Here are five things you must know for Wednesday, March 23:
1. -- Stock Futures Edge Lower, Oil Leaps On Sanctions Talk
U.S. equity futures edged lower Wednesday, while oil prices resumed their recent march higher and the dollar held gains against its global peers, as investors awaited news of fresh sanctions on Russia while side-stepping one of the biggest bond market sell-offs on record.
President Joe Biden is set to travel to Brussels for a meeting with NATO leaders in the Belgian capital Thursday, with reports suggesting he's prepared unveil new sanctions on Moscow, possibly in the energy sector, in response to its month-long invasion of Ukraine.
As fighting continues in the southern city of Mariupol, United Nations observers estimate that nearly 1,000 civilians have died in the conflict, which has been deemed a 'special operation' by President Vladimir Putin, while peace talks are said to be moving forward only on a "step-by-step" basis, according to Ukrainian President Volodymyr Zelenskiy.
The extended fighting, as well as talk of new sanctions on Russian crude exports, lifted oil prices back over the $110 mark in overnight trading, with gains capped by a firmer U.S. dollar.
WTI crude futures for May delivery were last seen $2.13 higher on the session at $111.40 per barrel ahead of Energy Department data on domestic stockpiles at 10:30 am Eastern time.
Markets were also closely tracking moves in the bond market, which is deep in the throes of its largest peak-to-trough decline on record amid hawkish signals from the Federal Reserve and yet another generationally-high reading on inflation -- this time in the United Kingdom, where CPI hit 6.2% -- from a major global economy.
Benchmark 10-year note yields were marked 2 basis points higher from last night's close at 2.359% ahead of pre-market speech from Fed Chair Jerome Powell at 8:00 am Eastern time, while the U.S. dollar index was marked 0.13% higher against a basket of its global peers at 98.613.
On Wall Street, futures futures contracts linked to the Dow Jones Industrial Average are indicating a 75 point opening bell dip while those linked to the S&P 500, which is down 5.34% for the year, are priced for a 12 point move to the downside. The tech-focused Nasdaq Composite is called 50 points lower.
2. -- Fed Chair Powell On Deck As Bonds Flash Recession Risk
Federal Reserve President Jerome Powell will speak at the Bank for International Settlements' "Innovation Summit" Wednesday as investors absorb a torrent of comment from policymakers suggesting the need for faster near-term rate hikes.
Powell, who insisted Monday that the U.S. economy was resilient enough to withstand a series of Fed Funds increases as the central bank tamps down the fastest inflation in forty years, will be followed by appearances from San Francisco Fed President Mary Daly and St. Louis Fed President James Bullard, both of whom have suggested that a 50 basis point rate hike may be necessary in the face of a domestic inflation rate that is hovering near 8%.
Market reaction to the Fed's hawkish tilt has been swift: the CME Group's FedWatch tool is pricing in a 63% chance of back-to-back half-point hikes at the Fed's May and June meetings, while benchmark 2-year note yields -- which have risen more than 1.4% so far this year -- are holding at 2.17%, putting the gap between 10-year paper at just 20 basis points.
Meanwhile, the Atlanta Fed's GDPNow suggest the economy is only growing at a 1.3% pace heading into the final week of the first quarter, while data from everything from retail sales to consumer sentiment is indicating signs of inflation fatigue and financial uncertainty in America's consumer-powered economy.
3. -- GameStop Shares Surge As Ryan Cohen Boosts Stake
GameStop (GME) shares surged higher in pre-market trading after an investment group lead by chairman Ryan Cohen unveiled a purchase of around 100,000 shares in the money-losing video game retailer.
Securities and Exchange Commission filings late Tuesday showed that Cohen's RC Ventures, which has also built stakes in Bed Bath & Beyond BBBY, now owns around 9.1 million GameStop shares representing an 11.9% overall stake in the Grapevine, Texas-based group.
GameStop reported a wider-than-expected loss of $1.86 per share for its fiscal fourth quarter last week, and managed to record negative free cash flow of $131.6 million even as revenues rose 6.2% to $2.25 billion.
GameStop shares, which soared 30.7% yesterday, were marked 11.7% higher in pre-market trading to indicate an opening bell price of $137.50 each.
4. -- Adobe Shares Slip Lower After Muted Q2 Cloud Outlook
Adobe Inc (ADBE) shares moved lower in pre-market trading after the world's third-largest cloud software group forecast weaker-than-expected current quarter profits that offset a solid March quarter update.
Adobe earned $2.66 per share for its fiscal first quarter, with revenues rising 9% to a Street-beating $4.26 billion, a record tally powered by the group's creative, document and experience cloud divisions.
Looking into the June quarter, however, Adobe said it sees earnings in the region of $3.30 per share, around 5 cents shy of Street forecasts, with sales of around $4.34 billion amid a new pricing structure for its suite of products and the ongoing impact on its European business from Russia's war on Ukraine.
"Management also expects a strong second half (to the fiscal year) partially from Digital Media price increases," said Oppenheimer analyst Brian Schwartz. "These positives are offset by signs of business deceleration, soft F2Q guidance, and a higher tax rate which suggests the business is becoming more seasonal and makes (the fiscal year) more back end loaded than pre-print."
Adobe shares were marked 2.7% lower in pre-market trading to indicate an opening bell price of $454.00 each.
5. -- Microsoft Says Okta Hackers Gain 'Limited Access' To Its System
Microsoft (MSFT) shares edged lower in pre-market trading after the tech giant said hackers linked to an attack on network access manager Okta (OKTA) gained 'limited access" to some of its systems.
Microsoft said the LAPSUS$ hacking group, which posted photographs of what were claimed to Okta's s internal technology on the Telegram channel earlier this week, are part of a "a large-scale social engineering and extortion campaign against multiple organizations". Okta said the attack could potentially affect around 366 of its customers.
Microsoft said no customer code or data was involved in the LAPSUS$ breach, which effectively involved only one compromised account.
"Our team was already investigating the compromised account based on threat intelligence when the actor publicly disclosed their intrusion," Microsoft said in a blogpost. "This public disclosure escalated our action allowing our team to intervene and interrupt the actor mid-operation, limiting broader impact."
Microsoft shares were marked 0.37% lower in pre-market trading to indicate an opening bell price of $302.93 each.
