Portfolio

US pre-open: Stocks to edge higher ahead of more earnings, Trump speech

By Michele Maatouk

Date: Tuesday 05 Feb 2019

US pre-open: Stocks to edge higher ahead of more earnings, Trump speech

(Sharecast News) - US stocks looked set for a slightly firmer open on Tuesday as investors eyed President Trump's State of the Union address and sifted through more earnings news.
At 1215 GMT, Dow Jones Industrial Average futures were up 0.3%, while S&P 500 and Nasdaq futures were 0.2% higher.

Trump is due to make his State of the Union address on Tuesday evening.

Oanda analyst Craig Erlam said: "The speech is going to be closely monitored by investors, keen to get an update on trade talks with China and border security, or more specifically the wall, which led to the longest ever government shutdown last month and could trigger another in just over a week.

"There have been plenty of reports that Trump is considering using emergency powers to deliver on his promise of border wall funding and this could be the platform for it, or at least a strong hint of an intention to do so."

In corporate news, Google parent Alphabet was down 2% in pre-market trade even after it posted a 22% jump in fourth-quarter sales to $39.3bn and a 23% increase in 2018 total revenue to $136.8bn, as operating profit came in flat at $26.3bn, slightly below expectations. In addition, capital expenditure rose to $7bn.

George Salmon, equity analyst at Hargreaves Lansdown, said: "While the core business has delivered another strong performance, a higher than expected cash spend and a weak showing from the Other Bets division pushed the shares down in after-market trading.

"Higher losses from speculative projects like Waymo self-driving cars shouldn't cause investors too much concern, after all these are early stage development projects not profit drivers.

"But another quarter of higher than expected capital expenditure is more concerning. While the core business is still growing impressively, the significant spending shows growth isn't quite as capital-light as had been hoped."

Elsewhere, Estee Lauder was poised to surge at the open as its second-quarter earnings and revenue beat analysts' expectations, while Viacom shares were likely to be active after the release of a mixed set of first-quarter numbers.

On the data front, Markit's services PMI is at 1445 GMT and the ISM non-manufacturing PMI is at 1500 GMT.

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