Stocks Move Higher Before the Open as Investors Await U.S. Inflation Data

March S&P 500 futures (ESH23) are trending up +0.31% this morning after three major U.S. benchmark indices ended the regular trading session in a mixed fashion as fear of a U.S. banking crisis continued to weigh on investor sentiment ahead of a crucial U.S. inflation report.

In Monday’s trading session, the benchmark S&P 500 and the blue-chip Dow ended in the red as concerns about the ongoing turmoil in the banking sector continued to weigh on sentiment despite action from regulators. Energy stocks also slumped as the prices of WTI crude oil fell more than -2% to a 5-week low as SVB’s collapse rippled across markets. The tech-heavy Nasdaq index, however, ended higher, underpinned by the fall in Treasury yields.

Treasury yields plunged on Monday, with the 2-year Treasury tumbling by more than 60 basis points logging the biggest one-day slump in decades, as the collapse of Silicon Valley Bank forced market participants to reassess their outlook for U.S. interest rates and made bets that the Federal Reserve might pause its rate hikes at next week’s meeting to prevent financial instability.

“The market is now expecting that the Fed is likely to not raise rates this month, and so they may enter a pause period,” said Peter Cardillo, a chief market economist at Spartan Capital Securities.

U.S. rate futures have priced in a 71.6% chance of a 25 basis point rate increase and a 28.4% chance the Fed holds interest rates at their current level at the upcoming meeting.

Today, all eyes are focused on the U.S. consumer inflation report in a couple of hours. Economists, on average, forecast that February U.S. CPI will come in at +0.4% m/m and +6.0% y/y, compared to the previous values of +0.5% m/m and +6.4% y/y.

U.S. Core CPI data will also be closely watched today. Economists estimate Core CPI to be +0.4% m/m and +5.5% y/y in February, compared to the previous figures of +0.4% m/m and +5.6% y/y.

In the bond markets, United States 10-Year rates are at 3.586%, up +2.03%.

The Euro Stoxx 50 futures are up +0.32% this morning as investors digested a slew of regional economic data while looking ahead to the latest U.S. inflation report. However, those gains are likely to be fragile as Silicon Valley Bank contagion worries continue to rattle sentiment in the region, with banking stocks leading declines. In corporate news, HSBC Holdings Plc (HSBA.LN) fell over -1% on reports that Europe’s largest bank intends to inject 2 billion pounds of liquidity into the U.K. division of SVB that it recently bought.

U.K.’s Average Earnings Index +Bonus, U.K.’s Claimant Count Change, U.K.’s Employment Change 3M/3M, U.K.’s Unemployment Rate, Spain’s CPI, and Italy’s Industrial Production data were released today.

U.K. January Average Earnings Index +Bonus has been reported at 5.7%, in line with expectations.

U.K. February Claimant Count Change stood at -11.2K, weaker than expectations of -12.4K.

U.K. January Employment Change 3M/3M came in at +65K, stronger than expectations of +52K.

U.K. January Unemployment Rate was at 3.7%, stronger than expectations of 3.8%.

The Spanish February CPI has been reported at +0.9% m/m and +6.0% y/y, weaker than expectations of +1.0% m/m and +6.1% y/y.

The Italian January Industrial Production stood at -0.7% m/m and +1.4% y/y, weaker than expectations of -0.1% m/m and +2.9% y/y.

Asian stock markets today closed in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.72%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -2.19%.

China’s Shanghai Composite today closed lower as heavy selling in local bank stocks overshadowed optimism over more government stimulus measures. Also, market participants digested news that Chinese President Xi Jinping plans to travel to Russia to meet Vladimir Putin as soon as next week. In addition, Chinese tourism, airline, and hotel operators’ stocks dropped on Tuesday even after the country’s foreign ministry said it would reopen its borders to foreign tourists by restoring the issuance of all types of visas starting on Wednesday.

“China’s growth will remain meager as the economy is in the process of structural deceleration,” said Alicia Garcia Herrero, a chief economist at Natixis.

Japan’s Nikkei 225 Stock Index closed sharply lower as investors continued to reduce their exposure to financial stocks, with Softbank Group falling over -4% to its lowest point since October. In addition, Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial plunged -8.6% and -7.6%, respectively. At the same time, the Japanese government spokesman Hirokazu Matsuno said a ripple effect on the Japanese financial system was unlikely. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up 4.02% and hit a new 1-month high of 18.61.

Pre-Market U.S. Stock Movers

Gitlab Inc (GTLB) plunged about -32% in pre-market trading after the company reported upbeat Q4 results but posted a soft FY24 revenue outlook.

Bunge Limited (BG) climbed more than +6% in pre-market trading after entering S&P 500 index.

Roku Inc (ROKU) rose over +2% in pre-market trading after Wolfe Research upgraded the stock to peer perform from underperform.

United Airlines Holdings Inc (UAL) slid more than -6% in pre-market trading after the company provided a pessimistic outlook for the first quarter of 2023.

American Airlines Group (AAL) fell about -1% in pre-market trading on downbeat UAL guidance.

Match Group Inc (MTCH) gained over +2% in pre-market trading after Barclays upgraded the stock to overweight from equal weight.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Tuesday - March 14th

Lennar (LEN), Huazhu (HTHT), Smartsheet (SMAR), Bezeq Corp (BZQIY), Braskem A (BAK), StoneCo (STNE), IHS Holding (IHS), SGHC Limited (SGHC), Custom Truck One Source (CTOS), Eve Holding (EVEX), FinVolution Group (FINV), Guess (GES), Caleres (CAL), Westrock Coffee (WEST), Snap One Holdings (SNPO), Hagerty (HGTY), Vacasa (VCSA), Agenus (AGEN), Cipher Mining (CIFR), BRT (BRT), McEwen Mining Inc. (MUX).

More Stock Market News from Barchart

• Bank Stocks Crater but Technology Stocks Climb as Bond Yields Slide
• Unusual Options Volume Highlights a Daring Contrarian Move for Goodyear Tire (GT)
• Investors are Shorting Deep Out-of-the-Money Puts and Calls in American Express
• The Collapse of Silicon Valley Bank is a Headwind for Tech Stocks