March S&P 500 E-Mini futures (ESH25) are up +0.28%, and March Nasdaq 100 E-Mini futures (NQH25) are up +0.36% this morning, with investors looking ahead to the publication of the minutes of the Federal Reserve’s latest policy meeting, remarks from Fed officials, and a fresh batch of U.S. economic data later in the week.
Limiting gains in U.S. stock futures, Treasury yields surged as cash trading resumed following the Presidents’ Day holiday. A rise in bond yields followed hawkish comments from Fed officials. Fed Governor Christopher Waller stated on Tuesday that recent economic data supported maintaining interest rates at current levels until further progress on inflation was observed. Also, Fed Governor Michelle Bowman said on Monday that while monetary policy “is now in a good place,” she wants to “gain greater confidence that progress in lowering inflation will continue as we consider making further adjustments to the target range.” In addition, Philadelphia Fed President Patrick Harker advocated for keeping rates unchanged amid a strong economy but said he anticipates interest rates will gradually decline in the long run.
In Friday’s trading session, Wall Street’s major equity averages ended mixed. Airbnb (ABNB) surged over +14% and was the top percentage gainer on the S&P 500 and Nasdaq 100 after the vacation home rental company reported upbeat Q4 results. Also, chip stocks gained ground after Treasury yields extended declines, with Micron Technology (MU) rising more than +4% and Nvidia (NVDA) advancing over +2%. In addition, Roku (ROKU) climbed more than +14% after the company posted better-than-expected Q4 results and said it aims to be profitable in FY26. On the bearish side, GoDaddy (GDDY) tumbled over -14% and was the top percentage loser on the S&P 500 after reporting weaker-than-expected Q4 EPS. Also, Applied Materials (AMAT) slid more than -8% and was the top percentage loser on the Nasdaq 100 after the chipmaking equipment maker provided a weak FQ2 revenue forecast.
Economic data released on Friday showed that U.S. retail sales slipped -0.9% m/m in January, missing the -0.2% m/m consensus, while core retail sales, which exclude motor vehicles and parts, dropped -0.4% m/m, weaker than expectations of +0.3% m/m. Also, U.S. industrial production climbed +0.5% m/m in January, stronger than expectations of +0.3% m/m, while manufacturing production unexpectedly fell -0.1% m/m, weaker than expectations of +0.1% m/m. In addition, the U.S. import price index rose +0.3% m/m in January, weaker than expectations of +0.4% m/m.
“The consumer sentiment report showed people were getting nervous and [Friday’s] weak retail sales number confirmed it. However, the resulting slack is good news for the Fed and tilts the balance a little bit more toward rate cuts,” said David Russell at TradeStation.
In this holiday-shortened week, investors will be closely watching the Federal Reserve’s minutes from the January 28-29 meeting, scheduled for release on Wednesday, for further indications that rate cuts remain unlikely in the foreseeable future amid expectations that inflation may remain elevated for longer. Market participants will pay particular attention to any comments on the potential inflationary impact of President Trump’s proposed policies, including trade tariffs.
Meanwhile, U.S. rate futures have priced in a 97.5% probability of no rate change and a 2.5% chance of a 25 basis point rate cut at the conclusion of the Fed’s March meeting.
Market watchers will also focus on several economic data releases this week, including the U.S. S&P Global Manufacturing PMI (preliminary), the S&P Global Services PMI (preliminary), Building Permits (preliminary), Housing Starts, the Philadelphia Fed Manufacturing Index, Initial Jobless Claims, Crude Oil Inventories, Existing Home Sales, and the University of Michigan’s Consumer Sentiment Index.
In addition, San Francisco Fed President Mary Daly, Fed Vice Chair for Supervision Michael Barr, Fed Vice Chair Philip Jefferson, Chicago Fed President Austan Goolsbee, Fed Governor Adriana Kugler, and St. Louis Fed President Alberto Musalem will be making appearances this week.
Fourth-quarter corporate earnings season is winding down, but several notable companies are due to report this week, including Walmart (WMT), Arista Networks (ANET), Medtronic (MDT), Analog Devices (ADI), Booking (BKNG), Rivian Automotive (RIVN), and Occidental Petroleum (OXY).
Today, investors will focus on the Empire State Manufacturing Index, which is set to be released in a couple of hours. Economists, on average, forecast that the February Empire State manufacturing index will come in at -1.90, compared to -12.60 in January.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.506%, up +0.67%.
The Euro Stoxx 50 Index is down -0.05% this morning, with investors closely monitoring geopolitical developments. Chemical, technology, and real estate stocks underperformed on Tuesday. At the same time, defense stocks continued to rise. Data from the Office for National Statistics released on Tuesday showed that wages in the U.K. grew at a faster pace last quarter, while the unemployment rate unexpectedly remained unchanged, potentially complicating the case for further monetary easing by the Bank of England. Separately, final data from the statistics agency Insee showed that France’s annual inflation rate was revised higher to 1.7% in January from the preliminary reading of 1.4%. In addition, the ZEW Economic Research Institute said that the gauge of economic sentiment for Germany improved to a 7-month high in February. Meanwhile, geopolitical tensions between the U.S. and Europe are expected to remain a focal point for investors this week as the U.S. and Russia meet to negotiate an end to the war in Ukraine, with officials in Kyiv and Europe excluded from the talks. European leaders convened an emergency summit in Paris on Monday to discuss their exclusion from peace talks, agreeing to increase defense spending. Polish Prime Minister Donald Tusk stated that new defense funding measures are set to be presented ahead of the upcoming March 20-21 summit. In corporate news, Capgemini (CAP.FP) slumped over -8% after the French IT consulting giant posted a 1.9% drop in full-year revenue.
U.K.’s Average Earnings ex Bonus, U.K.’s Unemployment Rate, France’s CPI, Germany’s ZEW Economic Sentiment Index, and Eurozone’s ZEW Economic Sentiment Index were released today.
U.K. Average Earnings ex Bonus stood at 5.9% in the three months to December, in line with expectations.
U.K. Unemployment Rate was 4.4% in the three months to December, stronger than expectations of 4.5%.
The French January CPI came in at +0.1% m/m and +1.7% y/y, stronger than expectations of -0.1% m/m and +1.4% y/y.
The German February ZEW Economic Sentiment Index arrived at 26.0, stronger than expectations of 19.9.
Eurozone February ZEW Economic Sentiment Index has been reported at 24.2, weaker than expectations of 24.3.
Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.93% and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.25%.
China’s Shanghai Composite Index ended lower today as optimism surrounding President Xi’s meeting with tech CEOs and the recent AI enthusiasm faded. Consumption and media stocks led the declines on Tuesday. At the same time, semiconductor and technology stocks outperformed. The benchmark index initially surged following a meeting between President Xi Jinping and business leaders on Monday. Xi urged the business community to “show their talent” and be confident in the strength of China’s model and market. Meanwhile, Zheng Bei, deputy head of the National Development and Reform Commission, stated on a CCTV program broadcast on Tuesday that China’s political, economic, and social environment is “very conducive” to the development of the private economy and that policies will be enacted to help alleviate challenges faced by private firms. China will continue to break down investment barriers and update its negative list for market access, which limits investment in certain sectors, as soon as possible, Zheng noted. Still, investors seem to be waiting for the “Two Sessions” meeting in early March to assess Beijing’s economic growth plan for this year. In corporate news, Alibaba rose over +3% in Hong Kong after CCTV broadcast footage of its founder Jack Ma and President Xi shaking hands during Monday’s meeting.
Japan’s Nikkei 225 Stock Index closed slightly higher today. Financial stocks led Tuesday’s gains on expectations of further interest rate hikes from the Bank of Japan after data on Monday showed that the nation’s economy grew more than expected in the fourth quarter. Defense stocks also advanced after their European counterparts rose on Monday, as investors factored in the potential for increased military spending in the region. Meanwhile, Japanese government bond yields climbed to their highest levels in over a decade on Tuesday. Former BOJ official Nobuyasu Atago said he sees a possible rate hike as early as the April 30-May 1 meeting, noting that rising bond yields indicate markets are pricing in the risk of an earlier move. In corporate news, Nissan Motor gained more than +3% after the Financial Times reported that rival Honda Motor is prepared to renew merger discussions if Nissan CEO Makoto Uchida resigns. Investor attention this week centers on comments from BOJ board member Hajime Takata on Wednesday and the CPI report on Friday. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -2.58% to 20.00.
Pre-Market U.S. Stock Movers
Intel (INTC) climbed over +5% in pre-market trading after the Wall Street Journal reported that Taiwan Semiconductor Manufacturing and Broadcom are each exploring deals that would break up the chip giant.
Constellation Brands (STZ) surged about +8% in pre-market trading after Warren Buffett’s Berkshire Hathaway disclosed a new stake in the company.
Snowflake (SNOW) rose more than +2% in pre-market trading after Wolfe Research upgraded the stock to Outperform from Peer Perform with a $235 price target.
Delta Air Lines (DAL) dropped over -1% in pre-market trading after one of its jets spun out of control after landing in Toronto.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Tuesday - February 18th
Grupo Aval (AVAL), Arista Networks (ANET), Medtronic (MDT), Cadence Design (CDNS), Occidental (OXY), Vulcan Materials (VMC), Baidu (BIDU), EQT (EQT), CoStar (CSGP), Devon Energy (DVN), IFF (IFF), Watsco (WSO), RB Global (RBA), Genuine Parts (GPC), Expeditors Washington (EXPD), Toll Brothers (TOL), Penumbra Inc (PEN), Shift4 Payments Inc (FOUR), Flowserve (FLS), Fluor (FLR), Celanese (CE), Halozyme (HALO), Matador (MTDR), Valmont Industries (VMI), Axsome Therapeutics Inc (AXSM), Element Solutions (ESI), Comstock Resources (CRK), Sonoco Products (SON), Franklin Electric (FELE), Magnolia Oil (MGY), Compass (COMP), Blackbaud (BLKB), TRI Pointe Homes (TPH), Genworth (GNW), Innospec (IOSP), Chemours Co (CC), iQIYI (IQ), ReNew Energy Global (RNW), Visteon (VC), Siriuspoint (SPNT), MasterBrand (MBC), GeneDx Holdings (WGS), Hillman Solutions (HLMN), Star Bulk Carriers (SBLK), Donnelley Financial Solutions (DFIN), Sandstorm Gold Ltd N (SAND), La-Z-Boy (LZB), CVR Energy (CVI), Perdoceo Education (PRDO), SSR Mining (SSRM), NeoGenomics (NEO), Ingevity (NGVT), Sapiens (SPNS), Adeia (ADEA), The Andersons (ANDE), Select Energy Services (WTTR), JBG SMITH Properties (JBGS), MFA Financial (MFA), Brookdale Senior Living (BKD), Centerspace (CSR), Bumble (BMBL), The Hackett (HCKT), BlueLinx (BXC), Brightspire Capital (BRSP), Great Lakes Dredge&Dock (GLDD), Gladstone Commercial (GOOD), TPG RE Finance (TRTX), Community Healthcare Trust Inc (CHCT), Unisys (UIS), Semler Scientifc (SMLR), Community Health Systems (CYH), Tactile Systems (TCMD), Quad Graphics (QUAD), Arteris (AIP), Safe Bulkers (SB), Truecar Inc (TRUE), Industrial Logistics Properties (ILPT), Seven Hills Realty Trust (SEVN).
