Five things you need to know before the market opens on Tuesday February 28:
1. -- Stocks Edge Higher With Bonds, Inflation In Focus
U.S. equity futures edged higher Tuesday, while the dollar added to gains against its global peers and Treasury yields nudged higher, as faster-than-expected inflation readings in Europe added to concerns the the Fed will need to go further in it effort to tame price pressures in the world's biggest economy.
Regional inflation readings in Europe showed inflation in France speeding to a record high of 7.2% in February, with a faster-than-expected reading in Spain as well, sending short-term government bond yields sharply higher and pulling the region-wide Stoxx 600 lower in the opening hours of trading.
The figures followed further indications of economic strength in the U.S. on Monday, where pending home sales showed a surprise spike in January and adjusted durable goods orders topped Street forecasts as figures from the Atlanta Fed's GDPNow forecasting too suggest a 2.7% growth rate for the current quarter.
That's lifted the odds of a 50 basis point rate hike from the Fed next month in Washington to around 25%, according to the CME Group's FedWatch tool, as futures traders are now pricing in a peak Fed Funds rate of around 5.42%, implying at least three more 25 basis point rate hikes from current levels
Benchmark 10-year notes were marked at around 3.943% in overnight trading while 2-year notes held at 4.812% and within touching distance of the highest levels since 2007. The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.03% higher at 104.703.
Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500 were indicating a 5.5 point opening bell gain ahead of January trade figures at 8:30 am Eastern time and house price index data at 9:00 am.
Futures linked to the Dow Jones Industrial Average were indicating a 50 point advance while the tech-heavy Nasdaq is looking at a more modest 13 point bump.
"Equities have moved into a short-term hibernation until the market gets more clearer evidence of where the bond market wants to go and whether growth is picking up in China following the reopening of the economy post its zero-Covid policy," Saxo Bank strategists wrote in their daily market update.
In overseas markets, Europe's Stoxx 600 was marked 0.12% lower in early Frankfurt trading while Britain's FTSE 100 slipped 0.37% in London.
Overnight in Asia, the region-wide MSCI ex-Japan index fell 0.41% into the close of trading, following-on from Friday's selloff on Wall Street, while the Nikkei 225 ended 0.08% higher in Tokyo.
2. -- Target Earnings Up Next As Rivals Caution on Consumer Spending Power
Target (TGT) shares edged lower in pre-market trading ahead of the retail giant's fourth quarter earnings prior to the opening bell.
Analysts are looking for Target to post adjusted earnings of $1.40 per share three months ending in December, with revenues nudging 0.9% lower from last year to $30.72 billion.
Beyond the headline figures, however, investors are likely to focus on both the retailer's near-term outlook for consumer spending, following muted updates from its larger rival Walmart (WMT) last week, and whether its recent moves to reduce bloated inventory levels added further pressures to gross margins, which narrowed by 330 basis points last quarter to 24.7%.
The retailer will also likely highlight plans to ramp-up its delivery service following the announcement of a $100 million investment earlier this month.
Target shares were marked 0.07% lower in pre-market trading to indicate an opening bell price of $166.69 each.
3. -- Occidental Slips Lower As Dividend, Buybacks Support Earnings Miss
Occidental Petroleum (OXY) shares slipped lower in pre-market trading after the oil group, and recent favorite of billionaire investor Warren Buffett, posted weaker-than-expected fourth quarter earnings while unveiling a dividend increase alongside a $3 billion buyback.
Occidental's adjusted bottom line for the three months ending in December was pegged at $1.61 per share, up 8.8% from the same period last year but firmly shy of the Street consensus forecast of $1.80.
The Permian-focused driller said capital spending would rise to around $6.2 billion, a 37.8% increase from last year, with low-carbon project spending possibly rising to as high as $600 million.
Occidental Petroleum shares were marked 0.8% in pre-market trading to indicate an opening bell price of $58.49 each.
4. -- Zoom Surges On Q4 Earnings Beat, Solid Near-Term Outlook
Zoom Video Communications (ZM) shares jumped higher in pre-market trading after the video conferencing specialists topped Street forecasts with its fourth quarter earnings and near-term profit outlook.
Zoom said adjusted profits for the three months ending in December were pegged at $1.22 per share, firmly ahead of Street forecasts of around 84 cents per share, as revenues rose 4% to $1.12 billion, edging past analysts' estimates.
Looking into the current quarter, Zoom said it sees revenues between $1.08 and $1.085 billion, with an estimate of between $4.435 billion and $4.455 billion for the year, and forecast earnings in the region of $4.11 to $4.18 per share.
"The age of AI and large language models has arrived, and we want to empower smarter experiences and workflows that enable our customers to benefit from these transformational tools," said CEO Eric Yuan.
Zoom shares were marked 6.8% higher in pre-market trading to indicate an opening bell price of $78.74 each.
5. -- Goldman Sachs Investor Day On Deck As CEO Solomon Seeks Support
Goldman Sachs (GS) shares edged higher in pre-market trading ahead of the investment bank's closely-watched investor day presentation later today in New York.
Goldman, which posted a big fourth quarter earnings miss last month as deal fees crumbled amid a slump in global merger activity, is likely to focus on plans to either completely dismantle, or severely reduce, its loss-making commercial banking division while highlighting the strength of its asset and wealth management units.
The group may also update its near-term targets for ROTE, or return on tangible equity, from its current range of between 15% and 17% per year, as CEO David Solomon looks to assuage investors who have grown unhappy with the stock's recent lethargy.
Earlier this year, Goldman unveiled plans to eliminate around 3,200 positions, the bulk of them centered around its trading and banking divisions, following a traditional end-of-year review lead by Solomon, who told employees in late December in a company-wide memo that a "variety of factors impacting the business landscape, including tightening monetary conditions that are slowing down economic activity" are weighing on the bank's prospects.
Goldman Sachs shares were marked 0.2% higher in pre-market trading to indicate an opening bell price of $336.24 each.
