seeking a seat on the board of the world's biggest restaurant chain.
The Wall Street Journal reported that Icahn, 86, is looking to pressure McDonald's into changing the nature of its pork supply chain, which includes the use of so-called 'gestational crates', also known as 'sow stalls'. for sows that are pregnant. Animal rights activists say the stalls are designed to produce larger litters.
McDonald's recently extended the date by which is plans to stop sourcing pork from suppliers using sow stalls from 2022 to 2024, citing "industry-wide challenges for farmers and producers ... including the impacts of global swine disease outbreaks and the COVID-19 pandemic".
McDonald's shares were marked 0.53% higher in pre-market trading to indicate an opening bell price of $261.46 each.
3. -- Chipotle Shares Leap After Q4 Earnings Beat Defies Price Increases
Chipotle Mexican Grill (CMG) shares surge higher in pre-market trading after the restaurant chain posted stronger-than-expected fourth quarter earnings that defied a host of rising input costs.
Chipotle said adjusted earnings were pegged at $5.58 per share, firmly ahead of Street forecasts, with revenues rising 22% to $2 billion.
A 4% price hike in December helped soften the impact of higher beef and pork prices, the company said, while offsetting higher wages costs that CEO Brian Niccol said will likely continue into this year.
"We believe we still have pricing power to use as needed if inflation continues to rise going forward," CFO John Hartung told investors on a conference call late Tuesday." Of course, we’ll be thoughtful and patient as we consider these actions to make sure we continue to deliver an excellent value and dining experience to our guests."
Chipotle shares were marked 6.5% higher in pre-market trading to indicate an opening bell price of $$1,554.05 each.
4. -- Lyft Shares Tumble After Muted Outlook Clouds Solid Q4
Lyft (LYFT) shares slumped lower in pre-market trading after the ride-sharing group issued a muted near-term outlook following a fourth quarter earnings report that was heavily-affected by the December surge in Omicron infections.
Lyft said March quarter revenues would come in between $800 million and $850 million a notable 15% decline from prior quarter levels that new CEO Elaine Paul put down to the lingering impact of the Omicron surge on ride demand.
Lyft generated $970 million in fourth quarter revenues, with revenue per ride rising 13.5% to $52, but still posted a full year loss of around $1 billion as ride use remains around 30% south of pre-Covid levels.
"Prior to Omicron, we were anticipating strong sequential rideshare ride growth in Q1. This was based on the demand trends we saw in Q4," Paul told investors on a conference call late Tuesday. "However, given the impact that Omicron has had on rideshare volumes, we now anticipate rideshare rides will be down slightly in Q1 versus Q4. In addition, the first quarter of every year always has rideshare ride mix headwinds with shorter rides and less use of bikes and scooters."
Lyft shares were marked 3.9% lower in pre-market trading to indicate an opening bell price of $39.60 each.
5. -- Disney Earnings On Deck With Streaming Additions in Focus
Walt Disney (DIS) shares moved higher in pre-market trading ahead of the media giant's first quarter earnings, expected after the close of trading Wednesday.
Investors will be laser-focused on subscriber additions to the group's Disney+ streaming service, which added only 2.1 million new users in the prior quarter and now sits some 50% shy of the company's 2024 goal of around 240 million total customers.
FactSet estimates suggest December quarter gains of around 8.5 million, powered by the release of new content such as the Beatles 'Get Back' documentary as well as the debut episode of 'The Book of Boba Fett'.
Disney's main streaming rival, Netflix (NFLX), added 8.28 million subscribers over its December quarter, but cautioned that new additions would slow to 2.5 million over the first three months of this year amid what it called a "Covid overhang" in key overseas markets.
"With the renewal with Comcast behind ESPN, attention has turned to the potential landing spot for the NFL’s Sunday Ticket package," said BMO Capital Markets analyst Daniel Salmon. "While the product could help differentiate Hulu/ESPN+, price could be considerable (other suitors reportedly include Apple (AAPL) and Amazon (AMZN))and the market is likely to take a more skeptical view of incremental streaming investment than it would have 6-12 months ago."
Disney shares were marked 1.35% higher in pre-market trading to indicate an opening bell price of $144.40 each.
