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Futures mixed ahead of Powell, Mnuchin testimony, Autozone beats estimates

Yahoo Finance's Emily McCormick joins Yahoo Finance’s The First Trade with Alexis Christoforous and Brian Sozzi to discuss what's weighing on the markets on Monday morning. McCormick also weighs in on Autozone earnings.

Video Transcript

ALEXIS CHRISTOFOROUS: All eyes are on Federal Reserve Chairman Jerome Powell. He'll testify before the House Financial Services Committee this morning. He's expected to urge Congress to spend more to help struggling Americans through this pandemic. Powell will appear alongside Treasury Secretary Steven Mnuchin. That's happening at 10:30 Eastern. And we'll bring that to you live right here on Yahoo Finance.

I want to bring in Yahoo Finance's Emily McCormick now, because Emily, yesterday we saw tech stocks actually bounce back. It was more of the banks and materials that dragged the market lower. What are you seeing this morning?

EMILY MCCORMICK: Well, we're seeing an extension of yesterday's trends in this morning's trading, Alexis. If we take a look at the NASDAQ, contracts on that index actually outperforming here in the early session. We have the index itself still down more than 10% from its recent record high from early September as of yesterday's close, but quickly closing that gap.

If we look at some of the most heavily weighed names, we have Apple, Amazon, Facebook, and Microsoft, each up between 1% and 2% in the early session here, starting to recover some of those losses from the middle of this month. So we are starting to see that tech rebound come into play here.

Now, one of the reasons for this is that concerns over the pace of the economic recovery are now back front and center, with prospects of fiscal stimulus from Congress to offset that dimming more and more by the day. Whenever we see economic growth concerns, a key issue, investors have tended to pile back into tech stocks, since those names and software especially are viewed as more insulated from the direction of the economy.

Now I want to highlight what John Stoltzfus, Chief Investment Strategist at Oppenheimer Asset Management wrote in a note yesterday, because I think that's very indicative of what we're seeing now. He's been continually constructive on tech, even with its recent pullback.

And he wrote in a note yesterday, quote, "Today's technology companies often are not just cash flow positive, but significantly profitable in a world in which hardware replaced by software has led to software replaced by subscriptions linked to the cloud, producing a more durable cycle."

As of last Friday, segments of the market, including technology, consumer discretionary, and communication services were beginning to look somewhat oversold and likely sooner than later to encourage investors to seek babies have been thrown out with the bathwater. So it seems like that's what we are seeing this morning, Alexis. And we do have textures outperforming the other sectors if we look in the S&P 500 as well, Alexis.

ALEXIS CHRISTOFOROUS: I also want to bring everybody's attention to an earnings report out today. AutoZone, the auto parts retailer, I guess crushing estimates, but what are they saying about the future?

EMILY MCCORMICK: Well, they are pointing to an uncertain future, no surprise there. But they did have an extremely strong fiscal fourth quarter. We saw fourth quarter comparable same store sales up a record 21.8%. That was more than double the 9.3% consensus and more than seven times the growth rate that the company had reported in the same quarter last year.

We also saw earnings per share of $30.93 growing year over year and topping estimates for just over $25 a share. Now AutoZone did flag a phenomenon we've seen from a number of retailers, which is that sales did slow slightly following the expiration of federal unemployed benefits, those enhanced benefits that we saw ending at the end of July.

Now, the company did say that in the last four weeks of the quarter, after that expiration, its same store sales increased 16.5%, so a bit of a slowdown there from the more than 20% growth that they saw earlier on and for the entire quarter. Now I also want to note that the company said that there continues to be quote, significant uncertainty heading into fiscal 2021, but for now, Wall Street taking these results in stride. That stock is up 4% in premarket trading. Alexis.