March S&P 500 E-Mini futures (ESH24) are up +0.27%, and March Nasdaq 100 E-Mini futures (NQH24) are up +0.39% this morning as investors looked ahead to further testimony from Federal Reserve Chair Jerome Powell and a fresh batch of U.S. economic data while also awaiting a policy verdict from the European Central Bank.
In Wednesday’s trading session, Wall Street’s major averages ended higher. DexCom Inc (DXCM) climbed over +9% and was the top percentage gainer on the S&P 500 after the U.S. FDA approved the company’s Stelo Glucose Biosensor System, the first over-the-counter continuous glucose monitor. Also, CrowdStrike Holdings Inc (CRWD) advanced more than +10% and was the top percentage gainer on the Nasdaq 100 after the cybersecurity firm posted upbeat Q4 results and issued strong Q1 and FY25 guidance. In addition, Palantir Technologies Inc (PLTR) gained over +9% after being awarded a $178.4 million contract from the U.S. Army to develop 10 prototypes of TITAN, the next-generation deep-sensing capability platform. On the bearish side, Foot Locker Inc (FL) plummeted more than -29% after the sportswear retailer issued below-consensus FY24 EPS guidance. Also, Tesla (TSLA) fell over -2% after Morgan Stanley cut its price target on the stock to $320 from $345.
The ADP National Employment report on Wednesday showed private payrolls rose by 140K jobs in February, lower than the consensus figure of 149K. Also, the U.S. January JOLTS job openings edged down to 8.863M from 8.889M in December (revised from 9.026M), compared with 8.800M consensus.
In testimony before a House panel Wednesday, Fed Chair Jerome Powell said it will likely be appropriate to begin lowering borrowing costs “at some point this year,” but “the committee does not expect that it will be appropriate to reduce the fed funds target range until it has gained greater confidence that inflation is moving sustainably toward 2%.” “We want to see a little bit more data,” he added during the question-and-answer session. Also, the Fed chief said that he expects “broad and material” changes to a controversial proposal that will require the largest U.S. banks to hold more capital.
Speaking at an event hosted by the Wall Street Journal on Wednesday, Minneapolis Fed President Neel Kashkari stated that he anticipates the Fed to reduce interest rates twice or perhaps just once in 2024 but stressed that he has not yet finalized his forecasts for the Fed’s upcoming meeting. “It’s hard for me to see the data that have come in that are saying more cuts than I said in December. At a base case where I was in December, or potentially one fewer, but I haven’t decided yet,” Kashkari said.
Meanwhile, U.S. rate futures have priced in a 3.0% chance of a 25 basis point rate cut at the Fed’s monetary policy committee meeting later this month and a 16.4% chance of a 25 basis point rate cut at May’s policy meeting.
In other news, the Federal Reserve said Wednesday in its Beige Book survey of regional business contacts that overall U.S. economic activity “increased slightly” in recent weeks. “Economic activity increased slightly, on balance, since early January, with eight districts reporting slight to modest growth in activity, three others reporting no change, and one district noting a slight softening,” according to the Beige Book. Also, employment in the majority of districts continued to increase, albeit at a modest rate. At the same time, consumer spending, particularly on retail goods, edged down in recent weeks, with several reports mentioning “heightened price sensitivity by consumers.”
Today, market participants will closely monitor Federal Reserve Chairman Jerome Powell’s semi-annual monetary policy testimony before the Senate Banking Committee.
Also, investors will be looking toward a speech from Cleveland Fed President Loretta Mester.
On the earnings front, notable companies like Broadcom (AVGO), Costco (COST), Marvell (MRVL), Kroger (KR), MongoDB (MDB), DocuSign (DOCU), and Gap (GPS) are slated to release their quarterly results today.
On the economic data front, investors will likely focus on U.S. Initial Jobless Claims data due later in the day. Economists estimate this figure to come in at 217K, compared to last week’s number of 215K.
U.S. Unit Labor Costs and Nonfarm Productivity data will also be closely watched today. Economists forecast Q4 Unit Labor Costs to be at +0.7% q/q and Q4 Nonfarm Productivity to stand at +3.1% q/q, compared to the third-quarter numbers of -1.2% q/q and +5.2% q/q, respectively.
U.S. Trade Balance data will be reported today. Economists foresee this figure to stand at -$63.40B in January, compared to the previous figure of -$62.20B.
U.S. Consumer Credit data will come in today as well. Economists expect January’s figure to be $10.10B, compared to the previous value of $1.56B.
In the bond markets, United States 10-year rates are at 4.108%, up +0.05%.
The Euro Stoxx 50 futures are up +0.10% this morning as investors exercised caution in anticipation of the European Central Bank’s interest rate decision. Healthcare stocks outperformed on Thursday, while automobile and retail stocks lost ground. The Federal Statistics Office said Thursday that German industrial orders experienced a much steeper decline than anticipated in January due to base effects. Meanwhile, the focus now shifts to the interest rate decision from the ECB, due later in the session. The central bank is poised to maintain borrowing costs steady for a fourth meeting, with the primary attention directed toward the updated economic projections and any signals from President Lagarde regarding the timing of potential rate cuts. In corporate news, Hugo Boss Ag (BOSS.D.DX) tumbled more than -17% after the German fashion retailer provided a weaker-than-expected 2024 operating profit forecast. At the same time, Novo Nordisk A/S (NOVOB.C.DX) climbed more than +5% after presenting data on its weight-loss drug amycretin.
U.K.’s Halifax House Price Index and Germany’s Factory Orders data were released today.
U.K. February Halifax House Price Index has been reported at +0.4% m/m, weaker than expectations of +0.8% m/m.
The German January Factory Orders stood at -11.3% m/m, weaker than expectations of -6.0% m/m.
Asian stock markets today closed in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.41% and Japan’s Nikkei 225 Stock Index (NIK) closed down -1.23%.
China’s Shanghai Composite Index closed lower today as optimism over better-than-expected trade data was largely offset by various geopolitical concerns. Pharmaceutical stocks led the declines on Thursday following the advancement of a bill by a U.S. Senate committee targeting certain Chinese biotechnology providers, with WuXi AppTec Co Ltd tumbling -10%. Also, semiconductor stocks retreated following a report from Bloomberg News indicating that the U.S. government is urging allies to tighten restrictions on China’s access to chip technology. Meanwhile, customs data revealed on Thursday that China’s exports and imports grew much faster than expected in the first two months of 2024. In other news, China’s Foreign Minister Wang Yi criticized the U.S. for imposing a “bewildering” level of trade restrictions on the Asian nation. “If the U.S. is obsessed with suppressing China, it will eventually harm itself,” Wang said. In corporate news, JD.com Inc. surged +6% after the online retailer reported better-than-expected Q4 revenue and initiated a $3 billion stock buyback program.
The Chinese Trade Balance arrived at $125.16B, stronger than expectations of $110.30B.
The Chinese Exports stood at +7.1% y/y, stronger than expectations of +1.9% y/y.
The Chinese Imports came in at +3.5% y/y, stronger than expectations of +1.5% y/y.
Japan’s Nikkei 225 Stock Index closed lower today as the yen rebounded to a 1-month high amid growing expectations that the Bank of Japan will end its negative interest rate as early as this month. Export-heavy automobile stocks underperformed on Thursday after the yen rallied to below 148 per dollar, with Nissan Motor Co Ltd plunging over -4% and Toyota Motor Corp falling more than -2%. Chip stocks also lost ground. Data revealed on Thursday that Japanese workers’ real wages declined in January for the 22nd straight month, albeit at the slowest rate in over a year amid weakening price pressures. Inflation-adjusted real wages decreased by 0.6% in January from a year earlier, following a revised 2.1% decline in December. Meanwhile, Bank of Japan board member Junko Nakagawa stated that the Japanese economy was steadily progressing towards achieving the central bank’s 2% inflation target, backed by robust wage growth. “There is a clear change of stance in companies’ wage-setting,” Nakagawa said. In corporate news, Sosei Group Corp climbed over +4% following the announcement that it would receive a $2.5 million milestone payment after Formosa Laboratories’ subsidiary received approval from the U.S. FDA for a post-eye surgery pain reliever. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +3.74% to 21.65.
“The market finally appears to be waking up to the idea that in two weeks, we may see the end of the Bank of Japan’s Negative Interest Rate Policy,” said Tony Sycamore, strategist at IG Australia.
The Japanese January Average Cash Earnings stood at +2.0% y/y, stronger than expectations of +1.3% y/y.
Pre-Market U.S. Stock Movers
Victoria’s Secret & Co (VSCO) plummeted about -31% in pre-market trading after the lingerie retailer warned of potential losses in Q1 and issued weaker-than-expected FY24 revenue guidance.
OneSpan Inc (OSPN) soared over +32% in pre-market trading after the company reported upbeat Q4 results and offered a solid FY24 outlook.
Yext Inc (YEXT) climbed more than +17% in pre-market trading after the company reported better-than-expected Q4 results and gave an above-consensus FY25 adjusted EPS forecast.
Rivian Automotive Inc (RIVN) gained over +1% in pre-market trading after Jefferies initiated coverage of the stock with a Buy rating and a $16 price target.
Micron Technology Inc (MU) rose more than +3% in pre-market trading after Stifel upgraded the stock to Buy from Hold with a price target of $120.
Edwards Lifesciences Corp (EW) advanced over +1% in pre-market trading after BofA upgraded the stock to Buy from Neutral.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Thursday - March 7th
Broadcom (AVGO), Costco (COST), Marvell (MRVL), Kroger (KR), MongoDB (MDB), Samsara (IOT), Burlington Stores (BURL), DocuSign (DOCU), Toro (TTC), BJs Wholesale Club (BJ), Guidewire (GWRE), Ciena Corp (CIEN), Gap (GPS), American Eagle Outfitters (AEO), Bilibili (BILI), Polestar Automotive Holding A (PSNY), Savers Value Village (SVV), ABM Industries (ABM), John Wiley&Sons (WLY), Ero Copper (ERO), Arhaus (ARHS), Custom Truck One Source (CTOS), Distribution Solutions (DSGR), MacroGenics Inc (MGNX), Eyepoint Pharma (EYPT), Natural Resource LP (NRP), Quanex Building Products (NX), Duckhorn Portfolio (NAPA), Arcturus Therapeutics Holdings Inc (ARCT), HCI Group Inc (HCI), BigBearai Holdings (BBAI), Bitfarms (BITF), Bitfarms (BITF), Vital Farms (VITL), Methode Electronics (MEI), Smith & Wesson (SWBI), Snap One Holdings (SNPO), DXP Enterprises (DXPE).
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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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