Here are five things you must know for Monday, February 7:
1. -- Stock Futures Edge Lower As Risk Appetite Wanes, Rate Bets Accelerate
U.S. equity futures edged lower Monday, while oil prices eased and Treasury bond yields held in check, as investors peeled away from risk markets amid rising geopolitical tensions in Europe and indications of faster rate hikes from the Federal Reserve.
Last week's January employment report, which showed a stunning increase in new job for the first month of the year, as well as upward revision for December and November, cemented the Fed's case for an aggressive stance on inflation, which is running at the hottest pace in more than forty years.
The CME Group's FedWatch tool is pricing in a 100% chance of a March rate hike, with more than a third of those bets suggesting the Fed may increase its benchmark rate by 50 basis points, while the chance of a follow-on move in June is now pegged at around 38.5%.
That rate risk is begin coupled with concern that Russian President Vladmir Putin, who is due to hold talks with France Emmanuel Macron later today, could launch a military incursion into the Ukraine "within days", according to White House Security Advisor Jake Sullivan.
Benchmark 10-year Treasury note yields, which move inversely to prices, are holding at 1.921%, the highest since January of 2020, while oil prices eased from their seven-year peak on Friday to trade at $92.50 per barrel in overnight European dealing.
On Wall Street, futures tied to the Dow Jones Industrial Average are indicating a modest 60 point opening bell decline while those linked to the S&P 500, which is down 5.6% for the year, are priced for a 10 point pullback. Nasdaq Composite futures are indicating a 30 point dip for the tech-focused benchmark .
2. -- Wall Street Week Ahead: Earnings and Inflation In Focus
The Commerce Department's January inflation report will highlight a thin calendar of earnings and economic releases this week, with analysts looking for another forty-year high reading of consumer prices that will likely add more fuel to rate hike bets from the Federal Reserve.
Last week's stronger-than-expected jobs reports showed that annualized wage gains were up 7.7% over the three months ending in January, a move that would demand faster and more aggressive action from the Fed if it were to be sustained over the first half of the year.
In terms of earnings, around 82 S&P 500 companies will report December quarter updates this week, including Pfizer (PFE), Lowe's (LOW), Walt Disney (DIS), CVS Health (CVS) PepsiCo (PEP), Coca Cola (KO) and Twitter (TWTR).
With around just over half of the S&P 500 reporting so far, collective fourth quarter earnings are expected to grow 27.2% from last year to a share-weighted 448.4 billion. That pace will slow markedly over the first three months of the year, however, with forecasts indicated a 7% growth rate and share-weighted earnings of $438.2 billion.
3. -- Peloton Shares Surge Amid Reports of Takeover Interest From Amazon
Peloton (PTON) shares surged higher in pre-market trading following multiple media reports that suggest Amazon (AMZN) is preparing a potential takeover bid for the connected fitness equipment maker.
Amazon is said to be exploring talks with senior Peloton officials, amid separate reports that activist investors at Blackwells Capital LLC called for the firing of CEO John Foley, and the potential sale of the company, following last week's multi-billion sell-off.
Britain's Financial Times also reported potential interest from Nike (NKE), one of the companies pushed by Blackwells Jason Aintabi as a possible suitor.
Peloton shares were marked 22% higher in pre-market trading to indicate an opening bell price of $30.00 each.
4. -- Ford Shares Extend Slump As Factories Go Dark Amid Chip Crunch
Ford (F) shares extended declines in pre-market trading after the carmaker said it will halt production at eight north American factories, including one that produces the F-150 pickup, for at least the next week amid the ongoing shortage in semiconductor supplies.
The moves followed less than a day after the company missed Street forecasts for its fourth quarter earnings while cautioning that supply chain disruptions and surging input costs would linger in the new year.
The news will test investor patience for Ford's plans to deepen its investment in electric vehicle production and double its current output by 2023 as it takes on both market leader Tesla (TSLA) and larger OEM rival General Motors (GM).
Ford shares, which fallen 28.7% since passing the $100 billion market cap threshold on January 14, were marked 1% lower pre-market trading to indicate an opening bell price of $19.95 each.
5. -- Spotify CEO Apologizes For Slurs Used on Joe Rogan Podcast
Spotify (SPOT) shares were on the back foot again Monday after the music sharing platform found itself entangled another controversy involving podcast host Joe Rogan.
Spotify CEO Daniel Elk, who last week had to manage the impact of weaker-than-expected user growth linked in part to the fallout from the popular "Joe Rogan Experience" podcast, apologized to employees over the weekend after a video surface of Rogan using racial slurs on several occasions during his show over a twelve year span.
Rogan, who apologized for spreading vaccine misinformation on his podcast last week, also expressed regret for his use of the N-word, which was uncovered by the singer-songwriter Inida.Arie.
“While I strongly condemn what Joe has said and I agree with his decision to remove past episodes from our platform, I realize some will want more,” Elk said in a letter to employees. "I want to make one point very clear: I do not believe that silencing Joe is the answer. We should have clear lines around content and take action when they are crossed, but canceling voices is a slippery slope.”
Spotify shares were marked 1.45% lower in pre-market trading to indicate an opening bell price of $171.90 each.
