Five things you need to know before the market opens on Tuesday March 13:
1. -- Stock Futures Higher With Fed Rate Decision In Focus
U.S. equity futures bumped higher Tuesday, while the dollar retreated against its global peers, as investors looked to consolidate gains ahead of a key inflation reading prior to the opening bell and the start of the Federal Reserve's two-day policy meeting in Washington.
Stocks have enjoyed a solid run of gains since lawmakers agreed to a deal that suspended the U.S. debt ceiling for at least two years earlier this month, with the S&P 500 entering bull market territory late last week and closing last night at the highest levels since April of 2022.
The Nasdaq is also on a roll, having risen more than 4% this month to take its year-to-date gain past 28.6% amid double-digit advances for mega-cap tech stocks and a record 12-day winning streak for EV maker Tesla TSLA.
All those gains could be challenged today, however, with the Commerce Department's May inflation reading and data which will feed into the Fed's Wednesday rate decision.
That said, "if the May inflation figures indeed surprise with lower-than-expected core inflation, then it could fuel the melt-up scenario even more," Saxo Bank strategists wrote in their Tuesday client note.
Markets will also need to continue absorbing billions in new Treasury bond issuance, including and $18 billion auction of new 30-year paper later today, as the Treasury refills it depleted account, run down during the debt ceiling crisis, with the Federal Reserve.
A $32 billion auction of 10-year notes yesterday, in fact, drew notably weaker demand and a higher selling yield, suggesting investors are struggling to take down the estimated $296 billion in new paper up for sale this week.
Benchmark 10-year notes were marked at 3.722% in overnight trading, down around 7 basis points from yesterday's auction levels, while 2-year notes slipped to 4.561%.
The U.S. dollar index, which tracks the greenback against a basket of its global peers, was marked 0.33% lower at 103.304 amid softening bets on a Fed rate hike tomorrow in Washington.
Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500, which is up just over 13% for the year, were priced of a 10 point opening bell gain while those linked to the Dow Jones Industrial Average was looking at a 15 point bump. The tech-focused Nasdaq is looking at a firmer 72 point gain decline thanks in party to the pullback in Treasury yields.
In overseas markets, Europe's Stoxx 600 edged 0.2% higher in early Frankfurt trading, helped by firmer tech stocks and a stronger-than-expected reading of business sentiment in Germany. Britain's FTSE 100 was marked 0.24% higher despite wage data suggesting the Bank of England will need to continue raising its benchmark lending rate when it meets next week in London.
Overnight in Asia, the region-wide MSCI ex-Japan index rose 1.8% in a follow-on rally to last night's close on Wall Street, with stocks in China getting a boost from a move by the PBOC to lower a short-term lending rate for the first time in ten months.
In Japan, the Nikkei 225 closed 1.8% higher at a fresh 33-year high of 33,018.65 points thanks in part to a 5% surge for Toyota, which unveiled major changes to its EV battery strategy as it seeks to take market share from Tesla.
2. -- Inflation Data On Deck As Markets Bet on June Rate 'Skip'
The Commerce Department will publish its May inflation estimate prior to the start of trading Tuesday as the Federal Reserve kicks off its two-day policy meeting amid speculation the central bank will pause its recent rate hike cycle as it assess incoming economic data.
Headline inflation, which dipped under 5% for the first time in more than two years in April, is expected to slow further, to 4.1% over the month of May. So-called core inflation, which strips out food and energy prices, is expected to fall to an annual rate of 5.2% from 5.5% with a rise of 0.4% when compared to the April reading.
A faster reading, however, could alter forecasts for the Fed's Wednesday rate decision, as investors are currently pricing in a 79.2% chance that Chairman Jerome Powell and his colleagues will "skip" a June increase but resume their hiking cycle in July, when traders expect either a 25 basis point (58.5%) or a 50 basis point (13.4%) ,move to the upside.
"The Fed remains data dependent, as does the market, but the most important gauge will come from inflation-related data," said Quincy Krosby. chief global strategist at LPL Financial. "Powell is determined to reduce inflation to acceptable levels so the Fed’s credibility remains intact."
3. -- Oracle Shares At Fresh Record High After Q4 Earnings Beat
Oracle Corp (ORCL) are slated to open at a fresh all-time high Tuesday after the group posted stronger-than-expected fourth quarter earnings powered by double-digit growth in its cloud services division.
Oracle said adjusted earnings rose 8.4% from last year to $1.67 per share, topping Street forecasts by 9 cents, with revenues up 16.6% at $13.8 billion, thanks in part to 54% surge in overall cloud revenues to $4.4 billion.
Looking into the current quarter, Oracle said it sees revenue growth in the region of 8% to 10%, with more double-digit gains for cloud on the bank of AI demand.
"We are seeing unprecedented demand for our cloud services and especially our AI services," CEO Safra Catz told investors on a conference call late Monday. "As a result, I expect cloud revenue, excluding Cerner, will continue growing at least similar rates to what we experienced in fiscal 2023, even though our base is much bigger and may be higher."
Oracle shares were marked 4.23% higher in pre-market trading to indicate an opening bell price of $121.35 each..
4. -- Apple Shares Slip As UBS Lowers Rating On Softening iPhone Demand
Apple (AAPL) moved lower in pre-market trading after analysts at UBS lowered their rating on the tech giant while citing softness in iPhone demand.
UBS analyst David Vogt lowered his rating on Apple to 'neutral' from 'buy", and added $10 to his price target to $190 per share, noting "persistent softness in developed markets and data that indicates growth is likely to remain under pressure".
Vogt said Apple stock, which closed at an all-time high last night and trade at around 29x earnings, remain expensive compared to the broader market, and more so when iPhone unit growth is likely to slow between 1% and 2% over the back half of the year.
Apple shares were marked 0.84% lower in pre-market trading to indicate an opening bell price of $182.25 each.
5. -- Intel Shares Gain On Reports of Anchor Interest in Arm IPO
Intel (INTC) shares bumped higher in pre-market trading following reports that Japan's SoftBank is lobbying the chipmaker to be an anchor investor in the IPO of British-based designer Arm Holdings.
Arm, which is being spun-off by SoftBank as the tech investment fund seeks to raise cash after absorbing billions in losses, snubbed the London Stock Exchange in favor of a listing on the Nasdaq later this year.
Multiple media reports suggest Intel is in talks with Arm to be one of the lead investors in the $10 billion IPO, as it would give CEO Pat Gelsinger an inside track on the Arm-designed chips Intel will need to compete with rivals such as Taiwan Semiconductor and Samsung.
Intel shares were marked 1.4% higher in pre-market trading to indicate an opening bell price of $33.54 each.
