Stocks Muted as Choppiness Remains

U.S. stocks are subdued in pre-market action as the global markets remain choppy amid the backdrop of uncertainty regarding the ultimate impact of aggressive monetary policy tightening. Treasury yields are trading mostly higher, and the U.S. dollar is little changed. Crude oil prices are rallying and gold is seeing pressure. Q4 earnings season continues to wrap up, with Target topping forecasts but offering disappointing guidance, while Zoom Video Communications bested forecasts but delivered a mixed outlook. The economic calendar showed home prices dipped compared to the prior month, while the trade deficit widened more than expected, and wholesale inventories unexpectedly declined. After the opening bell, we will get a look at regional manufacturing activity out Chicago and the Conference Board's Consumer Confidence report. Asia finished mixed and Europe is also diverging amid the grappling with monetary policy uncertainty.

As of 8:51 a.m. ET, the March S&P 500 Index future is 6 points above fair value, the Nasdaq Index future is 13 points north of fair value, and the DJIA future is 57 points above fair value. WTI crude oil is increasing $1.86 to $77.54 per barrel, and Brent crude oil is gaining $1.70 to $83.74 per barrel. The gold spot price is down $9.20 to $1,815.70 per ounce. Elsewhere, the Dollar Index is dipping 0.1% to 104.63.

Target Corporation (TGT $167) reported adjusted Q4 earnings-per-share (EPS) of $1.89, above the $1.40 FactSet estimate, as revenues rose 1.3% year-over-year (y/y) to $31.40 billion, versus the Street's expectation of $30.67 billion. Q4 same-store sales rose 0.7% y/y, compared to the anticipated 1.6% decline. However, the company issued Q1 and full-year EPS and same-store sales guidance that came in below estimates, noting that it is planning cautiously in the near term to ensure it remains agile and responsive to the current operating environment.

Zoom Video Communications Inc. (ZM $74) posted adjusted Q4 EPS of $1.22, versus the forecasted $0.81, with revenues rising 4.0% y/y to $1.12 billion, compared to the expected $1.10 billion. ZM issued Q1 and full-year earnings guidance that came in above estimates, but its revenue outlooks missed projections.

Q4 earnings season continues down the home stretch this week and of the 481 S&P 500 companies that have reported thus far, about 58% have topped revenue estimates and approximately 68% have exceeded earnings projections, per data compiled by Bloomberg. Results have been mixed, along with guidance as corporations try to determine the ultimate impact of the aggressive Fed monetary policy tightening on the economy and profit margins.

Schwab’s Chief Investment Strategist Liz Ann Sonders notes in her latest article, The Price You Pay: A Look at Equity Valuations, how valuation metrics broadly look more attractive relative to where they were a year ago, but history shows they don't provide clear guidance on future returns.