March S&P 500 E-Mini futures (ESH24) are down -0.03%, and March Nasdaq 100 E-Mini futures (NQH24) are up +0.03% this morning as investors looked ahead to the release of U.S. inflation data due Tuesday for clues regarding the timing of future Federal Reserve interest-rate cuts.
In Friday’s trading session, Wall Street’s major averages ended lower. Marvell Technology Inc (MRVL) tumbled over -11% and was the top percentage loser on the Nasdaq 100 after the specialty semiconductor company issued disappointing Q1 guidance. Also, Costco Wholesale Corp (COST) plunged more than -7% and was the top percentage loser on the S&P 500 after the big box retailer reported weaker-than-expected Q2 revenue. In addition, Broadcom Inc (AVGO) slid about -7% after reporting weaker-than-expected Q1 semiconductor solutions revenue. On the bullish side, Gap Inc (GPS) climbed more than +8% after the retailer posted better-than-expected Q4 results.
The U.S. Labor Department’s report on Friday showed that nonfarm payrolls climbed by 275K jobs last month, topping analyst expectations of 198K and increasing from the 229K (revised from 353K) jobs added in January. Also, the U.S. February unemployment rate unexpectedly rose to a 2-year high of 3.9%, weaker than expectations of no change at 3.7%. In addition, U.S. average hourly earnings came in at +0.1% m/m and +4.3% y/y in February, weaker than expectations of +0.2% m/m and +4.4% y/y.
“The report didn’t necessarily amount to an ‘all-clear’ signal for the Fed, but there also didn’t appear to be anything in it that would derail its plan to cut rates,” said Chris Larkin at E*Trade from Morgan Stanley.
Chicago Fed President Austan Goolsbee stated on Friday that he anticipates policymakers will reduce interest rates this year as inflation continues to cool. “As inflation comes down, we would be moving toward less restrictiveness over the course of the year,” Goolsbee said in an interview on Fox News.
Meanwhile, U.S. rate futures have priced in a 3.0% chance of a 25 basis point rate cut at the Fed’s monetary policy committee meeting later this month and a 24.4% probability of a 25 basis point rate cut at the May FOMC meeting.
On the earnings front, notable companies like Oracle (ORCL), Dollar Tree (DLTR), Lennar (LEN), Adobe (ADBE), Dollar General (DG), Ulta Beauty (ULTA), Dick’s Sporting Goods (DKS), and Jabil Circuit (JBL) are slated to release their quarterly results this week.
On the economic data front, the U.S. consumer inflation report for February will be the main highlight in the coming week. Also, market participants will be eyeing a spate of other economic data releases, including the U.S. Core CPI, Retail Sales, Core Retail Sales, PPI, Core PPI, Initial Jobless Claims, Crude Oil Inventories, Business Inventories, Export Price Index, Import Price Index, NY Empire State Manufacturing Index, Industrial Production, Manufacturing Production, and Michigan Consumer Sentiment (preliminary).
The U.S. economic data slate is largely empty on Monday.
In the bond markets, United States 10-year rates are at 4.071%, down -0.42%.
The Euro Stoxx 50 futures are down -0.85% this morning, extending the losses seen in Asia overnight following Friday’s weakness on Wall Street, with investors bracing for the release of a key U.S. inflation reading later this week. Losses in technology and basic resources stocks are leading the overall market lower. Meanwhile, investors this week will be keeping a close watch on the U.S. consumer prices reading, U.K. labor market data, consumer price inflation from Germany and other regions, and Eurozone industrial production print. In corporate news, Currys Plc (CURY.LN) slumped over -8% following Elliott Investment Management’s announcement on Monday that it had decided not to make another takeover bid for the British electrical retailer. Also, BE Semiconductor Industries N.V. (BESI.NA) plunged more than -6% amid concerns regarding potential delays in hybrid bonding adoption.
The European economic data slate is mainly empty on Monday.
Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.74%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -2.19%.
China’s Shanghai Composite Index closed higher today after a rebound in consumer prices ignited optimism for the resurgence of the country’s economic momentum. Solar stocks extended their recent gains on Monday amid speculation that the government will ease restrictions on renewable installation, improving the sector’s outlook. As a result, Xinyi Solar Holdings Ltd. surged over +11%, and Flat Glass Group Co. climbed more than +10% in Hong Kong. Property stocks also gained ground following a Reuters report indicating that Chinese regulators met financial institutions to ask large banks to bolster financing support for state-backed property developer China Vanke. Meanwhile, data released by the National Bureau of Statistics on Saturday showed that consumer prices in China increased for the first time in six months, attributed to spending associated with the Lunar New Year. At the same time, China’s producer prices continued their decline in February, marking the 17th consecutive month of contraction. In corporate news, BAIC BluePark New Energy Techno Co Ltd. gained about +10% after revealing plans to establish a 390 million yuan platform company.
The Chinese February CPI stood at +1.0% m/m and +0.7% y/y, stronger than expectations of +0.7% m/m and +0.3% y/y.
The Chinese February PPI came in at -2.7% y/y, weaker than expectations of -2.5% y/y.
Japan’s Nikkei 225 Stock Index closed sharply lower today, slipping below the 39,000 mark amid growing speculation that the Bank of Japan will raise interest rates at the March 18th-19th meeting. Export-heavy automobile stocks underperformed on Monday after the yen extended last week’s rally against the dollar, with Nissan Motor Co Ltd. and Toyota Motor Corp. falling over -3%. Technology stocks also slumped after Nvidia Corp. and other U.S. tech stocks slid on Friday amid profit-taking. The Cabinet Office said Monday that Japan’s economy grew at an annualized rate of 0.4% in October-December from the previous quarter, reversing the initially reported 0.4% decline and bolstering the case for the BOJ to raise rates for the first time since 2007. Meanwhile, Japanese government bond yields rose on Monday as investors remained cautious following reports indicating that the central bank is contemplating scrapping its yield curve control program and a growing number of policymakers are inclined towards ending negative rates due to anticipated larger wage increases this year. Investor focus is now squarely on economic data, annual wage negotiations between unions and management, and their policy implications ahead of the BOJ’s policy meeting next week. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +0.05% to 21.96.
The Japanese GDP has been reported at +0.1% q/q and +0.4% y/y in the fourth quarter, stronger than expectations of -0.1% q/q and -0.4% y/y.
Pre-Market U.S. Stock Movers
Cryptocurrency-exposed stocks are moving higher in pre-market trading, with the price of Bitcoin topping $71,000 for the first time. Marathon Digital (MARA) is up more than +6%. Also, Hut 8 Mining (HUT) is up more than +4%, and Coinbase Global (COIN) is up more than +6%.
Boeing Co (BA) dropped about -0.8% in pre-market trading following a report from the Wall Street Journal indicating that the U.S. Justice Department has launched a criminal investigation into the 737 MAX incident on an Alaska Airlines flight.
Hyatt Hotels Corporation (H) fell over -1% in pre-market trading after Morgan Stanley downgraded the stock to Equal Weight from Overweight with a price target of $156.
Bilibili Inc (BILI) climbed more than +7% in pre-market trading after JPMorgan upgraded the stock to Neutral from Underweight with a price target of $11.
Xcel Energy Inc (XEL) gained over +1% in pre-market trading after Wolfe Research upgraded the stock to Outperform from Peer Perform with a $58 price target.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Monday - March 11th
Oracle (ORCL), Legend Bio (LEGN), Caseys (CASY), Vail Resorts (MTN), Natura & Co (NTCO), Asana (ASAN), Polestar Automotive Holding A (PSNY), Fortrea Holdings (FTRE), Ocular Therapeutix Inc (OCUL), Ballard (BLDP), Yalla (YALA).
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