US pre-open: Stocks seen mixed after dovish Fed; Facebook surges on results
US stocks looked set for a mixed open on Thursday as investors digested dovish comments from Fed chairman Jerome Powell and a slew of earnings from the likes of Facebook and Microsoft.
At 1215 GMT, Dow Jones Industrial Average futures were down 0.1%, while S&P 500 and Nasdaq futures were up 0.1% and 0.4%, respectively.
The Federal Reserve left interest rates on hold at between 2.25% and 2.5% on Wednesday, as expected. Market participants took comfort from the fact that the Fed dropped the phrase "further gradual increases" in relation to rate hikes from its statement. They also welcomed Powell's patient wait-and-see policy and acknowledgement that the case for higher rates has weakened.
"Only last month the Fed had raised rates and hinted that two more moves could follow this year," said strategists at Rabobank. "While last night’s change of direction had been heralded by more accommodative comments from various Fed officials in the past few weeks, the abruptness of the change of direction still took the market by the surprise."
In corporate news, Facebook shares looked set to surge at the open as it posted a record $6.9bn profit for the last three months of 2018, up 61% on the previous year.
Hargreaves Lansdown equity analyst George Salmon said: "Only time will tell if Mark Zuckerberg’s ambitious plans to revolutionise Facebook pay off, but these results will go a long way towards regaining the trust of Wall Street - analysts had been jittery after a tumultuous 2018 which included the trials and tribulations of the Cambridge Analytica scandal and a reset on strategy."
General Electric shares were also poised for solid gains as its fourth-quarter revenue topped analysts' expectations.
Microsoft was down 2% in pre-market trade, however, as its second-quarter revenue missed expectations of $32.51bn, at $32.47bn.
Electric car maker Tesla was sharply lower in pre-market trade after its fourth-quarter earnings. Neil Wilson, chief market analyst at Markets.com, said the results were OK, but the outlook is a little bit dubious.
"Back-to-back quarterly profits will get headlines but one must fear that Musk is rather robbing Peter to pay Paul in order to achieve it and the guidance for 2019 looks very weak.
"Earnings missed expectations despite much better revenues. Operating income steady at $414m, with profits hit by decline in regulatory credits, lower prices in China, higher import duties on parts from China and the introduction of a lower-priced mud-range Model 3."
Elsewhere, Northrop Grumman, DowDuPont, UPS and Hershey shares could be active after the release of their quarterly earnings.
On the macro font, initial jobless claims are due at 1330 GMT, while the Chicago PMI is at 1445 GMT and new home sales are at 1500 GMT.