U.S. stock futures were little changed ahead of the open Wednesday as investors prepared to parse through more corporate financial updates for signs of the “earnings recession” many analysts have warned about.
Futures tied to the S&P 500 (^GSPC) ticked up 0.1%, while futures on the Dow Jones Industrial Average (^DJI) hugged the flatline. Contracts on the technology-heavy Nasdaq Composite (^IXIC) were also a modest 0.1% above breakeven.
Among specific stock moves, shares of United Airlines (UAL) rose 2.5% in pre-market trading after the company reported a better-than-expected profit for the last three months of 2022 and an upbeat outlook for the new year — underscoring resilient travel demand even despite high airfares.
Moderna (MRNA) shares soared 6.7% ahead of the open after the biotech company said results from a late-stage clinical trial for its vaccine against RSV was effective and that it would seek approval for the shot from the Food and Drug Administration by the middle of the year.
Shares of International Business Machines Corporation (IBM) fell nearly 2% following a downgrade from Morgan Stanley to Equal-Weight from Everweight.
Investors are approaching the thick of what’s likely to be a challenging fourth-quarter earnings season. Analysts have been downwardly revising their forecasts for earnings growth. The S&P 500 is projected to report a year-over-year decline in earnings of 3.9% for the fourth quarter, according to data from FactSet Research — the first year-over-year decline in earnings reported by the index since late 2020 if realized.
DataTrek’s Nicholas Colas notes that while near-term declines in sequential S&P earnings resemble those that have preceded the last four recessions, there is not enough evidence at this point to support an economic downturn or sizable drop off in corporate results.
“What we don’t have – yet – is visibility into the catalyst which will drive the next set of larger negative quarterly comparisons,” Colas notes.
“Yes, last year’s aggressive Fed monetary policy may still bite the US economy in 2023 and take corporate earnings lower,” he added “As of right now, however, there are not enough economic data points to make an airtight case for a 2023 recession and/or substantially lower corporate earnings.”
Investors were also watching a crucial central bank move overseas early Wednesday. The Bank of Japan kept monetary policy unchanged, maintaining its ultra-low interest rates and a cap on its bond yield, contrary to market expectations. The yen dropped against the dollar following the outcome.
In commodities markets, oil extended a streak of gains. West Texas Intermediate (WTI) crude futures rose 2% to $81.80 per barrel.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc