Stocks Slip Before the Open as Key U.S. Inflation Data Looms

March S&P 500 E-Mini futures (ESH24) are down -0.18%, and March Nasdaq 100 E-Mini futures (NQH24) are down -0.15% this morning as investors refrained from making big bets ahead of the release of the Fed’s preferred inflation gauge.

In Wednesday’s trading session, Wall Street’s major averages ended in the red. Viatris Inc (VTRS) plunged over -7% and was the top percentage loser on the S&P 500 after reporting weaker-than-expected Q4 results. Also, UnitedHealth Group Incorporated (UNH) slid nearly -3% and was the top percentage loser on the Dow following a report from the Wall Street Journal that the U.S. Department of Justice launched an antitrust investigation into the company. In addition, Applied Materials Inc (AMAT) fell over -2% after the company disclosed in a filing that it had received multiple subpoenas from U.S. government agencies requesting information about its shipments to certain Chinese customers. On the bullish side, Axon Enterprise Inc (AXON) climbed more than +13% and was the top percentage gainer on the S&P 500 after reporting upbeat Q4 results. Also, eBay Inc (EBAY) gained over +7% after the e-commerce firm posted better-than-expected Q4 results, offered positive Q1 guidance, and authorized an additional $2 billion stock repurchase program.

The U.S. Department of Commerce’s second estimate of Q4 GDP growth was revised downward to +3.2% (q/q annualized) from the first estimate of +3.3% and below the consensus figure of +3.3%. Also, U.S. wholesale inventories fell -0.1% m/m in January, stronger than expectations of +0.1% m/m.

Atlanta Fed President Raphael Bostic said Wednesday that the Federal Reserve has not yet “declared victory” over inflation, stressing that there is “still work to do” to reduce it. Also, Boston Fed President Susan Collins reiterated the likelihood of interest rate cuts starting later this year, emphasizing that policymakers require more evidence indicating the persistence of the disinflationary trend before carefully normalizing policy. “Some of the recent data illustrate the need for greater clarity that inflation is sustainably on a path back to the 2 percent target before adjusting the policy stance,” Collins said. In addition, New York Fed President John Williams stated that the U.S. central bank still has “a ways to go” in its battle over inflation and reiterated the likelihood of interest rate cuts “later this year.”

Meanwhile, U.S. rate futures have priced in a 2.5% chance of a 25 basis point rate cut at the next FOMC meeting in March and an 18.3% probability of a 25 basis point rate cut at May’s policy meeting.

On the earnings front, notable companies like Dell Technologies (DELL), Autodesk (ADSK), Zscaler (ZS), Hewlett Packard (HPE), and Best Buy (BBY) are set to report their quarterly figures today.

Today, all eyes are focused on the U.S. core personal consumption expenditures price index, the Fed’s preferred inflation gauge, in a couple of hours. Economists, on average, forecast that the core PCE price index will come in at +0.4% m/m and +2.8% y/y in January, compared to the previous values of +0.2% m/m and +2.9% y/y.

Also, investors will likely focus on the U.S. Chicago PMI, which stood at 46.0 in January. Economists foresee the February figure to be 48.1.

U.S. Pending Home Sales data will be reported today. Economists foresee this figure to stand at +1.4% m/m in January, compared to the previous number of +8.3% m/m.

U.S. Personal Spending data will also be closely watched today. Economists forecast Personal Spending to be +0.2% m/m in January, compared to the previous figure of +0.7% m/m.

U.S. Initial Jobless Claims data will be reported today as well. Economists estimate this figure to be 209K, compared to last week’s value of 201K.

In addition, market participants will be looking toward a batch of speeches from Fed officials Bostic, Goolsbee, Mester, and Williams.

In the bond markets, United States 10-year rates are at 4.306%, up +0.70%.

The Euro Stoxx 50 futures are up +0.06% this morning as investors digested the latest batch of economic data and braced for key inflation reports from Germany and the United States. Construction stocks gained ground on Thursday, while technology stocks retreated. Data showed on Thursday that German retail sales unexpectedly fell in January compared to the previous month, marking the third consecutive month of decrease. Separately, data revealed that France’s annual inflation rate decreased to 2.9% in February from 3.1% in January, while Spanish inflation fell to a 6-month low of 2.8% year-on-year in February, declining from 3.4% in the previous month. Meanwhile, investors will be focusing on the U.S. Core Personal Consumption Expenditures data for January and the February Consumer Price Index reading from Germany, scheduled for later in the day. In corporate news, Moncler Spa (MONC.M.DX) climbed over +5% after the Italian luxury company posted stronger-than-expected full-year results. At the same time, Air France-KLM (AF.FP) slumped more than -7% after the airline group reported a Q4 loss and warned that some capacity growth may slow this year.

Germany’s Retail Sales, France’s CPI (preliminary), France’s GDP, Spain’s CPI (preliminary), Germany’s Unemployment Rate, and Germany’s Unemployment Change data were released today.

The German January Retail Sales stood at -0.4% m/m and -1.4% y/y, compared to expectations of +0.5% m/m and -1.5% y/y.

The French February CPI came in at +0.8% m/m and +2.9% y/y, stronger than expectations of +0.7% m/m and +2.7% y/y.

The French GDP has been reported at +0.1% q/q and +0.7% y/y in the fourth quarter, compared to expectations of 0.0% q/q and +0.7% y/y.

The Spanish February CPI arrived at +0.3% m/m and +2.8% y/y, in line with expectations.

The German February Unemployment Rate was at 5.9%, weaker than expectations of 5.8%.

The German February Unemployment Change stood at 11K, weaker than expectations of 6K.

Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed up +1.94%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.11%.

China’s Shanghai Composite Index closed higher today after the government committed to protect the stock market, with investors turning their focus to domestic manufacturing PMI data due Friday and the annual plenary sessions of the National People’s Congress next week. Semiconductor, communications equipment, and automobile stocks outperformed on Thursday. Sentiment received a boost following the announcement by the China Securities Regulatory Commission that it would strengthen supervision of derivatives, including so-called DMA-Swap products. Separately, the China Financial Futures Exchange said that it had recently penalized a Shanghai-based hedge fund for surpassing the trading limit on stock index futures. The CSRC said it would work with CFFEX to enhance oversight of high-frequency trading and crack down on misconduct. Meanwhile, investor attention is currently centered on the upcoming release of key Chinese purchasing managers index data for February, scheduled for Friday, which is anticipated to provide further insights into a potential economic recovery in the country. In addition, market participants are eagerly awaiting next week’s meeting of China’s National People’s Congress. In corporate news, ACM Research Shanghai surged over +12% after the wafer cleaning and wet processing equipment maker announced that it would distribute a cash dividend of 6.27 yuan for every 10 shares held by shareholders.

“The momentum may be sustained toward the commencement of the NPC on March 5th, with most focus on ministerial comments on capital market reform and industrial policies,” said Redmond Wong, strategist at Saxo Capital Markets.

Japan’s Nikkei 225 Stock Index closed slightly lower today. Technology and steel stocks led the declines on Thursday, while financial stocks outperformed. Government data released on Thursday revealed that Japan’s factory output experienced its sharpest decline since May 2020 in January compared to the previous month, with automobile production plummeting due to suspensions at Toyota Motor Corp. group companies following safety test scandals. Separately, government data showed that Japanese retail sales grew more than expected in January from a year earlier, extending a streak of growth for the 23rd consecutive month. Meanwhile, the yen advanced the most in more than a week against the dollar following remarks from Bank of Japan Board Member Hajime Takata, suggesting that the central bank should initiate discussions regarding the details of a potential exit from its ultra-easy monetary policy. In other news, according to exchange data, during the holiday-shortened week ending on February 22nd, foreign investors pulled out a net total of 2.83 billion yen (about $19 million) from Japanese stocks, representing their first weekly sale in three weeks. In corporate news, Aozora Bank Ltd. climbed over +9% after a fund associated with activist investor Yoshiko Murakami disclosed a 5.42% stake in the Tokyo-based bank. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +0.05% to 19.23.

The Japanese January Industrial Production arrived at -7.5% m/m, weaker than expectations of -6.7% m/m.

The Japanese January Retail Sales came in at +2.3% y/y, stronger than expectations of +2.0% y/y.

Pre-Market U.S. Stock Movers

Snowflake Inc (SNOW) tumbled over -22% in pre-market trading after the data warehousing company issued weaker-than-expected Q1 and FY25 product revenue guidance. The company also announced that Chief Executive Officer Frank Slootman will be replaced by Sridhar Ramaswamy, effective immediately.

Salesforce Inc (CRM) slid more than -2% in pre-market trading after the cloud software giant provided a below-consensus FY25 sales forecast that outweighed upbeat Q4 results.

HP Inc (HPQ) fell over -3% in pre-market trading after reporting weaker-than-expected Q1 revenue.

Okta Inc (OKTA) surged more than +28% in pre-market trading after the company posted better-than-expected Q4 results and offered strong Q1 guidance. 

C3.ai Inc (AI) climbed over +17% in pre-market trading after the enterprise software company reported upbeat Q3 results and raised its FY24 revenue forecast.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Thursday - February 29th

Toronto Dominion Bank (TD), Dell Tech (DELL), Autodesk (ADSK), Canadian Imperial Bank (CM), Veeva Systems A (VEEV), Zscaler (ZS), Hewlett Packard (HPE), Cooper (COO), NetApp (NTAP), Best Buy (BBY), Hormel Foods (HRL), Celsius (CELH), Elastic (ESTC), Evergy (EVRG), Bath & Body Works (BBWI), CubeSmart (CUBE), Dentsply (XRAY), New Fortress Energy (NFE), MasTec (MTZ), Hilton Grand Vacations (HGV), Frontline (FRO), ExlServices (EXLS), Acushnet Holdings (GOLF), Crescent Point Energy (CPG), Vertex (VERX), Cogent (CCOI), Endava (DAVA), Xenon Pharmaceuticals (XENE), GMS Inc (GMS), Quaker Chemical (KWR), Verra Mobility (VRRM), ACI Worldwide (ACIW), Polestar Automotive Holding A (PSNY), Hayward Holdings (HAYW), Certara (CERT), Tegna (TGNA), Goodrx (GDRX), California Water Service (CWT), Green Brick Partners Inc (GRBK), Utz Brands (UTZ), Pactiv Evergreen (PTVE), International Seaways (INSW), First Advantage (FA), Papa John's (PZZA), Strategic Education (STRA), Vericel Corp Ord (VCEL), Golar (GLNG), Tecnoglass (TGLS), PTC Therapeutics (PTCT), Six Flags (SIX), NCR (VYX), Dyne (DYN), SoundHound AI (SOUN), Fidelis Insurance Holdings (FIHL), Brightspring Health Services (BTSG), Global Industrial Co (GIC), American Woodmark (AMWD), Xometry (XMTR), Avepoint (AVPT), Pacira (PCRX), Uniti Group (UNIT), Sweetgreen (SG), Olaplex Holdings (OLPX), Advantage Solutions (ADV), ANI Pharma (ANIP), P10 Inc (PX), TriMas (TRS), Dole (DOLE), Golden Entertainment (GDEN), Paragon 28 (FNA), Navitas Semiconductor (NVTS), Montrose (MEG), Opera (OPRA), Everi Holdings (EVRI).

More Stock Market News from Barchart

• Stocks Finish Lower Ahead of Thursday’s Core PCE Deflator Report
• Veralto: The Unassuming ESG Powerhouse That Will Likely Double
• Forget Tesla, Buy This EV Stock Instead
• 4 Top Dividend Kings to Earn Passive Income