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Yellen to Meet Regulators, Jobless Claims, Earnings Galore - What's up in Markets

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By Geoffrey Smith

Investing.com -- U.S. regulators may huddle to discuss the retail stock frenzy of recent days, a deluge of earnings starts with Merck and BMS and ends with Peloton (NASDAQ:PTON) and Ford, weekly jobless claims are due and the dollar hits a two-month high on brighter prospects for the U.S. economy. Here’s what you need to know in financial markets on Thursday, February 4th.

1. Yellen to meet with regulators on trading frenzy

Treasury Secretary Janet Yellen may meet with U.S. financial regulators to discuss the implications of the frenzied trading in a handful of heavily-shorted stocks over the last couple of weeks.

The meeting, called on Tuesday, will be attended by the heads of the Securities and Exchange Commission, the Federal Reserve, the Federal Reserve Bank of New York and the Commodity Futures Trading Commission, according to Reuters. It still isn't clear exactly when the meeting will start.

The meeting comes after heavy losses in stocks such as GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC), which are down more than 50% from last week’s highs.

Yellen has sought and received permission from ethics lawyers to chair the meeting, in the light of her accepting $700,000 in speaking fees from Citadel in the past. Citadel is one of the hedge funds at the heart of the ongoing battle between retail traders and Wall Street hedge funds, and has an extensive trading relationship with online brokerage Robinhood, which routes its orders through Citadel.

2. Dollar hits two-month high on U.S. growth prospects

The dollar hit its highest level in two months as a brightening outlook for the U.S. economy pushed bond yields higher.

The dollar gained most against the euro, which fell below $1.20 on perceptions that the two regions’ rollout of vaccines and the extent of their lockdowns both point to U.S. outperformance in the next couple of months.

The greenback was also higher against sterling, which trimmed gains ahead of the Bank of England’s monetary policy committee meeting. The BoE wasn’t expected to change policy, meaning that the market’s main focus will be on what the MPC has to say about the likelihood of negative interest rates this year.

3. Wall Street set to drift higher; jobless claims eyed

U.S. stock markets are set to drift higher at opening ahead of Yellen’s meeting with regulators, with the initial focus likely to be on jobless claims data at 8:30 AM ET (1430 GMT).

The numbers will be a more up-to-the minute snapshot of the labor market than ADP’s much stronger-than-expected private-sector hiring report for January, which only runs through the middle of the month. Analysts expect a drop in initial jobless claims to 830,000, which would be the lowest number in a month. Durable goods orders for December and data on unit labor costs and productivity are also due.

By 6:35 AM ET, Dow Jones Futures were up 29 points, or 0.1%, while S&P 500 Futures and NASDAQ Futures were up by a similar amount.

4. Earnings torrent due; Qualcomm (NASDAQ:QCOM) disappoints, PayPal cheers

It’s another heavy day for earnings, with Merck and Bristol-Myers Squibb leading the charge early, along with Becton Dickinson and AmerisourceBergen, Cigna, Air Products and InterContinental Exchange Group. Tapestry and Ralph Lauren add a dash of style to the mix.

The lineup after the close is just as heavy, with T-Mobile, Gilead, Ford Motor, Activision Blizzard and Peloton Interactive leading a cast of thousands.

PayPal and Qualcomm presented starkly differing reports late on Wednesday, with the chipmaker set to open down 6.7% after missing on revenue expectations, and the payments firm up over 5% in premarket after a handsome beat.

5. Oil struggles with resistance after OPEC meeting;

Oil prices continued to test new highs overnight without actually breaking through, in the wake of an OPEC meeting that delivered no surprises on output policy.

By 6:40 AM ET, U.S. Crude futures were up 0.8% at $56.83 a barrel, while Brent crude futures were up 0.3% at $58.84.

Overnight, Anglo-Dutch major Royal Dutch Shell reported a heavy net loss for the year and a further rise in its gearing ratio in the fourth quarter, but that didn’t stop it from saying it expected to raise its dividend again in the first quarter of this year. The company is also nearing the point where its net debt is low enough to trigger a new policy on shareholder returns.

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