Stocks Plunge Before The Open As Sticky U.S. Inflation Sparks Rate Worries, U.S. Retail Sales Data In Focus

March S&P 500 futures (ESH23) are down -0.44%, and March Nasdaq 100 E-Mini futures (NQH23) are down -0.47% this morning after three major U.S. benchmark indices finished the regular session mixed as stronger-than-expected U.S. inflation data and comments from Federal Reserve officials bolstered fears of more hawkish moves from the central bank.

In Tuesday’s trading session, Wall Street’s main indexes closed mixed after data showed the U.S. consumer price index increased +0.5% m/m in January, driven by gasoline and shelter costs. Consumer prices rose +6.4% on an annual basis in January, down from +6.5% y/y in December but ahead of economists’ expectations of +6.2% y/y. Also, January’s core CPI, which is considered a more accurate gauge of inflation, slowed to +5.6% y/y from +5.7% y/y but was above expectations of +5.5% y/y.

“Inflation has peaked but isn’t declining as quickly as the Fed would have liked. The report showed no signs of easing in service or housing inflation, and deflationary pressures in goods appear to be abating,” Jefferies said in a note. 

Richmond Fed President Thomas Barkin and Dallas Fed President Lorie Logan on Tuesday continued to express the need to hike rates for longer than expected to ensure inflation continues to ease. Also, New York Fed President John Williams said that subdued economic growth and labor-market weakness would likely be required to bring inflation back down to the 2% target. At the same time, Philadelphia Fed President Patrick Harker said that policymakers were nearing the point where rates were restrictive enough.

On the earnings front, global companies like Cisco (CSCO), Shopify Inc (SHOP), and Kraft Heinz (KHC) are set to report their quarterly earnings today. Meanwhile, analysts expect corporate earnings from S&P 500 companies to fall 2.8% for the quarter.

Today, all eyes are focused on the U.S. Retail Sales data in a couple of hours. Economists, on average, forecast that January Retail Sales will stand at +1.8% m/m, compared to the previous value of -1.1% m/m.

Also, investors are likely to focus on the U.S. Core Retail Sales data, which was at -1.1% m/m in December. Economists foresee the new figure to be +0.8% m/m.

U.S. NY Empire State Manufacturing Index will be reported today. Economists anticipate this figure to stand at -18.00 in February, compared to the previous number of -32.90.

U.S. Industrial Production data will come in today. Economists expect January’s figure to be +0.5% m/m, compared to the previous number of -0.7% m/m.

U.S. Business Inventories data will also be closely watched today. Economists expect Business Inventories to come in at +0.3% m/m in December, compared to the previous figure of +0.4% m/m.

U.S. Crude Oil Inventories data will be reported today as well. Economists estimate this figure to be +1.166M, compared to last week’s value of +2.423M.

In the bond markets, United States 10-Year rates are at 3.728%, down -0.87%.

The Euro Stoxx 50 futures are up +0.26% this morning as market participants digested inflation data from the U.S. and the U.K. Data on Wednesday showed that British consumer price inflation eased by more than expected to +10.1% y/y in January from December’s +10.5% y/y, driven by a drop in fuel and air travel costs. In addition, investors will likely focus on a speech by European Central Bank President Christine Lagarde later in the session that may provide clues on the central bank’s next steps. In corporate news, shares of Barclays Plc (BARC.LN) slid over -8% after the British bank reported a 14% fall in annual profits.

U.K.’s CPI, U.K.’s Core CPI, Spain’s CPI, Eurozone’s Industrial Production, and Eurozone’s Trade Balance data were released today.

U.K. January CPI has been reported at -0.6% m/m and +10.1% y/y, weaker than expectations of -0.4% m/m and +10.3% y/y.

U.K. January Core CPI stood at -0.9% m/m and +5.8% y/y, weaker than expectations of -0.5% m/m and +6.2% y/y.

The Spanish January CPI came in at -0.2% m/m and +5.9% y/y, stronger than expectations of -0.3% m/m and +5.8% y/y.

Eurozone December Industrial Production stood at -1.1% m/m and -1.7% y/y, weaker than expectations of -0.8% m/m and -0.7% y/y.

Eurozone December Trade Balance was at -8.8B, stronger than expectations of -12.5B.

Asian stock markets today closed in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.39%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.37%.

China’s Shanghai Composite today closed lower after hotter-than-expected U.S. inflation data ramped up fears of a higher-for-longer interest rate policy by the Federal Reserve, with technology stocks dropping the most. On the positive side, the People’s Bank of China boosted medium-term liquidity injections into the banking system on Wednesday while keeping the interest rate unchanged at 2.75%, in line with market expectations. 

At the same time, Japan’s Nikkei 225 Stock Index closed lower amid uncertainty over local monetary policy after the government nominated academic Kazuo Ueda as the next Bank of Japan governor. The index’s downward momentum was fueled by losses in the Marine Transport, Transport, and Transportation Equipment sectors. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up 1.79% to 16.51.

Pre-Market U.S. Stock Movers

Airbnb Inc (ABNB) climbed about +9% in pre-market trading after the company reported upbeat Q4 results and provided strong Q1 revenue guidance.

Ammo Inc (POWW) fell more than -12% in pre-market trading after the company reported downbeat Q3 results and cut its full-year revenue outlook.

Tripadvisor Inc (TRIP) rose over +9% in pre-market trading after the company posted a better-than-expected Q4 report.

Credo Technology Group Holding Ltd (CRDO) plunged about -42% in pre-market trading after the company announced it expects Q4 revenue to be at $30M-$32M compared to the consensus of $55.1M.

American Eagle Outfitters Inc (AEO) dropped more than -1% in pre-market trading after Jefferies downgraded the stock to hold from buy.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Wednesday - February 15th

Cisco (CSCO), Analog Devices (ADI), Equinix (EQIX), Shopify Inc (SHOP), Synopsys (SNPS), Kraft Heinz (KHC), Suncor Energy (SU), AIG (AIG), Biogen (BIIB), Energy Transfer (ET), Nutrien (NTR), Republic Services (RSG), Manulife Financial (MFC), Barclays ADR (BCS), Welltower (WELL), Waste Connections (WCN), Albemarle (ALB), Barrick Gold (GOLD), American Water Works (AWK), Seagen (SGEN), The Trade Desk (TTD), Royalty Pharma (RPRX), Martin Marietta Materials (MLM), Ameren (AEE), Roblox (RBLX), Tenaris ADR (TS), Invitation Homes (INVH), Waters (WAT), Westinghouse Air Brake (WAB), Rollins (ROL), Marathon Oil (MRO), CF Industries (CF), Newcrest Mining (NCMGF), Tyler Technologies (TYL), Host Hotels Resorts (HST), Telefonica Brasil ADR (VIV), EQT (EQT), Twilio (TWLO), Zillow C (Z), Zillow Group Inc (ZG), TPG Inc (TPG), ICL Israel Chemicals (ICL), Owens Corning (OC), Antero Resources Corp (AR), Generac (GNRC), Roku (ROKU), Lithia Motors (LAD), Siteone Landscape Supply (SITE), Wyndham Hotels (WH), Choice Hotels (CHH), STAG Industrial (STAG), Exelixis (EXEL), Quidel (QDEL), MSA Safety (MSA), Antero Midstream (AM), Kinross Gold (KGC), 10X Genomics (TXG), Ryder System (R), Sendas Distribuidora (ASAI), Trinet Grou (TNET), Parsons (PSN), Boston Beer (SAM), Independence Realty Trust Inc (IRT), Atlas Corp (ATCO), Ringcentral Inc (RNG), Allison Transmission (ALSN), Ziff Davis (ZD), Sunoco LP (SUN), Taylor Morn Home (TMHC), Summit Materials Inc (SUM), Copa (CPA), Quantumscape (QS), Essential Properties (EPRT), Avient Corp (AVNT), Pegasystems (PEGA), Amedisys (AMED), Resideo Tech (REZI), SunPower (SPWR), Ultrapar Participacoes (UGP), Nova (NVMI), Tronox (TROX), Bowlero (BOWL), Four Corners Property Trust Inc (FCPT), Trupanion Inc (TRUP), Kadant (KAI), Nextier Oilfield Solutions (NEX), Sabre Corpo (SABR), Sonic Automotive (SAH), InterDigital (IDCC), Nu Skin (NUS), Empire State Realty (ESRT), Krispy Kreme (DNUT), Retail Opportunity (ROIC), Warrior Met Coal (HCC), Vector (VGR), Upwork (UPWK), Chimera Investment (CIM), Fastly (FSLY), Aurora Innovation (AUR), The Chefs Warehouse (CHEF), Amplitude (AMPL), Paramount Group Inc (PGRE), Avantax (AVTA), SFLoration Ltd (SFL), Kornit Digital Ltd (KRNT), Palomar (PLMR), Veeco (VECO), Cellebrite (CLBT).

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