What you need to know…
The S&P 500 Index ($SPX) (SPY) this morning is down -0.81%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.47%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -1.57%.
U.S. stock indexes this morning are moderately lower and are weighed down by losses in technology stocks. Also, a -2% plunge in the Euro Stoxx 50 is weighing on the overall market as European stocks are falling on signs the Russian attack on Ukraine will continue after talks between the countries failed to make progress in halting the war. In addition, stocks are also under pressure today after the ECB announced a faster winding down of its asset-purchase program. U.S. stock indexes maintained moderate losses after this morning’s U.S. economic data showed weekly jobless claims rose more than expected, and consumer prices accelerated for a sixth month at the fastest pace in 40 years.
U.S. weekly initial unemployment claims rose +11,000 to 227,000, showing a weaker labor market than expectations of 217,000.
U.S. Feb CPI rose +7.9% y/y, right on expectations and the largest increase in 40 years.
The 7-day average of new U.S. Covid infections fell to a 7-1/2 month low Wednesday of 37,555.
Today’s stock movers…
Technology stocks are weaker today and are pressuring the overall market as the 10-year T-note yield climbed to a 1-1/2 week high of 2.009%. Advanced Micro Devices is down more than -4%. Nvidia (NVDA), Qualcomm (QCOM), Micron Technology (MU), Align Technology (ALGN), Applied Materials (AMAT), and Lam Research (LRCX) are down more than -3%, and Apple (AAPL) is down more than -2% today to lead losers in the Dow Jones Industrials.
U.S.-listed Chinese stocks are under pressure today. JD.com (JD) is down more than -18% today to lead losers in the Nasdaq 100 after it reported 569.7 million active customer accounts in Q4, well below the consensus of 577 million. In addition, Pinduoduo (PDD) is down more than -15%, NetEase (NTES) is down more than -11%, Alibaba Group Holdings (BABA) is down more than -8%, and Baidu (BIDU) is down more than -7%.
Amazon.com (AMZN) is up more than +5% today to lead gainers in the S&P 500 after the company announced a 20-for-1 stock split and a $10 billion stock buyback.
Crowdstrike Holdings (CRWD) is up more than +12% today to lead gainers in the Nasdaq 100 after it reported Q4 revenue of $431.0 million, better than the consensus of $410.5 million, and forecast 2023 revenue of $2.13 billion to $2.16 billion, stronger than the consensus of $2.01 billion.
Energy stocks are climbing today as the price of WTI crude is up more than +2%. Chevron (CVX) is up more than +4% to lead gainers in the Dow Jones Industrials. Haliburton (HAL), Occidental Petroleum (OXY), and Baker Hughes are up more than +2%.
Across the markets…
June 10-year T-notes (ZNM22) this morning are down -8 ticks, and the 10-year T-note yield is up +2.3 bp at 1.976%. June T-notes dropped to a 1-1/2 week low this morning, and the 10-year T-note yield rose to a 1-1/2 week high of 2.009%. A jump in the 10-year German bund yield to a 3-week high of 0.306% today undercut T-note prices after the ECB unexpectedly announced that it would speed up the tapering of its asset purchases. T-notes maintained moderate losses after today’s data showed U.S. Feb CPI rose at the fastest pace in 40 years. Supply pressures also weigh on T-notes as the Treasury later today will auction $20 billion of reopened 30-year T-bonds. Losses in T-notes are limited as a decline in stocks has boosted some safe-haven demand for government debt.
The dollar index (DXY00) this morning is up +0.29%. The dollar index is moderately higher today as a decline in stocks has boosted the liquidity demand for the dollar. Gains in the dollar were limited after weekly U.S. jobless claims rose more than expected and after U.S. Feb CPI rose at the fastest pace in 40 years, curbing the dollar’s purchasing power.
EUR/USD (^EURUSD) this morning is down -0.64%. EUR/USD today erased an early rally and moved moderately lower. EUR/USD initially rallied today after the ECB announced it would speed up the tapering of its asset purchases. However, the euro gave up its gains and turned lower after the ECB cut its Eurozone 2002 GDP forecast and raised its 2022 inflation forecast. Also, EUR/USD fell back after talks between Ukraine and Russia failed to make progress in ending the war.
ECB President Lagarde said, "the war in Ukraine is a substantial upside risk to inflation, especially in energy prices."
The ECB today said it would end its Pandemic Purchase Program (PEPP) in March and unexpectedly said it will slow its asset purchase program (APP) to 30 billion euros a month in May and then to 20 billion euros in June and may end the APP program in Q3. The ECB also said that any changes in borrowing costs will take place “some time after” the end of net bond purchases and will be “gradual.”
The ECB cut its Eurozone 2022 GDP estimate to 3.7% from 4.2% and raised its Eurozone 2022 inflation forecast to 5.1% from 3.2%.
Goldman Sachs predicts Eurozone Q2 GDP will contract due to the war in Ukraine, and it cut its Eurozone 2022 GDP estimate to 2.5% from a previous estimate of 3.9%.
USD/JPY (^USDJPY) this morning is up +0.27%. USD/JPY today rallied to a 1-month high and is moderately higher. The yen is under pressure today on divergent central bank policies. The Fed is expected to hike interest rates next week, and the ECB today announced a faster pace of QE tapering. Meanwhile, the BOJ is expected to maintain its QE program and keep interest rates at record lows. A surge in Japanese producer price pressures is also negative for the yen after Japan Feb PPI rose +9.3% y/y, stronger than expectations of +8.6% y/y and the fastest pace of increase in 41 years.
April gold (GCJ22) this morning is up +18.3 (+0.92%), and May silver (SIK22) is up +0.464 (+1.80%). Precious metals prices this morning are moderately higher. A slump in stocks today is boosting safe-haven demand for precious metals. Rising global price pressure also boosts demand for gold as an inflation hedge after U.S. Feb CPI rose at the fastest pace in 40 years, and Japan Feb PPI rose at the fastest pace in 41 years. Rising global bond yields today and a stronger dollar are limiting the upside in gold prices.
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