The S&P 500 Index ($SPX) (SPY) this morning is down -0.22%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.20%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.41%.
In Friday’s trading session, Wall Street’s major averages ended mixed. Lululemon Athletica (LULU) slumped over -15% and was the top percentage loser on the S&P 500 and Nasdaq 100 after the company provided disappointing Q1 and FY25 guidance. Also, Nike (NKE) slid more than -6% and was the top percentage loser on the Dow after the world’s largest sportswear retailer warned that sales would drop by the low single digits in the first half of fiscal 2025. In addition, Tesla (TSLA) fell over -1% after Bloomberg reported that the automaker had reduced electric car production at its plant in China. On the bullish side, FedEx Corporation (FDX) rose more than +7% and was the top percentage gainer on the S&P 500 after the parcel giant topped quarterly profit estimates and announced a $5 billion stock buyback plan.
Meanwhile, the Commerce Department’s Bureau of Economic Analysis is set to release the U.S. core personal consumption expenditures price index, the Fed’s preferred inflation gauge, on Friday, when the U.S. markets will be closed in observance of the Good Friday holiday. Also, market participants will be eyeing a spate of economic data releases during this holiday-shortened week, including the U.S. CB Consumer Confidence, Durable Goods Orders, Core Durable Goods Orders, S&P/CS HPI Composite - 20 n.s.a., Richmond Manufacturing Index, Crude Oil Inventories, GDP, Initial Jobless Claims, Chicago PMI, Michigan Consumer Sentiment, and Pending Home Sales.
Federal Reserve Chair Jerome Powell is scheduled to participate in a moderated discussion at the Macroeconomics and Monetary Policy Conference on Friday. Atlanta Fed President Raphael Bostic, Fed Governor Lisa Cook, Chicago Fed President Austan Goolsbee, and Fed Governor Christopher Waller will also be making appearances this week.
“We believe that it is likely that Fed speakers over the coming weeks will lean more on the hawkish side, especially with regard to the long-term path for policy interest rates - the thing that could be material for the 10-year yield,” analysts at Macquarie said in a recent note.
U.S. rate futures have priced in a 10.8% chance of a 25 basis point rate cut at May’s monetary policy meeting and a 67.4% chance of a 25 basis point rate cut at the conclusion of the Fed’s June meeting.
Today, all eyes are focused on U.S. New Home Sales data in a couple of hours. Economists, on average, forecast that February New Home Sales will stand at 675K, compared to the previous value of 661K.
The U.S. Building Permits data will be reported today as well. Economists expect February’s figure to be 1.518M, compared to the previous number of 1.489M.
In the bond markets, United States 10-year rates are at 4.224%, up +0.12%.
The Euro Stoxx 50 futures are down -0.32% this morning, starting the holiday-shortened week on a subdued note. Retail stocks underperformed on Monday, while travel and defense stocks advanced. Meanwhile, Goldman Sachs on Monday boosted its 2024 year-end target for Europe’s STOXX 600 index to 540 from 510, attributing the adjustment to the anticipated improvement in economic growth and monetary policy easing across central banks. In corporate news, Direct Line Insurance Group Plc (DLG.LN) tumbled over -13% after Brussels-based Ageas said Friday it would not make a third takeover offer for the fellow insurance firm. Also, Kingfisher Plc (KGF.LN) fell more than -2% after the home improvement group reported a 25.1% drop in underlying pre-tax profits for the year ending January 31st and warned of another steep decline in earnings this year.
The European economic data slate is mainly empty on Monday.
Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.71% and Japan’s Nikkei 225 Stock Index (NIK) closed down -1.16%.
China’s Shanghai Composite Index closed lower today. Software technology, media, and consumer staples stocks lost ground on Monday. At the same time, real estate stocks outperformed. The offshore yuan gained on Monday as the dollar weakened and the People’s Bank of China set a stronger-than-anticipated daily reference rate. Meanwhile, Chinese Premier Li Qiang downplayed concerns regarding challenges confronting the economy and provided reassurance to investors that Beijing will enhance supportive measures for growth. “There’s still plenty of space for macroeconomic policies to be expanded because consumer price growth is relatively low and the central government’s debt level is not high,” Li said during a keynote speech at the China Development Forum on Sunday. Speaking at the same event, IMF Managing Director Kristalina Georgieva remarked that if China implements a comprehensive package of pro-market reforms, it could potentially experience an additional growth of 20% over the next 15 years. In other news, China adopted guidelines to cease the utilization of U.S.-made microprocessors from Intel and AMD in government servers and personal computers, as per a report by the Financial Times on Sunday. The guidance also aims to reduce usage of Microsoft’s Windows operating system and foreign-made database software, substituting both with domestic alternatives. In corporate news, China Hongqiao Group surged over +13% after reporting strong 2023 results due to improved margins for its aluminum alloy products. Investor attention this week will be on data releases for China’s February industrial profit and March PMIs.
Japan’s Nikkei 225 Stock Index closed lower today, snapping a 4-day winning streak as investors decided to lock in some profits following the benchmark index’s climb to record highs last week. Technology, real estate, and bank stocks led the declines on Monday. Data from the Cabinet Office showed on Monday that Japan’s leading economic index was revised downward to 109.5 in January from a flash reading of 109.9 released earlier this month. Meanwhile, the country’s top currency official cautioned against speculative moves in the foreign exchange market. “We will take appropriate action against excessive fluctuations without ruling out any options,” Vice Finance Minister for International Affairs Masato Kanda told reporters Monday. In corporate news, Kyowa Kirin fell about -2% following the announcement that it would allocate 84,518 treasury shares as part of restricted stock compensation and performance-linked remuneration to certain board directors and executive officers. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +3.08% to 19.07.
The Japanese January Leading Index stood at 109.5, weaker than expectations of 109.9.
Pre-Market U.S. Stock Movers
Masimo Corporation (MASI) surged about +12% in pre-market trading after the medical technology company said that its board of directors had authorized management to assess a proposed separation of its consumer business. Also, the Wall Street Journal reported that activist investor Politan Capital Management, currently holding two seats on the board of Masimo, is gearing up for a proxy fight to secure two additional seats.
Advanced Micro Devices (AMD) and Intel Corporation (INTC) fell over -2% in pre-market trading following a report from the Financial Times indicating that China implemented guidelines to discontinue the use of microprocessors from the companies in government servers and personal computers.
United Airlines Holdings (UAL) slid more than -4% in pre-market trading after the Wall Street Journal reported that the Federal Aviation Administration is intensifying its scrutiny of the carrier in response to a series of incidents involving its aircraft over the past few weeks.
Tesla (TSLA) fell over -1% in pre-market trading after Mizuho downgraded the stock to Neutral from Buy with a $195 price target.
Walt Disney Company (DIS) rose more than +1% in pre-market trading after Barclays upgraded the stock to Overweight from Equal Weight with a price target of $135.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Monday - March 25th
Noah (NOAH), Dada Nexus (DADA), GreenTree Hospitality (GHG), Sanara Medtech (SMTI), Rekor Systems (REKR), Westport Fuel Systems (WPRT).
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