March S&P 500 E-Mini futures (ESH24) are trending up +0.09% this morning as investors exercised caution and refrained from taking large positions ahead of revisions to monthly U.S. inflation data.
In Thursday’s trading session, Wall Street’s major indexes closed higher, with the benchmark S&P 500 and tech-heavy Nasdaq 100 posting new record highs. Ralph Lauren (RL) surged over +16% and was the top percentage gainer on the S&P 500 after the apparel giant reported much better-than-expected Q3 total comparable sales ex-forex. Also, Monolithic Power Systems Inc (MPWR) soared more than +14% after the company reported upbeat Q4 results and issued an above-consensus Q1 revenue forecast. In addition, Walt Disney Company (DIS) climbed over +11% and was the top percentage gainer on the Dow after the theme park and movie giant posted better-than-expected Q1 adjusted EPS, raised its cash dividend by 50%, and provided an upbeat profit outlook for the year. On the bearish side, PayPal Holdings Inc (PYPL) tumbled more than -11% and was the top percentage loser on the S&P 500 and Nasdaq 100 after the payment tech company delivered soft full-year adjusted EPS guidance.
The Labor Department’s report on Thursday showed claims for state unemployment benefits fell -9K to 218K last week, stronger than expectations of 221K.
Richmond Fed President Thomas Barkin said Thursday that policymakers have time to build confidence before commencing the interest-rate cut process, pointing to robust demand and a tight labor market. “No one wants inflation to reemerge. And given robust demand and a historically strong labor market, we have time to build that confidence before we begin the process of toggling rates down,” Barkin said in prepared remarks at an Economic Club of New York event.
Meanwhile, U.S. rate futures have priced in a 17.5% chance of a 25 basis point rate cut at the conclusion of the Fed’s March meeting and a 59.8% probability of at least a 25 basis point rate cut at May’s policy meeting.
In other news, JPMorgan equity strategists issued a cautionary note, stating that the potential upside for global stock markets is now mostly limited. “We stick to our view that upside from here appears limited and that equities will fall 20-30% from a 2024 peak,” strategists wrote in a note.
On the earnings front, notable companies like PepsiCo (PEP), Newell Brands (NWL), and AMC Networks (AMCX) are slated to release their quarterly results today.
The U.S. economic data slate is empty on Friday. However, market participants will closely monitor annual revisions to the seasonal adjustment factors for U.S. consumer price data following last year’s adjustments that raised doubts about the Federal Reserve’s progress in taming consumer prices.
“There is some talk that CPI revisions could throw cold water on the recent good inflation numbers, but this is a wonky number. We think the next move comes off the CPI number next Tuesday,” said Andrew Brenner at NatAlliance Securities.
In the bond markets, United States 10-year rates are at 4.174%, up +0.05%.
The Euro Stoxx 50 futures are up +0.11% this morning as investors digested another batch of quarterly earnings and economic data while cautiously awaiting annual revisions to the U.S. CPI later in the day. Healthcare stocks outperformed on Friday, driven by a surge of over +8% in Danish medical equipment manufacturer Coloplast A/S (COLOB.C.DX) following its stronger-than-expected Q1 results. The Federal Statistics Office said on Friday that German inflation moderated to 2.9% year-on-year in January, confirming preliminary data and marking the lowest rate since June 2021. In other corporate news, Ubisoft Entertain (UBI.FP) soared over +16% after the video games group posted better-than-expected Q3 net bookings. Also, Saab Ab (SAABB.S.DX) rose about +3% after raising its mid-term sales growth targets. At the same time, L’Oreal (OR.FP) slid more than -6% after the French cosmetics maker missed Q4 sales estimates.
Germany’s CPI and Italy’s Industrial Production data were released today.
The German January CPI has been reported at +0.2% m/m and +2.9% y/y, in line with expectations.
The Italian December Industrial Production came in at +1.1% m/m, stronger than expectations of +0.8% m/m.
Japan’s Nikkei 225 Stock Index (NIK) closed up +0.09%, while Chinese markets were closed for the Lunar New Year holiday.
Japan’s Nikkei 225 Stock Index pared earlier gains to close just above the flatline today. Gains in energy and technology stocks led the overall market higher. Meanwhile, Japanese government bond yields rose on Friday in response to tepid demand observed at a five-year bond auction and the latest remarks from the Bank of Japan. BOJ Governor Kazuo Ueda stated on Friday that the likelihood of easy money conditions persisting for some time remains high, even in the event of discontinuing its negative interest rates policy. In other news, the International Monetary Fund said Friday that the BOJ should contemplate ending its yield curve control and massive asset purchases, followed by a gradual increase in short-term interest rates. In corporate news, SoftBank Group Corp. climbed over +8% after the Japanese technology investment company returned to profit for the first time in five quarters, and also benefited from further gains for Arm Holdings Plc, in which it holds a stake. At the same time, Nissan Motor Co Ltd plunged more than -11% after the automaker missed profit estimates and cut its sales volume forecast for this financial year. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -2.78% to 19.25.
“Investors wanted to sell stocks as the Nikkei reached the 37,000 milestone. The pace of the gains was too fast,” said Shuji Hosoi, senior strategist at Daiwa Securities.
Pre-Market U.S. Stock Movers
Cloudflare Inc (NET) surged about +26% in pre-market trading after the content delivery network and cloud security platform reported upbeat Q4 results and provided solid FY24 guidance.
Expedia Inc (EXPE) tumbled over -13% in pre-market trading as news of the CEO’s departure overshadowed better-than-expected quarterly results.
Pinterest Inc (PINS) plunged more than -11% in pre-market trading after the company reported mixed Q4 results and offered light Q1 revenue guidance.
Affirm Holdings Inc (AFRM) slid over -9% in pre-market trading following the company’s announcement that it anticipates a decline in adjusted operating margin for fiscal Q3 compared to its fiscal Q2 level.
Take-Two Interactive Software Inc (TTWO) fell more than -9% in pre-market trading after posting mixed Q3 results and cutting its full-year bookings outlook.
Lululemon Athletica Inc (LULU) dropped over -1% in pre-market trading after Exane BNP Paribas downgraded the stock to Underperform from Neutral.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Friday - February 9th
PepsiCo (PEP), Enbridge (ENB), Fortis Inc (FTS), Magna Intl (MGA), WP Carey Inc (WPC), Plains All American Pipeline (PAA), Catalent Inc (CTLT), Essent Group Ltd (ESNT), Mr. Cooper (COOP), Newell Brands (NWL), TELUS International (TIXT), Construction Partners (ROAD), Sensient Technologies (SXT), Embecta (EMBC), Proto Labs (PRLB), AMC Networks (AMCX).
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On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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