U.S. equity futures indicate that the pressure on the market will continue following yesterday’s sell-off. The Dow has lost ground for three consecutive sessions and has been having a tough first month of the year. Mixed earnings reports, poor economic data out of China, and weakening investor sentiment are weighing on the market. There will be little else for investors to key in on as few economic data points are due to be released, and most of the country continues to deal with frigid temperatures. The CBOE Volatility Index (VIX) has once again bounced off of the $12 level from last week. We should see continued option premium expansion today as investors buy some protection. If we get a pop in the VIX above $15, the anticipated correction in stocks may be in the cards.
Risk-off remained the global theme and flight to quality trades saw Treasury yields drop further overnight in conjunction with most global bonds. The 10-year declined to test 2.70%. Equities are down sharply with losses of over 1% in core markets. German Bunds outperformed after Fitch confirmed Germany's AAA rating. Economic news today is non-existent heading into the weekend. There will be earnings news from Bristol-Meyers Squibb, Kimberly-Clark, Procter & Gamble, Samsung, and Stanley Black & Decker. Meanwhile, market attention will turn squarely to next week's FOMC and supply.
Stock Stories:
Proctor & Gamble (PG) – Flat – The consumer products leader posts quarterly results that are in-line with estimates. The company expects strong earnings growth in the second half of its fiscal year driven by solid top-line growth, moderating headwinds from foreign exchange, and productivity savings that build throughout the fiscal year. The shares are up slightly ahead of the opening bell but are down sharply from last year’s highs.
