Five things you need to know before the market opens on Thursday February 23:
1. -- Stock Futures Higher On Fed Minutes Relief, Tech Boost
U.S. equity futures edged higher Thursday, while the dollar extended gains against its global peers, as investors assessed the tone of Federal Reserve minutes suggesting further rate cuts while riding optimism in the tech space following an upbeat sector outlook from chipmaker Nvidia.
Minutes from the Fed's February meeting suggest that while 'a few' policymakers made the case for a 50 basis point rate hike, the bulk of opinion suggested smaller movers, spread over a longer period of time, would best tame domestic inflation and protect the resilient labor market.
Traders are still betting that faster readings could trigger an outsized hike in March, with the CME Group's FedWatch indicating a 27% chance of a 50 basis point increase,, but most see the Fed Funds rate rising in 25 basis point increments to between 5.25% and 5.5% by mid-June.
"The Fed has the luxury of a strong labor market, and overall resilient economic landscape, to keep raising rates until the Federal Open Market Committee feels comfortable that inflationary pressures are closer to its price stability mandate," said Quincy Krosby chief global strategist for LPL Financial in Charlottesville, Virginia.
"Should inflation continue to climb, based on the minutes, there could be enough voting members to push for a 50 basis point move," she added. "Overall, the minutes suggest a "wait and see approach" as they remain data dependent."
The release of the Fed minutes took some air out of the CBOE Group's key VIX volatility gauge, which fell 3.8% in the overnight session to 22 points, and could add further support to rate-sensitive tech stocks in the Thursday session.
Benchmark 10-year notes were marked at around 3.943% in overnight trading, the highest since early November, while 2-year notes held at 4.706%. The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.16% higher at 104.602.
Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500 were indicating an 18 point opening bell gain ahead of a final reading for fourth quarter GDP, quarterly PCE inflation data and weekly jobless claims figures at 8:30 am Eastern time.
Futures linked to the Dow Jones Industrial Average, which remains in negative territory for the year, were indicating a 90 point gain. The tech-heavy Nasdaq is indicating a 98 point advance, powered by better-than-expected fourth quarter earnings and a solid near-term outlook from AI chipmaker Nvidia.
In overseas markets, Europe's Stoxx 600 was marked 0.29% higher in early Frankfurt trading despite a faster-than-expected reading for January inflation that has revived bets on bigger ECB rate hikes, while Britain's FTSE 100 fell 0.05% in London.
Overnight in Asia, the region-wide MSCI ex-Japan index rose 0.27% into the close of trading while the Nikkei 225 ended 1.34% higher in Tokyo.
2. -- Nvidia Shares Surge As AI Chip Demand Powers Solid Sales Outlook
Nvidia (NVDA) shares powered higher in pre-market trading after it topped fourth quarter earnings forecasts and predicted better-than-expected near-term revenues thanks in part to a surge in demand for its AI chips.
Nvidia said earnings for the three months ending in January fell 33% from the same period last year to 88 cents per share, but that tally topped Street forecasts by around 7 cents. Revenues, the chipmaker said, came in at $6.05 billion, again besting analysts' estimates.
Looking into the current quarter, Nvidia said revenues would likely rise 7.4% on a sequential basis to $6.5 billion, with gross margins expanding 80 basis points to around 64.1%.
"AI is at an inflection point, setting up for broad adoption reaching into every industry," said CEO Jensen Huang. “We are set to help customers take advantage of breakthroughs in generative AI and large language models."
"Gaming is recovering from the post-pandemic downturn, with gamers enthusiastically embracing the new Ada architecture GPUs with AI neural rendering,” he added.
Nvidia shares were marked 8.1% higher in pre-market trading to indicate an opening bell price of $224.35 each.
3. -- Moderna Earnings On Deck As Drugmaker Looks Past Vaccine Growth
Moderna (MRNA) shares moved higher in pre-market trading ahead of the drugmaker's fourth quarter earnings prior to the opening bell.
Slower Covid vaccine sales are expected to notably trim the group's bottom line, which is forecast to fall nearly 60% from last year to $4.68 per share on revenues of around $5.02 billion.
Moderna has, however, been working to extend its messenger RNA technology into to other drugs and treatments, including the winning of a Breakthrough Therapy Designation late Wednesday from the U.S. Food & Drug Administration for a developing mRNA-structed cancer vaccine made in partnership with Merck (MRK).
The companies have said the personalized are designed to prime the immune system so that a patient can generate a tailored antitumor response to their tumor mutation signature to treat their cancer.
An earlier effort to use the technology to develop a flu vaccine, however, ended with disappointing results from a late-stage trial earlier this month, with the drug proving superior to the unnamed vaccine it was tested against when used to treat a so-called A-strains of the flu, but falling short of its 'non-inferiority' goal when compared to treating B-strains.
Moderna shares were marked 2% higher in pre-market trading to indicate an opening bell price of $161.31 each.
4. -- eBay Shares Slump As Muted Outlook Offsets Q4 Earnings Beat
eBay Inc. (EBAY) shares slumped lower in pre-market trading after the online marketplace cautioned that muted consumer spending would hit both sales volumes and profit levels over the first half of the year.
eBay said gross merchandise value (GMV), a closely-tracked metric of platform activity, fell 12% over the three months ending in December to around $18 billion, although a focus on higher-priced goods meant revenues were only down 4% to $2.51 billion, allowing adjusted earnings to rise 2% and come in just ahead of Street forecasts at $1.07 per share.
eBay declined to provide detailed sales and profit guidance for the coming year, but said March quarter revenues would likely fall between $2.46 billion and $2.5 billion, with GMV down around 5% from the previous year.
"Our baseline expectation is that the external demand environment does not materially improve during the first half of the year, as a result of continued macro uncertainty across our largest markets," said CFO Steve Priest.
eBay shares were marked 5.1% lower in pre-market trading to indicate an opening bell price of $45.42 each.
5. -- Wells Fargo Cutting More Mortgage Jobs As Market Extends Slump
Wells Fargo (WFC) shares edged higher in pre-market trading following multiple reports that the lender has extended job cuts in its mortgage division amid the ongoing slump in the U.S. housing market.
Bloomberg reported the layoffs could affect around 500 jobs, following on from cuts in the division last year, as the bank moves to "create a more focused home lending business ... in response to significant decreases in mortgage volume in the broader market environment.”
A surge in U.S. mortgage rates, which have tracked the Federal Reserve's effort to tame domestic inflation, has hammered the housing market, with median home prices down around 11.6% from their May 2022 peak. The Mortgage Bankers Association's closely-tracked Purchase Index was down 41% from year ago levels this week, according to data published Wednesday, with refinancing activity "more than 70% behind last year’s pace."
Wells Fargo shares were marked 0.13% higher in pre-market trading to indicate an opening bell price of $46.07 each.
