MW: U.S. stocks: Futures tilt lower as oil gives back gains; ADP data ahead
MADRID (MarketWatch) — A cautious mood was settling in on Wednesday, as stock futures moved lower along with oil prices, a day after a monster rally sent the Dow industrials more than 300 points higher.
Investors are waiting on a private-sector payrolls survey and data that will gauge the health of the U.S. services sector. Earnings from Whirlpool Corp., General Motors Co. and Merck & Co. Inc. will all hit the tape early.
Futures for the Dow Jones Industrial Average DJH5, -0.13% dipped 23 points to 17,549, while those for the S&P 500 index SPH5, -0.21% slipped 4.8 points to 2,037.30. Futures for the Nasdaq-100 index NDH5, -0.29% fell 9.75 points to 4,205.50. Losses pared some after the People’s Bank of China announced a cut in its reserve-ratio requirement.
A rally for oil prices, and hence energy names, triggered the biggest gain in more than three weeks for the Dow industrials DJIA, +1.76% DJIA, +1.76% on Tuesday. The S&P 500 SPX, +1.44% jumped 1.4%, and the Nasdaq Composite COMP, +1.09% gained 1.1%.
But putting another day of big gains for stocks at risk was the fact that oil prices were backing off Wednesday, with March WTI crude CLH5, -3.49% dropping more than 3% and Brent crude LCOH5, -2.61% down more than 2%. Losses came after data released late Tuesday showed a big inventory build.
Investors are also watching for the ADP employment report for January, ahead of Friday’s nonfarm-payrolls report. That ADP data is due at 8:15 a.m. Eastern Time, and then at 10 a.m. Eastern, the ISM nonmanufacturing survey for January will be released.
A market battleground: Expect a “battle of the bulls and bears” for Wednesday, said Michael O’Rourke, chief market strategist with JonesTrading. He notes that so far in 2015, the S&P 500 has been range-bound, with 1,980-1,990 as support and 2,050 -2,060 as resistance.
Tuesday’s close at 2,050 will have bulls “pushing for the technical breakout” on Wednesday, despite the fact that positive drivers are getting smaller and smaller on a daily basis, he said. “With the growing list of negatives, we are continually amazed at how many opportunities this market is giving investors to de-risk within 2% of the all-time high,” O’Rourke said in a note.
Stocks in the spotlight: Ahead of the bell, Whirlpool WHR, +0.83% is expected to post fourth-quarter earnings of 41 cents a share, according to a consensus survey by FactSet. General Motors GM, +1.38% is projected to report fourth-quarter earnings of 83 cents a share.
Merck MRK, -0.85% Boston Scientific Corp. BSX, +1.57% and Clorox Co. CLX, -0.04% are also expected to report ahead of the open.
Chipotle Mexican Grill Inc. CMG, -6.42% shares fell more than 5% in late trade, after profit jumped but sales fell short of expectations. Walt Disney Co. DIS, +4.13% saw shares rise in late trade after earnings beat forecasts. Gilead Sciences Inc. GILD, -4.83% shares fell late after it reported earnings that beat forecasts, but said it expects price discounts for its hepatitis C drugs to double in 2015.
See more after-hours action in Movers & Shakers
China cuts reserve requirement for banks: The Nikkei 225 index NIK, +1.98% saw its biggest gain in two weeks on upbeat earnings. Well after the close for Chinese stocks, which ended the day lower, the People’s Bank of China cut its reserve ratio for banks by 0.5%. Among the reactions, gold prices GCH5, +0.67% moved higher.
The Stoxx Europe 600 index SXXP, -0.08% was largely flat after sizable gains on Tuesday, led by a 11% surge for Greek stocks. The Athens Composite Index GD, -2.14% was down 1.6% as Prime Minister Alexis Tsipras and Finance Minister Yanis Varoufakis sought a debt deal with greater leniency on repayments.
