March S&P 500 E-Mini futures (ESH25) are up +0.46%, and March Nasdaq 100 E-Mini futures (NQH25) are up +0.61% this morning as investors shrugged off U.S. President Donald Trump’s latest tariff announcement and looked ahead to key U.S. inflation data and Federal Reserve Chair Jerome Powell’s congressional testimony later this week.
Speaking to reporters Sunday on Air Force One, President Trump said he would announce on Monday a 25% levy on all steel and aluminum imports into the U.S. Trump also stated that he would introduce reciprocal tariffs this week on countries that tax U.S. imports.
In Friday’s trading session, Wall Street’s major equity averages closed in the red. Amazon.com (AMZN) slid over -4% after the e-commerce and cloud services giant provided below-consensus Q1 revenue guidance. Also, chip stocks retreated after Treasury yields advanced, with Marvell Technology (MRVL) slumping more than -7% to lead losers in the Nasdaq 100 and Broadcom (AVGO) falling over -2%. In addition, e.l.f. Beauty (ELF) tumbled more than -19% after the cosmetics company cut its full-year guidance. On the bullish side, Expedia Group (EXPE) climbed over +17% and was the top percentage gainer on the S&P 500 after the online travel company posted upbeat Q4 results.
The U.S. Labor Department’s report on Friday showed that nonfarm payrolls rose by 143K in January, missing the 169K consensus estimate. Also, the University of Michigan’s U.S. consumer sentiment index unexpectedly fell to a 7-month low of 67.8 in February, weaker than expectations of 71.9. At the same time, the U.S. January unemployment rate unexpectedly fell to an 8-month low of 4.0%, stronger than expectations of no change at 4.1%. Also, U.S. average hourly earnings rose +0.5% m/m and +4.1% y/y in January, stronger than expectations of +0.3% m/m and +3.8% y/y. Finally, U.S. December consumer credit surged to a record $40.85B, stronger than expectations of $17.70B.
“The broader picture is still one of labor market resilience and sustained wage pressures,” said Seema Shah at Principal Asset Management. “This simply gives the Fed little reason to cut policy rates immediately.”
Fed Governor Adriana Kugler stated on Friday that it is appropriate to maintain rates at their current level for “some time,” citing a stable labor market, limited progress on inflation in recent months, and uncertainty surrounding fiscal and trade policy. Also, Minneapolis Fed President Neel Kashkari said, “We’re in a very good place to just sit here until we get a lot more information on the tariff front, on the immigration front, on the tax front... I would expect the federal funds rate to be modestly lower at the end of this year.”
Meanwhile, U.S. rate futures have priced in a 91.5% probability of no rate change and an 8.5% chance of a 25 basis point rate cut at the conclusion of the Fed’s March meeting.
The U.S. consumer inflation report for January will be the main highlight this week, as it may indicate when U.S. interest rates are next likely to be cut, if at all. Also, market watchers will be keeping an eye on other economic data releases, including the U.S. PPI, the Core PPI, Retail Sales, Core Retail Sales, Initial Jobless Claims, Crude Oil Inventories, the Export Price Index, the Import Price Index, Industrial Production, Manufacturing Production, and Business Inventories.
Fed Chair Jerome Powell’s semi-annual monetary policy testimony on Capitol Hill will also be closely monitored for insights into the rate outlook. Mr. Powell will testify before the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday. The Fed Chief will likely emphasize the resilient economy as a primary reason policymakers are not in a hurry to further reduce borrowing costs. Fed Governor Michelle Bowman, New York Fed President John Williams, Atlanta Fed President Raphael Bostic, Fed Governor Christopher Waller, and Dallas Fed President Lorie Logan are also scheduled to speak this week.
Fourth-quarter corporate earnings season rolls on, and investors await fresh reports from prominent companies this week, including McDonald’s (MCD), Coca-Cola (KO), Shopify (SHOP), Gilead (GILD), Cisco (CSCO), CVS Health Corp. (CVS), Applied Materials (AMAT), Palo Alto Networks (PANW), and Deere & Company (DE). According to Bloomberg Intelligence, companies in the S&P 500 are expected to post an average +7.5% increase in quarterly earnings for Q4 compared to the previous year.
The U.S. economic data slate is mainly empty on Monday.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.490%, up +0.07%.
The Euro Stoxx 50 Index is up +0.38% this morning, starting the week on a positive note as investors appeared to shrug off concerns over the global trade war. Energy and real estate stocks outperformed on Monday, while steel and aluminum stocks retreated. A survey released on Monday indicated that investor morale in the Eurozone improved in February, reaching the highest level since July. Meanwhile, U.S. President Donald Trump pledged to impose tariffs on all imports of steel and aluminum. This came as China’s retaliatory tariffs on select U.S. exports took effect today, while German Chancellor Olaf Scholz affirmed that the EU stands ready to respond “within an hour” if the U.S. imposes tariffs on European goods. Looking ahead, investors are awaiting Eurozone industrial production figures for December, along with fourth-quarter gross domestic product data, this week. In corporate news, BP Plc (BP-.LN) climbed over +6% after Bloomberg reported that activist investor Elliott Investment Management had built a significant stake in the company.
Eurozone’s Sentix Investor Confidence Index was released today.
Eurozone February Sentix Investor Confidence Index came in at -12.7, stronger than expectations of -16.4.
Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.56%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.04%.
China’s Shanghai Composite Index closed higher today as investors digested better-than-expected inflation data from the country. AI-related stocks led the gains on Monday, driven by ongoing optimism about breakthroughs in artificial intelligence in China. Shares of the nation’s three largest telecom providers jumped on Monday after they integrated DeepSeek’s model into their offerings. Analysts at China Securities said in a note that domestic equities “could keep this upward momentum until the Two Sessions in March despite the volatility, boosted by the launch of DeepSeek AI which has increased market confidence.” Adding to the positive sentiment, concerns over China’s deflation eased after data released on Sunday showed that consumer inflation picked up in January, buoyed by holiday spending. However, producer prices extended their downward trend, declining for the 28th consecutive month. Meanwhile, analysts pointed out that worries over U.S.-China trade tensions could subside in the short term as investors increasingly perceive tariff threats as a negotiation tactic. In corporate news, Dongfeng Automobile climbed +10% after revealing plans to merge with another state-owned automaker, Chongqing Changan.
The Chinese January CPI came in at +0.7% m/m and +0.5% y/y, compared to expectations of +0.8% m/m and +0.4% y/y.
The Chinese January PPI stood at -2.3% y/y, weaker than expectations of -2.2% y/y.
Japan’s Nikkei 225 Stock Index closed just above the flatline today as cautious sentiment prevailed amid fresh U.S. tariff risks. Gains in chemical and some electronics stocks helped offset losses in trading houses on Monday. Data released by the Finance Ministry on Monday showed that Japan’s current account surplus grew in December compared to the same month a year earlier, though it fell short of economists’ forecasts. Separately, data showed that the gauge for Japan’s service sector dropped to a 3-month low in January. Meanwhile, investors are focusing on U.S. President Trump’s tariff plans and domestic earnings. Late on Sunday, Trump announced that he would impose 25% tariffs on steel and aluminum imports, which would negatively impact companies, including Japanese ones, that export steel and aluminum to the U.S. The latest tariff threats follow Japanese Prime Minister Shigeru Ishiba’s first White House summit with Trump on Friday, with analysts noting that the meeting went well. Investors are also anticipating key earnings reports this week, especially from Honda and Nissan, in the wake of the fallout from their merger talks. In corporate news, DeNA Co. surged over +23% after the technology firm returned to profitability and reported a revenue increase for the nine months ending December 2024. Also, Mitsubishi Chemical Group rose about +2% after announcing plans to sell its drug unit for $3.37 billion. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +0.28% to 21.75.
The Japanese December Current Account n.s.a. came in at 1.077T yen, weaker than expectations of 1.362T yen.
The Japanese January Economy Watchers Current Index arrived at 48.6, weaker than expectations of 49.7.
Pre-Market U.S. Stock Movers
Steelmakers are climbing in pre-market trading on the tariff news. Cleveland-Cliffs (CLF) is up over +9%, Nucor Corp. (NUE) is up more than +8%, and Alcoa Corp. (AA) is up over +4%.
U.S. Steel (X) rose over +8% in pre-market trading after Japan’s chief cabinet secretary reportedly said that Nippon Steel was considering making “a bold proposal that is completely different from previous ones” regarding the American steelmaker.
Megacap technology stocks are moving higher in pre-market trading, with Microsoft (MSFT) and Meta Platforms (META) up about +0.6%.
Johnson Controls (JCI) gained more than +3% in pre-market trading after UBS upgraded the stock to Buy from Neutral with a price target of $103.
Shopify (SHOP) advanced over +2% in pre-market trading after Benchmark upgraded the stock to Buy from Hold with a $150 price target.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Monday - February 10th
McDonald’s (MCD), Vertex (VRTX), Arch Capital (ACGL), Rockwell Automation (ROK), ON Semiconductor (ON), Cincinnati Financial (CINF), Banco Bradesco (BBD), Loews (L), Astera Labs (ALAB), Credicorp (BAP), Incyte (INCY), CNA Financial (CNA), Monday.Com (MNDY), Medpace Holdings (MEDP), Vornado (VNO), Brixmor Property (BRX), Roivant Sciences (ROIV), Lattice (LSCC), Simpson Manufacturing (SSD), Watts Water Technologies (WTS), SPS Commerce (SPSC), TIM Participacoes (TIMB), Amkor (AMKR), Coty (COTY), Inspire Medical Systems (INSP), Tower (TSEM), Kilroy (KRC), GCM Grosvenor (GCMG), Arrowhead Pharma (ARWR), Fluence Energy (FLNC), Axcelis (ACLS), CoreCivic (CXW), Prospect Capital (PSEC), Bank of N.T. Butterfield Son (NTB), Danaos (DAC), Edgewell Personal Care (EPC), Harmonic (HLIT), Apollo Commercial RE Finance (ARI), Alexanders (ALX), Columbus McKinnon (CMCO).
