S&P Futures Tick Higher Ahead of Powell Testimony

March S&P 500 futures (ESH23) are trending up +0.21% this morning after three major U.S. benchmark indices ended the regular session mixed as market participants braced for Federal Reserve Chairman Jerome Powell’s congressional testimony.

In Monday’s trading session, major U.S. stock indexes drifted to a mixed close, giving up most of their gains as the 10-year T-note yield rebounded from an early decline. Also, the basic materials sector dropped the most after China set its lowest growth target in over 30 years of around 5%. Meanwhile, Apple Inc (AAPL) led the tech sector’s gains, climbing more than +1% after Goldman Sachs initiated coverage on the stock with a buy rating. In addition, Merck & Company Inc (MRK) rose over +3% and was the top percentage gainer on the blue-chip Dow index after Jeffries initiated a buy rating on the stock and named the company its top pharma pick. At the same time, Tesla Inc (TSLA) dropped about -2% after the company slashed prices for its Model S and Model X vehicles in the U.S.

On the economic front, U.S. Factory Orders fell less than expected to -1.6% m/m in January, weighed down by a drop in civilian aircraft bookings, data from the Commerce Department showed on Monday. At the same time, the Commerce Department report also showed an increase in orders for machinery and other products, pointing to some rebound in manufacturing.

Today, market participants will be closely watching Federal Reserve Chairman Jerome Powell’s semi-annual monetary policy testimony before the Senate Banking Committee for fresh clues on the trajectory of interest rates as well as the state of the economy.

“If the past is any prologue, he’ll continue to be firm on the hawkish talk because he has to keep the long-term inflation expectations pinned,” said Thomas Hayes, chairman at Great Hill Capital LLC.

Also, investors are likely to focus on the U.S. Wholesale Inventories data, which was at +0.1% m/m in December. Economists foresee the new figure to be -0.4% m/m.

In the bond markets, United States 10-Year rates are at 3.930%, down -1.32%.

The Euro Stoxx 50 futures are up +0.16% this morning as investors awaited testimony from Fed Chair Jerome Powell to Congress. Also, Austrian central bank chief Robert Holzmann, a hawkish member of the European Central Bank’s governing council, said Monday that the ECB should lift interest rates by 50 basis points at each of its next four meetings. “I expect it to take a very long time for inflation to come down,” Holzmann said. In corporate news, Brenntag Se (BNR.D.DX) gained over +2% after Bloomberg reported that the German chemicals distributor was considering buying back at least 5% of its shares.

U.K.’s Halifax House Price Index, Germany’s Factory Orders, and Spain’s Industrial Production data were released today.

U.K. February Halifax House Price Index has been reported at +1.1% m/m, stronger than expectations of -0.3% m/m.

The German January Factory Orders stood at +1.0% m/m, stronger than expectations of -0.9% m/m.

The Spanish January Industrial Production came in at -0.4% y/y, stronger than expectations of -0.6% y/y.

Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed down -1.11%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.25%.

China’s Shanghai Composite today closed lower after the country’s new foreign minister Qin Gang said relations with the U.S. have left a “rational path” and warned of conflict if Washington does not “hit the brake.” Data on Tuesday showed the country logged a record trade surplus in February, driven by a smaller-than-expected drop in exports. However, the Chinese imports fell -10.2% y/y in February, weaker than expectations of -5.5% y/y, pointing to weak local demand even after the country eased most COVID-19 curbs. The soft import reading and a weaker-than-expected GDP forecast for the year bolstered some concerns over the timing of the Chinese economic recovery.

The Chinese February Trade Balance has been reported at $116.88B, stronger than expectations of $81.80B.

The Chinese February Exports stood at -6.8% y/y, stronger than expectations of -9.4% y/y.

The Chinese February Imports came in at -10.2% y/y, weaker than expectations of -5.5% y/y.

At the same time, Japan’s Nikkei 225 Stock Index closed higher after data showed wage growth in the country fell more than anticipated in January. The index’s upward momentum was fueled by gains in the Steel, Retail, and Paper & Pulp sectors. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up 2.53% to 16.60.

The Japanese January Average Cash Earnings stood at +0.8% y/y, weaker than expectations of +1.9% y/y.

Pre-Market U.S. Stock Movers

Rivian Automotive Inc (RIVN) plunged over -5% in pre-market trading after the company announced a proposed $1.3B private offering of green convertible senior notes due 2029 to qualified institutional buyers.

Cara Therapeutics (CARA) tumbled more than -31% in pre-market trading after the company’s fourth-quarter results fell short of expectations.

DXC Technology Co (DXC) dropped over -1% in pre-market trading after the company said it had terminated takeover discussions with the financial sponsor due to challenges in raising the necessary capital.

Arista Networks (ANET) rose more than +1% in pre-market trading after Goldman Sachs initiated coverage on the stock with a buy rating.

Kimbell Royalty Partners LP (KRP) climbed about +3% in pre-market trading after KeyBanc upgraded the stock to overweight from sector weight.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Tuesday - March 7th

Sea (SE), Ashtead Gro (ASHTY), Crowdstrike Holdings (CRWD), Henkel AG & Co KGAA (HENKY), Ferguson (FERG), Dick’s Sporting Goods (DKS), Caseys (CASY), Fresnillo (FNLPF), Thor Industries (THO), ESAB Corp (ESAB), Squarespace (SQSP), Agiliti (AGTI), Cricut (CRCT), Crescent Energy (CRGY), Ero Copper (ERO), Vivid Seats (SEAT), Treace Medical Concepts (TMCI), Dole (DOLE), Enfusion (ENFN), Yext (YEXT), First Watch Restaurant (FWRG), Amryt Pharma Holdings (AMYT), Maxeon Solar Technologies (MAXN), W&T Offshore (WTI), Allied Motion (AMOT), Seres Therapeutics Inc (MCRB), SoundHound AI (SOUN), The York Water (YORW), Avadel Pharma (AVDL), Stitch Fix (SFIX).

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