June S&P 500 E-Mini futures (ESM24) are up +0.10%, and June Nasdaq 100 E-Mini futures (NQM24) are up +0.14% this morning as investors digested the latest U.S. inflation figures and looked ahead to remarks from a host of Federal Reserve officials as well as a fresh slew of U.S. labor market data, with a particular focus on Friday’s nonfarm payrolls report.
In Thursday’s trading session, Wall Street’s major averages closed mixed, with the benchmark S&P 500 notching a new all-time high. Estee Lauder (EL) climbed over +6% and was the top percentage gainer on the S&P 500 after Bank of America upgraded the stock to Buy from Neutral with a $170 price target. Also, Walgreens Boots Alliance (WBA) advanced more than +3% and was the top percentage gainer on the Nasdaq 100 after reporting better-than-expected Q2 results. In addition, RH (RH) surged over +17% after the company provided a stronger-than-expected FY24 revenue growth forecast. On the bearish side, MillerKnoll (MLKN) tumbled more than -18% after reporting mixed Q3 results and issuing below-consensus Q4 guidance.
Data from the U.S. Department of Commerce on Friday showed that the U.S. core PCE price index, a key inflation gauge monitored by the Federal Reserve, came in at +0.3% m/m and +2.8% y/y in February, in line with expectations. Also, U.S. February personal spending climbed +0.8% m/m, stronger than expectations of +0.5% m/m. At the same time, U.S. personal income rose +0.3% m/m in February, less than the +0.4% m/m expected.
Fed Chair Jerome Powell, interviewed at the San Francisco Fed on Friday, said the February personal consumption expenditures data was “more along the lines of what we want to see,” adding, “It’s good to see something coming in line with expectations.” At the same time, Powell reiterated that the U.S. central bank is not in a hurry to lower interest rates, emphasizing that policymakers are awaiting more evidence that inflation is contained. “The fact that the U.S. economy is growing at such a solid pace, the fact that the labor market is still very, very strong, gives us the chance to just be a little more confident about inflation coming down before we take the important step of cutting rates,” he said.
U.S. rate futures have priced in a 3.9% chance of a 25 basis point rate cut at the next FOMC meeting in May and a 65.9% probability of a 25 basis point rate cut at June’s monetary policy meeting.
The highlight of the upcoming week will be the U.S. Nonfarm Payrolls report for March. Also, market participants will be eyeing a spate of other economic data releases, including U.S. JOLTs Job Openings, Factory Orders, ADP Nonfarm Employment Change, S&P Global Composite PMI, S&P Global Services PMI, ISM Non-Manufacturing PMI, Crude Oil Inventories, Exports, Imports, Initial Jobless Claims, Trade Balance, Average Hourly Earnings, Private Nonfarm Payrolls, Unemployment Rate, and Consumer Credit.
Meanwhile, Federal Reserve Chair Jerome Powell is scheduled to deliver a speech at the Stanford Business, Government, and Society Forum on Wednesday. In addition, several other Fed officials will be making appearances this week, including Cook, Bowman, Williams, Mester, Daly, Goolsbee, Barr, Barkin, and Collins.
Today, all eyes are focused on the U.S. ISM Manufacturing PMI in a couple of hours. Economists, on average, forecast that the March ISM Manufacturing PMI will come in at 48.5, compared to the previous value of 47.8.
Also, investors will likely focus on the U.S. S&P Global Manufacturing PMI, which stood at 52.2 in February. Economists foresee the March figure to be 52.5.
U.S. Construction Spending data will be reported today as well. Economists foresee this figure to stand at +0.7% m/m in February, compared to the previous number of -0.2% m/m.
In the bond markets, United States 10-year rates are at 4.202%, up +0.17%.
Major European markets are closed today to mark Easter Monday.
Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed up +1.19%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -1.40%.
China’s Shanghai Composite Index closed higher today, logging its biggest one-day gain in a month as fresh signs of economic recovery boosted sentiment. Consumer staples, healthcare, and financial stocks led the gains on Monday. An official factory survey showed on Sunday that China’s manufacturing activity expanded for the first time in six months in March. The official non-manufacturing PMI, encompassing services and construction, also surpassed expectations, marking the highest reading since September. Separately, a private survey showed on Monday that China’s manufacturing activity experienced its most rapid expansion in 13 months in March, with business confidence reaching an 11-month high. Meanwhile, a private survey released on Monday revealed that new home prices in China surged at the quickest rate in over 2-1/2 years in March compared to the previous month. In corporate news, Jonjee Hi-tech Industrial & Commercial climbed over +6% after returning to profitability in 2023, posting an attributable profit of 1.70 billion yuan compared to a loss of 592.2 million yuan in 2022.
The Chinese March Manufacturing PMI stood at 50.8, stronger than expectations of 50.1.
The Chinese March Non-Manufacturing PMI came in at 53.0, stronger than expectations of 51.3.
The Chinese March Caixin Manufacturing PMI arrived at 51.1, stronger than expectations of 51.0.
Japan’s Nikkei 225 Stock Index closed sharply lower today, falling below the 40,000 mark following a report indicating a slight deterioration in confidence among the nation’s large manufacturers for the first time in four quarters. Chip-related, financial, and automobile stocks underperformed on Monday. The Bank of Japan’s closely-watched tankan survey showed Monday that sentiment among large Japanese manufacturers deteriorated for the first time in four quarters during the three months to March, reflecting a significant decline in sentiment among automakers. Separately, the central bank’s survey indicated that business sentiment among large Japanese non-manufacturers surged to its highest level in over three decades in the first quarter. Meanwhile, Japanese Finance Minister Shunichi Suzuki reiterated his caution against excessive yen declines on Monday, pointing out some speculative moves in the currency market that were not aligned with economic fundamentals. In corporate news, CyberAgent fell over -3% following its announcement that it anticipates reversing an extraordinary loss of 3.3 billion yen attributed to the decline in the market value of Realgate, in which the company owns a stake. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +5.82% to 19.65.
The Japanese Tankan Large Manufacturers Index stood at 11 in the first quarter, stronger than expectations of 10.
The Japanese Tankan Large Non-Manufacturers Index arrived at 34 in the first quarter, stronger than expectations of 31.
Pre-Market U.S. Stock Movers
Torrid Holdings (CURV) climbed over +13% in pre-market trading after the company reported better-than-expected Q4 results.
Applied Therapeutics (APLT) tumbled more than -14% in pre-market trading after announcing that the U.S. FDA extended the review period for the New Drug Application for govorestat by three months.
AT&T (T) fell over -1% in pre-market trading following the announcement by the U.S. telecom giant that certain company data-specific fields were leaked on the dark web about two weeks ago, affecting around 7.6 million current account holders and 65.4 million former account holders.
Cameco (CCJ) rose more than +1% in pre-market trading after Goldman Sachs initiated coverage of the stock with a Buy rating and a $55 price target.
Devon Energy (DVN) gained over +2% in pre-market trading after Wells Fargo upgraded the stock to Overweight from Equal Weight with a price target of $59.
Bill (BILL) slid more than -3% in pre-market trading after Wells Fargo downgraded the stock to Underweight from Equal Weight with a price target of $60.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Monday - April 1st
PVH (PVH), Sigma Lithium Resources (SGML), Ast Spacemobile (ASTS), Nano X (NNOX), Microvast Holdings (MVST), Natural Gas Services (NGS), Omeros (OMER), Sachem Capital (SACH), Escalade (ESCA).
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