The S&P 500 Index ($SPX) (SPY) Tuesday is down -0.06%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.09%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.08% this morning as market participants refrained from making major moves ahead of the eagerly awaited today's Federal Reserve decision that will help shape the outlook for interest rates this year.
In yesterday’s trading session, Wall Street’s major indices ended in the green. International Paper (IP) climbed over +10% and was the top percentage gainer on the S&P 500 after the maker of paper products announced that Andrew Silvernaill, former executive adviser at KKR, will succeed Mark Sutton as CEO, effective May 1st. Also, Nordstrom (JWN) advanced more than +9% following a Reuters report indicating that the department store chain’s founding family is contemplating a new takeover offer. In addition, Home Depot (HD) rose about +2% and was the top percentage gainer on the Dow after Mizuho Securities initiated coverage of the stock with a Buy rating and a $415 price target. On the bearish side, Super Micro Computer (SMCI) slumped more than -8% and was the top percentage loser on the S&P 500 after offering to sell 2 million shares of common stock in a public offering. Also, semiconductor stocks retreated, with Advanced Micro Devices (AMD) plunging over -4% and Marvell Technology (MRVL) falling more than -3%.
Economic data on Tuesday showed that U.S. building permits, a proxy for future construction, rose +1.9% m/m to a 6-month high of 1.518M in February, stronger than expectations of 1.500M. In addition, U.S. February housing starts jumped +10.7% m/m to 1.521M, compared with the 1.430M consensus.
Today, all eyes are focused on the Federal Reserve’s monetary policy decision later in the day. With the Fed anticipated to keep rates on hold for a fifth straight meeting, the focus will turn to the central bank’s quarterly “dot plot” and Chair Jerome Powell’s post-decision press conference. The summary of economic projections will unveil whether the recent strong economic data are prompting officials to reconsider their plans to reduce rates or if their outlook for three rate cuts this year remains unchanged.
“We don’t think the Fed will fundamentally change its outlook for inflation based on two hotter-than-desired prints to start the year. However, we do expect a slightly more hawkish tone in the hopes of keeping a leash on financial conditions,” said Christopher Hodge, chief economist at Natixis CIB Americas.
On the earnings front, notable companies like Micron Technology (MU), General Mills (GIS), Five Below (FIVE), and Chewy (CHWY) are set to report their quarterly figures today.
On the economic data front, investors will likely focus on U.S. Crude Oil Inventories data due later in the day. Economists estimate this figure to be -0.900M, compared to last week’s value of -1.536M.
In the bond markets, United States 10-year rates are at 4.277%, down -0.16%.
The Euro Stoxx 50 futures are down -0.32% this morning as investors adopted a cautious stance in anticipation of the latest monetary policy decision from the U.S. Federal Reserve. Losses in luxury stocks are leading the overall market lower, with Kering (KER.FP) tumbling over -14% after issuing a warning that Gucci sales are expected to fall by 20% year-on-year in the first quarter amid declining Asia transactions. Data from the Office for National Statistics showed Wednesday that Britain’s annual inflation rate fell more than expected in February, marking its lowest level since September 2021. Separately, the Federal Statistical Office said on Wednesday that German annual producer prices experienced a larger-than-anticipated decline in February. In other corporate news, Lonza Group Ag (LONN.Z.IX) climbed over +4% after agreeing to buy Roche’s Genentech manufacturing facility in California for $1.2 billion in cash.
U.K.’s CPI, U.K.’s Core CPI, Germany’s PPI, and Italy’s Industrial Production data were released today.
U.K. February CPI has been reported at +0.6% m/m and +3.4% y/y, weaker than expectations of +0.7% m/m and +3.5% y/y.
U.K. February Core CPI stood at +0.6% m/m and +4.5% y/y, weaker than expectations of +0.7% m/m and +4.6% y/y.
The German February PPI arrived at -0.4% m/m and -4.1% y/y, weaker than expectations of -0.1% m/m and -3.8% y/y.
The Italian January Industrial Production came in at -1.2% m/m, weaker than expectations of -0.6% m/m.
China’s Shanghai Composite Index (SHCOMP) closed up +0.55%, while Japanese markets were closed for a holiday.
China’s Shanghai Composite Index closed higher today after the People’s Bank of China said the benchmark interest rates were held steady as expected. Media and software stocks outperformed on Wednesday. Tech giants and mainland developers listed in Hong Kong also rose. China kept benchmark lending rates unchanged at a monthly fixing on Wednesday, matching market expectations after the central bank held its key policy rates unchanged this month. According to the People’s Bank of China, the one-year loan prime rate stayed at 3.45%, and the five-year LPR remained steady at 3.95%. Meanwhile, in a statement released late Tuesday, China’s central bank announced a reshuffle of its monetary policy committee, adding securities regulator head Wu Qing, vice central bank chief Xuan Changneng, and two new academic members. In other news, Bloomberg News reported that the U.S. is contemplating placing a number of Chinese semiconductor companies associated with Huawei Technologies Co. on a blacklist following the company’s unexpected chip advancement last year. In corporate news, Tencent Music Entertainment Group surged +11% after the company reported better-than-expected Q4 revenue.
Japan’s Nikkei Stock Index today was closed for the Vernal Equinox holiday. The markets will reopen on Thursday.
Pre-Market U.S. Stock Movers
Intel Corporation (INTC) rose more than +3% in pre-market trading after the White House said the company would receive up to $8.5 billion in grants and $11 billion in loans under the CHIPS and Science Act. The awards will be announced by President Joe Biden in Arizona on Wednesday.
Chipotle Mexican Grill (CMG) climbed over +5% in pre-market trading after the company announced that its board had approved a 50-for-1 split of its common stock.
Harrow Health (HROW) slid more than -8% in pre-market trading after the company reported weaker-than-expected Q4 results.
Riot Platforms (RIOT) gained over +2% in pre-market trading after JPMorgan upgraded the stock to Overweight from Neutral.
Antero Resources (AR) advanced more than +1% in pre-market trading after JPMorgan upgraded the stock to Overweight from Neutral with a price target of $30.
Wells Fargo & Company (WFC) fell over -1% in pre-market trading after Citi downgraded the stock to Neutral from Buy with a price target of $63.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Wednesday - March 20th
Micron (MU), General Mills (GIS), BioNTech (BNTX), Huazhu (HTHT), Five Below (FIVE), Chewy (CHWY), KB Home (KBH), Ollie's Bargain Outlet (OLLI), Signet Jewelers (SIG), Alvotech (ALVO), Worthington Industries (WOR), Corporacion America Airports (CAAP), Enerpac Tool Group (EPAC), Steelcase (SCS), JinkoSolar (JKS), Guess (GES), Kingsoft Cloud (KC).
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