Stocks Slip Before the Open After Fed-Fueled Rally, U.S. Economic Data and Earnings in Focus

March S&P 500 E-Mini futures (ESH25) are down -0.43%, and March Nasdaq 100 E-Mini futures (NQH25) are down -0.60% this morning, tracking losses in European equities after ECB President Christine Lagarde stated that U.S. tariffs heightened uncertainty over the economic outlook.

Stock futures initially moved higher after the Federal Reserve indicated there remains scope to lower interest rates later this year, as any tariff-driven rise in inflation is expected to be temporary. However, concerns remain that U.S. President Donald Trump will keep raising trade tariffs, which could dampen economic growth and drive inflation.

Investors now await a flurry of U.S. economic data and earnings reports from several high-profile companies.

As widely expected, the Federal Reserve kept interest rates unchanged yesterday. The Federal Open Market Committee voted to maintain the federal funds rate in a range of 4.25%-4.50% for the second consecutive meeting. In a post-meeting statement, officials said that “uncertainty around the economic outlook has increased.” Also, the Fed said that, starting in April, it would further slow the pace at which it is shrinking its balance sheet. In addition, the Fed’s updated Summary of Economic Projections showed that officials anticipate a half percentage point of rate cuts in 2025, implying two quarter-percentage-point reductions, unchanged from their December forecast.

At a press conference, Fed Chair Jerome Powell acknowledged the considerable uncertainty stemming from President Donald Trump’s significant policy changes but reiterated that the central bank is in no rush to adjust interest rates. “Inflation has started to move up,” he said, “we think partly in response to tariffs. And there may be a delay in further progress over the course of this year.” However, the Fed chief noted that his baseline expectation is that any inflation increase driven by tariffs will be “transitory.”

“The Fed indirectly cut rates [yesterday] by taking action to reduce the pace of runoff of its Treasury holdings. This paves the way for the Fed to eliminate runoff by summer, and, with any luck, inflation data will be in place where reducing the Federal Funds rate will be the obvious choice,” said Jamie Cox at Harris Financial Group. 

In yesterday’s trading session, Wall Street’s major indexes ended in the green. Boeing (BA) climbed over +6% and was the top percentage gainer on the S&P 500 and Dow after CFO Brian West stated that the plane maker’s cash burn was slowing and provided a positive outlook on the company’s business. Also, Tesla (TSLA) rose more than +4% after the EV maker received California’s approval to begin carrying passengers in its vehicles. In addition, Signet Jewelers (SIG) soared over +17% after the world’s largest diamond jewelry retailer posted upbeat Q4 results and gave strong Q1 revenue guidance. On the bearish side, Gilead Sciences (GILD) fell more than -2% after the Wall Street Journal reported that the Health and Human Services Department plans to significantly cut the federal government’s funding for domestic HIV prevention.

Meanwhile, U.S. rate futures have priced in an 83.3% probability of no rate change and a 16.7% chance of a 25 basis point rate cut at the next central bank meeting in May.

Today, memory and storage products maker Micron Technology (MU), apparel giant Nike (NKE), and economic bellwether FedEx (FDX), along with other notable companies like Accenture (ACN), Lennar (LEN), and Darden Restaurants (DRI), are slated to release their quarterly results.

On the economic data front, all eyes are on the U.S. Philadelphia Fed Manufacturing Index, which is set to be released in a couple of hours. Economists, on average, forecast that the March Philly Fed manufacturing index will stand at 8.8, compared to last month’s value of 18.1.

Investors will also focus on U.S. Initial Jobless Claims data. Economists expect this figure to be 224K, compared to last week’s number of 220K.

U.S. Existing Home Sales data will be reported today. Economists foresee this figure coming in at 3.95M in February, compared to 4.08M in January. 

U.S. Current Account data will come in today. Economists estimate this figure will stand at -$330.0B in the fourth quarter, compared to -$310.9B in the third quarter.

The Conference Board’s Leading Economic Index for the U.S. will be released today as well. Economists expect the February figure to be -0.2% m/m, compared to the previous number of -0.3% m/m.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.217%, down -0.92%.

The Euro Stoxx 50 Index is down -0.60% this morning, snapping a four-day winning streak as investors digest remarks from European Central Bank President Christine Lagarde on the impact of tariffs and monitor monetary policy decisions from key central banks in the region. Bank and travel & leisure stocks led the declines on Thursday. Data from the Office for National Statistics released on Thursday showed that U.K. wage growth remained at its highest level in nine months and employment increased at the start of 2025, signaling a tight labor market that will likely keep Bank of England policymakers cautious about further easing. Meanwhile, the Swiss National Bank on Thursday cut its key interest rate by a quarter percentage point to 0.25%, while the Riksbank held rates steady at 2.25% for the first time since mid-2024. Investor focus is now on the BOE’s interest rate decision due later in the session, with the central bank widely expected to leave its benchmark rate unchanged at 4.5%. In corporate news, Hapag-Lloyd Ag (HLAG.D.DX) tumbled over -10% after the German shipping giant reported a 19% year-over-year decline in full-year profit and projected lower net income for this year.

ECB President Christine Lagarde said Thursday that an increase in U.S. tariffs on imports from the European Union, if met with retaliation, would dampen economic growth in the Eurozone and drive inflation higher. Lagarde stated that a 25% increase in U.S. tariffs would reduce the Eurozone’s economic growth rate by 0.3% in the first year. If the EU were to retaliate by increasing tariffs on U.S. imports, economic growth would decline by half a percentage point, while the Eurozone’s inflation rate would rise by the same margin.

U.K.’s Average Earnings ex Bonus, U.K.’s Unemployment Rate, and Germany’s PPI data were released today.

U.K. Average Earnings ex Bonus came in at 5.9% in the three months to January, in line with expectations.

U.K. Unemployment Rate was 4.4% in the three months to January, in line with expectations.

The German February PPI arrived at -0.2% m/m and +0.7% y/y, weaker than expectations of +0.2% m/m and +1.0% y/y. 

China’s Shanghai Composite Index (SHCOMP) closed down -0.51%, while Japanese financial markets were closed for a holiday.

China’s Shanghai Composite Index ended lower today, extending losses from the prior session as investors continued to take profits after a recent strong rally and looked for fresh catalysts. Consumer and insurance stocks led the declines on Thursday. Still, HSBC analysts said the rollout of various consumption stimulus policies will improve market expectations and bolster investment sentiment. China kept its benchmark lending rates unchanged for the fifth consecutive month on Thursday, in line with market expectations. The one-year loan prime rate (LPR) remained at 3.1%, and the five-year LPR was steady at 3.6%, the People’s Bank of China said. Wang Qing, chief macro analyst at Golden Credit Rating, stated that the primary reason for unchanged LPRs is the acceleration in consumption and investments. “The impact of the trade war is not yet obvious, and the necessity and urgency of lowering interest rates are not high,” Wang added. Meanwhile, Chinese government bonds climbed for a third straight day after the PBOC boosted short-term funding support, reflecting mounting official concerns over risks from the recent bond sell-off. The country’s central bank has injected a net total of 973.2 billion yuan ($134.6 billion) through short-term policy loans over the past four days. In corporate news, Tencent Holdings slid over -3% in Hong Kong after the internet giant projected a “low teens” increase in capital expenditure for this year, disappointing some investors who anticipated a more aggressive increase. At the same time, Geely Automobile Holdings rose more than +1% in Hong Kong after the carmaker posted better-than-expected annual profit.

Japan’s Nikkei 225 Stock Index was closed today for the Vernal Equinox holiday. The markets will reopen on Friday.

Pre-Market U.S. Stock Movers

Tesla (TSLA) dropped more than -1% in pre-market trading after recalling all Cybertrucks produced and sold in the U.S. during their first 15 months on the market due to an exterior panel that can detach while driving.

Nvidia (NVDA) rose over +1% in pre-market trading after the Financial Times reported that the chipmaker plans to spend hundreds of billions of dollars on U.S.-made chips and other electronics over the next four years.

Five Below (FIVE) surged more than +12% in pre-market trading after the discount retailer posted a narrower-than-expected drop in Q4 comparable sales and issued strong Q1 guidance.

Constellation Brands (STZ) fell over -1% in pre-market trading after Citi downgraded the stock to Neutral from Buy.

Rivian Automotive (RIVN) slid more than -2% in pre-market trading after Piper Sandler downgraded the stock to Neutral from Overweight.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Thursday - March 20th

Accenture (ACN), Micron (MU), Nike (NKE), FedEx (FDX), Lennar (LEN), Darden Restaurants (DRI), FactSet Research (FDS), Jabil Circuit (JBL), Huazhu (HTHT), Energy of Minas Gerais (CIG), Commercial Metals (CMC), Academy Sports (ASO), Kindercare Learning (KLC), Planet Labs PBC (PL), ARS Pharmaceuticals (SPRY), Quantum (QUBT), Yirendai Ltd (YRD), Shoe Carnival (SCVL), Torrid Holdings (CURV), Valneva SE (VALN), Caleres (CAL), Scholastic (SCHL), Autolus Therapeutics (AUTL), Gambling.com Group (GAMB), Ouster (OUST), Runway Growth Finance (RWAY), Monte Rosa Therapeutics (GLUE), Lands’ End (LE), Titan Machinery (TITN), Amprius Tech (AMPX), Baozun Inc (BZUN), KNOT Offshore Partners LP (KNOP), Designer Brands (DBI), MacroGenics Inc (MGNX), Vaxart (VXRT), Adaptimmune Therapeutics (ADAP), Destination XL Group (DXLG), Bragg Gaming (BRAG), So-Young (SY).