Today’s Big Picture Asian markets closed today’s trading down across the board, with the exception of South Korea’s KOSPI, which eked out a 0.16% gain.China’s Shanghai Composite declined 0.13%, Taiwan’s TAIEX closed off 0.17%, India’s Sensex fell 1.38%, Japan’s Nikkei declined 1.68% and Hong Kong’s Hang Seng slumped 1.84% on the day.By mid-day trading, European equity indices are up across the board and U.S.futures point to a positive market open later this morning.
The stock market’s recent up-down-up dynamics looks to continue today despite oil, natural gas, wheat, and other commodity prices moving higher this morning amid reports Russian troops captured Ukraine port Kherson.The added climb in oil prices came despite the U.S.and other members of the IEA agreeing to release 60 million barrels from the Strategic Petroleum Reserve and other emergency stocks.Meanwhile, the EU agreed to impose further restrictions on Belarus for its involvement in Russia’s invasion of Ukraine and more companies announce plans to halt business with Russia.
During President Biden’s State of the Union address last night, he focused on infrastructure and the push to become more self-reliant.
He referenced not just energy but manufacturing as well, highlighting Intel’s ( INTC ) plans to build a $20 billion semiconductor fabrication complex in Ohio and calling for physical infrastructure repairs to be “Made In America” from start to finish.
Later this morning Fed Chair Powell, will begin his semi-annual testimony to the House Finance Committee.We expect many questions over the speed of the economy, the economic potential impact from the Russia-Ukraine conflict and ensuing sanctions, and the pace at which the Fed will begin its interest rate lift-off.While Powell will answer a number of questions, odds are he will leave the specifics regarding the pace of interest rate hikes in the coming months for after the Fed’s upcoming monetary policy meeting that concludes on March 16.
Data Download International Economy
The Eurozone’s February CPI print came in at up 5.80% YoY, exceeding estimates by 0.50% and hotter than January’s 5.10% print.
At 10:00 AM ET, the Bank of Canada announces the update to its overnight lending rate target.Expectations are for a 0.25% hike to 0.50% from the current 0.25% in an attempt to corral soaring inflation.Similar to the Fed, investor expectations are for at least four rate hikes in 2022 with rates to reach 1.25% going into 2023.
Domestic Economy
At 8:15 AM ET, the February ADP Employment Change Report will be published and expectations call for 320,000 jobs to have been added in stark contrast to the 301,000 jobs reported lost in January.While a positive sign and one of strength in the economy we find it difficult to square this with a continually shrinking Q1 GDP growth forecast from the Atlanta Fed that has gone from 1.30% in the middle of February to 0.0% as of the latest update.
Later this morning at 10:30 AM ET a slew of energy related metrics will be released covering Crude, Distillate and Gasoline stocks, Refinery Utilization, and various Ethanol metrics.
Today at 2:00 PM ET sees the release of the Fed’s latest Beige Book .Investors will pore over this to glean insight into each of the 12 Fed districts that contribute to the publication.
We expect investors will be squaring up the data with comments made today by Fed Chair Powell (see above) as well as this week’s PMI data from ISM and Markit Economics.
Markets
Renewed Ukraine-Russian tensions weighed on equities yesterday as Russian forces attacked civilian areas in Ukraine and Russia’s defense ministry warned of missile strikes on Ukrainian intelligence and communications facilities in Kyiv.Published satellite images showed a 40-mile long convoy of Russian military vehicles approaching Kyiv.Those developments combined with oil prices passing $106 per barrel led the S&P 500 to shed 1.6% yesterday.Despite the move lower in Treasury yields, the Nasdaq Composite closed 1.6% lower while the Dow Jones Industrial Average and the Russell 2000 lost 1.8% and 1.9%, respectively on the day.Year-to-date, here’s how the major market indicators stack up:
Dow Jones Industrial Average: -8.4% S&P 500: -9.7% Nasdaq Composite: -13.5% Russell 2000: -10.6% Bitcoin (BTC-USD): -3.8% Ether (ETH-USD): -19.0% Stocks to Watch Before trading kicks off, Abercrombie & Fitch ( ANF ), Dollar Tree ( DLTR ), Dycom ( DY ), and Patterson Companies ( PDCO ) will release earnings.
Salesforce ( CRM ) topped January quarter expectations with beats on both its top and bottom lines, however, it offered mixed guidance for the current quarter with EPS of $0.93-$0.94 vs.the $1.00 consensus.Revenue for the current quarter is expected to reach $7.37-7.38 billion vs.
the $7.24 billion consensus.Salesforce did boost its 2023 revenue expectation to $32.0-$32.1 billion, up from its previous forecast of $31.7-$31.8 billion in November.
Amidst its quarterly earnings report, Ross Stores ( ROST ) shared its domestic freight costs are up 100 basis points and its ocean freight costs are also higher leading its merchandise margin to drop by 50 basis points.
Coffee company Dutch Bros ( BROS ) reported mixed quarterly results as revenue bested expectations while its EPS for the quarter missed by $0.01.Same-store comp sales rose 10.1% YoY and the company expressed an outlook for same-store comps to be in the mid-single digits for the current quarter.
The company shared at in November it took a 2.9% price increase and that it will look at its pricing every six months.
On February 20, Expeditors International of Washington ( EXPD ) announced it was the target of a cyber-attack and has now shared it expects to continue to incur higher cybersecurity expenses in the future.The company expects the impact of the prior shutdown and the ongoing impacts of the cyber-attack will have a material adverse impact on its business, revenues, expenses, results of operations, cash flows, and reputation.At this stage, Expeditors is unable to estimate the ultimate direct and indirect financial impacts of this cyber-attack.
Netflix ( NFLX ) has agreed to acquire Next Games, a Finnish video game development company that is licensed to publish mobile games based on “The Walking Dead” and Netflix’s “Stranger Things.”
Movie theater chain AMC ( AMC ) announced it is testing out variable pricing in the U.S., which could mean watching a new movie release could cost more than other films playing in the same theaters at the same time.
Ford Motor ( F ) is expected to announce a reorganization under which its electric vehicle (EV) and internal-combustion engine (ICE) units will be run as separate businesses in a move to fast track growth in EVs.
During his State of the Union address last night, President Biden announced a ban on Russian aircraft and airlines entering American airspace.While U.S.
carriers don’t operate any non-stop flights to Russia, its airspace is part of a key corridor for many long-haul flights to Asia and will have an impact on air-cargo operations run by the likes of FedEx ( FDX ) and UPS ( UPS ) .Per data from IATA, cargo flights between Asia and North America account for a quarter of global freight traffic.
IPOs
There are no IPO offerings expected to price this week.Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page .
After Today’s Market Close
American Eagle (AEO), Box (BOX), ChargePoint (CHPT), Okta (OKTA), Signify Health (SGFY), Snowflake (SNOW), and Victoria’s Secret (VSCO) will be reporting their latest quarterly results.Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar .
On the Horizon Thursday, March 3
Japan: PMI Services – February China: Markit/Caixin Services PMI – February Eurozone: Markit PMI Services & Composite PMI – February Eurozone: Producer Price Index – February Eurozone: Unemployment Rate – January US: Weekly Initial & Continuing Jobless Claims US: Unit Labor Costs – 4Q 2021 US: Markit PMI Services – February US: Durable Orders – January US: Factory Orders – January US: ISM Non-Manufacturing Index – February Friday, March 4
UK: CIPS Construction PMI – February Eurozone: Retail Sales – February.US: Employment Report – February Thought for the Day “One day, in retrospect, the years of struggle will strike you as the most beautiful.” ~Sigmund Freud
Disclosures Okta (OKTA) is a constituent of the Foxberry Tematica Research Cybersecurity & Data Privacy Index Intel (INTC) is a constituent of the Tematica BITA Digital Infrastructure & Connectivity Index .
