Futures are Signaling a Weak Open for Wall Street, U.S. PCE Data In Focus

March S&P 500 futures (ESH23) are down -0.33% and March Nasdaq 100 E-Mini futures (NQH23) are down -0.75% this morning as investors braced for the release of the U.S. personal consumption expenditures index for further clues on the future course of monetary policy. 

In Thursday’s trading session, all three major indexes closed higher, with the tech-heavy Nasdaq leading the pack, boosted by a 14% jump in Nvidia stock after it reported better-than-expected Q4 results and gave an upbeat revenue outlook. Energy stocks also gained ground as the prices of WTI crude oil jumped over +2% on expectations of steep cuts to Russian production next month. 

The Labor Department report on Thursday showed claims for state unemployment benefits unexpectedly fell -3K to a 3-week low of 192K, stronger than expectations of 200K, pointing to a tight labor market. A separate report showed U.S. GDP for the fourth quarter was revised lower to +2.7% q/q from the previously reported +2.9% q/q, reflecting a downward revision to consumer spending.

On the earnings front, Block Inc (SQ) climbed more than +6% in pre-market trading after posting better-than-expected Q4 revenue and solid FY23 adjusted EBITDA guidance. However, Warner Bros Discovery Inc (WBD) fell about -5% in pre-market trading after the company reported weaker-than-expected Q4 results. In addition, Autodesk Inc (ADSK) slid over -3% in pre-market trading after the company reported upbeat Q4 results, but its FY24 guidance fell short of expectations.

Today, all eyes are focused on the U.S. core personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge, in a couple of hours. Economists, on average, forecast that the Core PCE Price Index will stand at +0.4% m/m and +4.3% y/y in January, compared to the previous values of +0.3% m/m and +4.4% y/y.

Also, investors will likely focus on the U.S. New Home Sales data, which came in at 616K in December. Economists foresee the new figure to be 620K.

U.S. Personal Spending data will be reported today. Economists foresee this figure to stand at +1.3% m/m in January, compared to the previous number of -0.2% m/m.

U.S. Michigan Consumer Sentiment Index will come in today. Economists expect February’s figure to be 66.4, compared to 64.9 in January.

U.S. Michigan Consumer Expectations Index will be reported today as well. Economists estimate this figure to be 62.3 in February, compared to January’s value of 62.7.

In addition, market participants will be looking toward speeches from Fed officials Mester and Jefferson for clues on the Fed’s rate hike path.

In the bond markets, United States 10-Year rates are at 3.902%, up +0.55%.

The Euro Stoxx 50 futures are down -0.07% this morning as investors digested more economic data while awaiting the release of the Federal Reserve’s preferred inflation measure. Data released on Friday showed that U.K. consumer confidence unexpectedly rebounded to a 10-month high of -38 in February, well above estimates of -43. At the same time, the statistics office said on Friday that the German economy contracted by -0.4% q/q in the fourth quarter of 2022, resulting in just +0.3% y/y annual growth. In corporate news, shares of Cie DE Saint-Gobain (SGO.P.DX) rose over +5% after the company reported record annual revenue that topped analysts’ expectations.

U.K.’s GfK Consumer Confidence, Germany’s GDP, Germany’s GfK Consumer Climate, and France’s Consumer Confidence data were released today. 

U.K. February GfK Consumer Confidence has been reported at -38, stronger than expectations of -43.

The German GDP stood at -0.4% q/q and +0.3% y/y in the fourth quarter, weaker than expectations of -0.2% q/q and +0.5% y/y.

The German March GfK Consumer Climate index came in at -30.5, weaker than expectations of -30.4.

The French February Consumer Confidence was at 82, stronger than expectations of 80.

Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.62%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +1.29%.

China’s Shanghai Composite today closed lower as uncertainty over U.S. monetary policy path triggered losses in technology stocks. Investor focus is now on the U.S. January’s Core PCE Price Index, the Fed’s preferred inflation measure, for clues on the central bank’s rate-hike campaign. The reading is expected to confirm that U.S. inflation remained elevated in January.

Japan’s Nikkei 225 Stock Index closed sharply higher after the incoming head of the Bank of Japan, Kazuo Ueda, pledged to hold interest rates at ultra-low levels to support economic growth in the near term. At the same time, data on Friday showed that Japanese consumer inflation hit a new 41-year high of +4.2% y/y in January, which may force the central bank to eventually tighten policy. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up 7.23% to 17.50.

“There have been high hopes that Ueda will bring a hawkish twist to the BOJ, but early remarks in his confirmation speech say anything but,” said Matt Simpson, a senior market analyst at City Index.

Pre-Market U.S. Stock Movers

Nektar Therapeutics (NKTR) plunged about -43% in pre-market trading after the company announced that the phase 2 study of rezpegaldesleukin in lupus did not meet the primary endpoint.

Beyond Meat Inc (BYND) surged about +14% in pre-market trading after the company reported better-than-expected Q4 results.

Adobe Systems Incorporated (ADBE) fell more than -3% in pre-market trading after Bloomberg reported that the U.S. Department of Justice is preparing a suit to block the company’s $20B takeover of Figma. 

Boeing Co (BA) dropped over -2% in pre-market trading after WSJ reported that the company halted 787 Dreamliner Jet deliveries due to a documentation issue.

Century Aluminum Company (CENX) rose more than +2% in pre-market trading after Wolfe Research upgraded the stock to peer perform from underperform.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Friday - February 24th

Canadian Imperial Bank (CM), Fomento Economico Mexicano (FMX), Dell Tech (DELL), Amadeus IT Holding SA PK (AMADY), Evergy (EVRG), Liberty Media SiriusXM A (LSXMA), Lamar (LAMR), HF Sinclair (DINO), Frontier Communications Parent (FYBR), Balchem (BCPC), PNM Resources (PNM), Onex Corp (ONEXF), Piraeus Bank ADR (BPIRY), Carter’s (CRI), Brady (BRC), Holly Energy Partners LP (HEP), Digitalbridge Group (DBRG), CI Financial Corp (CIXXF), Gray Television (GTNa), Northwest Natural Gas (NWN), Cinemark (CNK), Federal Agricultural Mortgage (AGM), Kratos Defense&Security (KTOS), Taboola (TBLA), Uniti Group (UNIT), Federal Agricultural Mortgage A (AGMa), EW Scripps A (SSP), Gray Television (GTN), Sprott Inc. (SII), US Silica (SLCA), Acm Research (ACMR).

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