Stan Choe
The ASX is set to open flat on Wednesday, after Wall Street edged back from its record high overnight following a mixed start to the latest profit reporting season for big US companies.
The S&P 500 slipped 0.4 per cent after drifting between small gains and losses in early trading. The Dow Jones Industrial Average was down 408 points, or 0.8 per cent, with a little less than an hour remaining in trading, and the Nasdaq composite was down 0.3 per cent. Both the S&P 500 and Dow are coming off all-time highs.
At 7.28am, futures were pointing to a decline of 3 points or 0.03 per cent in the ASX200, after the market gained 0.6 per cent on Tuesday, boosted by miners and financial firms. The Australian dollar was trading at US66.80¢ on Wednesday morning.
US companies are under pressure to deliver strong growth in profits for the last three months of 2025 to justify the record-breaking runs for their stock prices. Analysts expect companies in the S&P 500 to deliver overall earnings per share that are 8.3 per cent higher than a year earlier, according to FactSet.
JPMorgan Chase helped kick off the latest reporting season by delivering weaker profit and revenue than analysts expected. Its stock fell 4.1 per cent and was one of the heaviest weights on the market, but the shortfall may have been because some analysts hadn’t updated their estimates to account for the earnings hit resulting from the bank’s purchase of the Apple Card credit card portfolio.
CEO Jamie Dimon sounded relatively optimistic about the US economy, saying “consumers continue to spend, and businesses generally remain healthy”.
Delta Air Lines lost 2.6 per cent despite reporting a stronger profit for the end of 2025 than analysts expected. Its revenue came up short of Wall Street’s expectations, as did the midpoint of its forecasted range for profit in 2026.
Chipotle Mexican Grill sank 3 per cent after saying it’s looking for a new chief marketing officer, a move that surprised analysts.
On the winning side of Wall Street were several health care companies after they raised their financial forecasts at an industry conference with analysts.
Moderna jumped 15.4 per cent for the biggest gain in the S&P 500 after saying it expects to report revenue for 2025 that’s above the midpoint of the range it had forecast in November. It also offered updates on several products, including a seasonal flu vaccine that could see potential approvals beginning later this year.
Revvity rose 5.5 per cent after the life sciences company said it expects to report profit for 2025 that’s above the top end of the forecasted range it had earlier given. Its forecast for revenue in the fourth quarter also topped analysts’ expectations.
In the bond market, yields eased a bit after a highly anticipated update on inflation came in close to economists’ expectations. The data strengthened expectations that the Federal Reserve may be able to cut its main interest rate at least twice in 2026 to shore up the job market.
Lower interest rates could make borrowing cheaper for US households and boost prices for investments, but they could also worsen inflation at the same time. Tuesday’s report showed that US consumers paid prices last month for fuel, food and other costs of living that were 2.7 per cent higher overall than a year earlier. That’s a touch worse than economists expected and above the Fed’s 2 per cent target for inflation.
But, more encouragingly, an important underlying trend of inflation wasn’t as bad last month as economists expected. That could give the Fed more leeway to lower interest rates later.
“We’ve seen this movie before – inflation isn’t reheating, but it remains above target,” according to Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management.
The data helped the 10-year Treasury ease to 4.16 per cent from 4.19 per cent late Monday. The two-year Treasury yield, which more closely tracks expectations for what the Fed will do, inched down to 3.52 per cent from 3.54 per cent.
A day earlier, Treasury yields swung amid worries about the Federal Reserve’s worsening feud with President Donald Trump. The concern is that the president’s attacks on the Fed could result in a central bank that’s more subservient to the White House. Experts say that in turn could lead to higher inflation over the long term.
In stock markets abroad, indexes were mixed in Europe and Asia.
Japan’s Nikkei 225 soared 3.1 per cent for one of the world’s biggest moves and set a record, thanks in part to gains for technology-related stocks.
AP
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