Stock Index Futures Climb After U.S. Inflation Jolt

March S&P 500 E-Mini futures (ESH24) are up +0.51%, and March Nasdaq 100 E-Mini futures (NQH24) are up +0.60% this morning, rebounding from yesterday’s slump prompted by hotter-than-anticipated U.S. inflation data, which heightened speculation that the Federal Reserve might delay interest rate cuts.

In Tuesday’s trading session, Wall Street’s major indices closed in the red, with the blue-chip Dow posting its biggest one-day percentage drop in nearly 11 months. Marriott International Inc (MAR) plunged over -5% after the world’s largest hotel operator reported mixed Q4 results and issued below-consensus FY24 adjusted EPS guidance. Also, Arista Networks (ANET) slid more than -5% after providing a weaker-than-expected Q1 adjusted operating margin forecast. In addition, Children’s Place Inc (PLCE) plummeted about -31% after B. Riley Securities downgraded the stock to Sell from Neutral with a price target of $4. On the bullish side, Ecolab Inc (ECL) climbed more than +8% and was the top percentage gainer on the S&P 500 after the company offered an upbeat Q1 adjusted EPS outlook. Also, JetBlue Airways Corp (JBLU) surged over +21% following activist investor Carl Icahn’s disclosure of a 9.91% stake in the U.S. low-cost airline.

The Labor Department’s report on Tuesday showed consumer prices rose +0.3% m/m in January, exceeding the +0.2% m/m consensus and exhibiting a faster pace than December’s +0.2% m/m (revised from +0.3% m/m). On an annual basis, headline inflation eased to +3.1% in January from +3.4% in December, stronger than expectations of +2.9%. At the same time, the core CPI, which excludes volatile food and fuel prices, came in at +3.9% y/y in January, unchanged from December and stronger than expectations of +3.7% y/y.

“While the door for a March cut had already been effectively shut given the recent Fed commentary and the jobs reports, the Fed has now locked the door and lost the key,” said Greg Wilensky at Janus Henderson Investors.

Meanwhile, U.S. rate futures have priced in an 8.5% chance of a 25 basis point rate cut at the March FOMC meeting and a 38.7% probability of a 25 basis point rate cut at the May FOMC meeting.

On the earnings front, notable companies like Cisco (CSCO), Kraft Heinz (KHC), Occidental (OXY), Energy Transfer (ET), Global Payments (GPN), Twilio (TWLO) and QuantumScape (QS) are set to report their quarterly figures today.

On the economic data front, investors will likely focus on U.S. Crude Oil Inventories data due later in the day. Economists estimate this figure to be 3.300M, compared to last week’s value of 5.521M.

In addition, market participants will be looking toward a speech from Chicago Fed President Austan Goolsbee.

In the bond markets, United States 10-year rates are at 4.295%, down -0.53%.

The Euro Stoxx 50 futures are up +0.21% this morning as investors digested the latest slew of corporate earnings and economic data. Media stocks outperformed on Wednesday, while mining stocks lost ground. The Office for National Statistics reported on Wednesday that the annual inflation rate in the U.K. held steady in January, defying expectations of an increase. Separately, Eurostat said on Wednesday that Eurozone economic growth was flat in the last three months of 2023 compared to the previous quarter and increased by 0.1% compared to the same period in 2022, confirming its earlier preliminary estimate. In corporate news, ABN Amro Bank N.V. (ABN.NA) climbed over +4% after the Dutch bank topped Q4 profit expectations and launched a 500 million euro ($535.4 million) share buyback. At the same time, Thyssenkrupp Ag (TKA.D.DX) slumped more than -8% after the German engineering and steel conglomerate lowered its full-year sales and net profit guidance. Also, Heineken (HEIA.NA) slid over -5% following the Dutch brewer’s projection of low- to high-single-digit operating profit growth for 2024, citing volatility in geopolitics and economic conditions.

European Central Bank Vice-President Luis de Guindos stated on Wednesday that Eurozone inflation seems to be on track to reach 2%, but more data is required before the ECB can confidently conclude that record-high interest rates have done their job. “While we are heading in the right direction, we must not get ahead of ourselves. It will take some more time before we have the necessary information to confirm that inflation is sustainably returning to our 2% target,” de Guindos said.

U.K.’s CPI, U.K.’s Core CPI, Eurozone’s Employment Change (preliminary), Eurozone’s Industrial Production, and Eurozone’s GDP (preliminary) data were released today.

U.K. January CPI has been reported at -0.6% m/m and +4.0% y/y, weaker than expectations of -0.3% m/m and +4.1% y/y.

U.K. January Core CPI stood at -0.9% m/m and +5.1% y/y, weaker than expectations of -0.8% m/m and +5.2% y/y.

Eurozone Employment Change came in at +0.3% q/q and +1.3% y/y in the fourth quarter, compared to expectations of +0.3% q/q and +1.1% y/y.

Eurozone December Industrial Production arrived at +2.6% m/m and +1.2% y/y, stronger than expectations of -0.2% m/m and -4.1% y/y.

Eurozone GDP stood at 0.0% q/q and +0.1% y/y in the fourth quarter, in line with expectations.

Japan’s Nikkei 225 Stock Index (NIK) closed down -0.69%, while Chinese markets were closed for the week-long Lunar New Year holiday.

Chinese markets will reopen on Monday, February 19th. 

Japan’s Nikkei 225 Stock Index closed lower today, tracking an overnight decline on Wall Street after hotter-than-estimated U.S. inflation data reignited concerns over higher for longer interest rates. All sectors of the Nikkei 225 ended in the red, with real estate and non-cyclical consumer stocks experiencing the largest declines. Meanwhile, the yen saw a slight rebound from its Tuesday slump after Masato Kanda, Japan’s top currency official, warned that recent movements have been rapid, and authorities are prepared to take steps if necessary. In other news, Japan conducted the world’s first sovereign climate transition bond auction on Wednesday, introducing a financing tool aimed at helping the nation’s industry decarbonize and grow at the same time. In corporate news, NHK Spring Co. Ltd. surged over +15% after boosting its attributable profit guidance for the fiscal year ending March 31st. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed flat at 19.48.

Pre-Market U.S. Stock Movers

Upstart Holdings Inc (UPST) tumbled over -19% in pre-market trading after the company issued weaker-than-expected Q1 revenue guidance.

Robinhood Markets Inc (HOOD) climbed more than +13% in pre-market trading after the company posted upbeat Q4 results.

LYFT Inc (LYFT) soared over +17% in pre-market trading after the ride-hailing firm topped quarterly profit estimates and said it would generate positive free cash flow for the first time in 2024.

Airbnb Inc (ABNB) slumped more than -5% in pre-market trading despite reporting Q4 revenue that surpassed expectations and issuing strong Q1 revenue guidance.

HP Inc (HPQ) rose about +1% in pre-market trading after HSBC upgraded the stock to Buy from Hold with a price target of $33.

Citigroup Inc (C) gained over +1% in pre-market trading after Piper Sandler upgraded the stock to Overweight from Neutral with a price target of $63.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Wednesday - February 14th

Cisco (CSCO), Equinix (EQIX), CME Group (CME), Occidental (OXY), Kraft Heinz (KHC), Energy Transfer (ET), Williams (WMB), Manulife Financial (MFC), IQVIA Holdings (IQV), Global Payments (GPN), Martin Marietta Materials (MLM), Arch Capital (ACGL), HubSpot Inc (HUBS), Barrick Gold (GOLD), Westinghouse Air Brake (WAB), American Water Works (AWK), Rollins (ROL), Tyler Technologies (TYL), Ventas (VTR), Applovin (APP), CNH Industrial NV (CNHI), Avantor (AVTR), CF Industries (CF), Albemarle (ALB), Owens Corning (OC), Twilio (TWLO), Charles River Laboratories (CRL), Informatica (INFA), Curtiss-Wright (CW), Lithia Motors (LAD), Generac (GNRC), Parsons (PSN), Siteone Landscape Supply (SITE), Royal Gold (RGLD), MSA Safety (MSA), CAE Inc. (CAE), Summit Materials Inc (SUM), West Fraser Timber (WFG), Wyndham Hotels (WH), Antero Resources Corp (AR), Kinross Gold (KGC), Taylor Morrison Home (TMHC), Antero Midstream (AM), Sonoco Products (SON), Ryder System (R), Sunoco LP (SUN), Aurora Innovation (AUR), Louisiana-Pacific (LPX), Chemours Co (CC), Magnolia Oil (MGY), Pegasystems (PEGA), Jfrog (FROG), Essential Properties (EPRT), Quantumscape (QS), Kadant (KAI), Tripadvisor (TRIP), Crane NXT (CXT), Avient Corp (AVNT), Independence Realty Trust Inc (IRT), Scorpio Tankers (STNG), Blackstone Mortgage (BXMT), Tower (TSEM), Warrior Met Coal (HCC), Fastly (FSLY), NorthWestern (NWE), NMI Holdings (NMIH), Udemy (UDMY), Urban Edge Properties (UE), Four Corners Property Trust Inc (FCPT), Hecla Mining (HL), Sonic Automotive (SAH), Veeco (VECO), Upwork (UPWK), Atmus Filtration Tech (ATMU), Retail Opportunity (ROIC), PC Connection (CNXN), NCR Atleos (NATL), SFLoration Ltd (SFL), Palomar (PLMR), Getty (GTY), SAGE Therapeutics (SAGE), The Chefs Warehouse (CHEF), Orion Engineered Carbons (OEC), Monarch (MCRI), Netstreit (NTST), Diebold Nixdorf (DBD), Nerdwallet (NRDS), Herbalife (HLF), Paramount Group Inc (PGRE), Chimera Investment (CIM), Altice USA (ATUS), Nu Skin (NUS), Kornit Digital Ltd (KRNT), Conduent (CNDT), Healthcare Services (HCSG).

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