The major U.S. index futures are currently pointing to a roughly flat open on Wednesday, with stocks likely to show a lack of direction following the substantial rebound seen in the previous session.

A lack of major U.S. economic data may keep some traders on the sidelines ahead of the release of several key reports in the coming days.

On Thursday, the Labor Department is scheduled to release its report on producer price inflation in the month of February, which may shed additional light on the outlook for interest rates.

Producer prices are expected to rise by 0.3 percent in February, matching the increase seen in January, while the annual rate of producer price growth is expected to accelerate to 1.1 percent from 0 .9 percent.

Reports on weekly jobless claims and retail sales are also due to be released on Thursday, with retail sales expected to rebound in February after slumping in January.

On Friday, trading may be impacted by reaction to reports on import and export prices, industrial production and consumer sentiment.

The University of Michigan’s preliminary report on consumer sentiment in March may be in focus, as it includes reading on inflation expectations.

After moving mostly lower in Friday and Monday’s sessions, stocks showed a strong move back to the upside during trading on Tuesday. The major averages fluctuated over the course of the session but finished the day firmly in positive territory.

The tech-heavy Nasdaq helped lead the way higher on the day, surging 246.36 points or 1.5 percent to 16,265.63. The S&P 500 also jumped 57.33 points or 1.1 percent to a new record closing high of 5,175.27, while the narrower Dow climbed 235.83 points or 0.6 percent to 39,005.49.

The strength on Wall Street partly reflected a positive reaction to the Labor Department’s highly anticipated report on consumer price inflation in the month of February.

The Labor Department said its consumer price index climbed by 0.4 percent in February after rising by 0.3 percent in January. The increase matched economist estimates.

Excluding food and energy prices, core consumer prices also rose by 0.4 percent in February, matching the increase seen in January. Economists had expected core prices to rise by 0.3 percent.

The report also said the annual rate of consumer price growth ticked up to 3.2 percent in February from 3.1 percent in January. The year-over-year growth was expected to be unchanged.

Meanwhile, the annual rate of core consumer price growth slowed to 3.8 percent in February from 3.9 percent in January. Economists had expected the pace of growth to decelerate to 3.7 percent.

While core price growth slowed by slightly less than expected, the slowdown still seems to have added to optimism about the Federal Reserve lowering interest rates in June.

“Although inflation has continued to ease, much of core inflation remains ‘sticky’ and isn’t unwinding at a pace that would offer the Fed the confidence it needs to begin the easing cycle perhaps even in June,” said Quincy Krosby, Chief Global Strategist for LPL Financial.

She added, “What could help underpin a move in June or July, however, is that Owners Equivalent Rent (OER) has begun to tick lower, and given its heavy weighting in the CPI a continued downward trajectory by June or July could certainly assuage Fed concerns regarding inflation remaining stubbornly higher.”

Software stocks saw substantial strength on the day, resulting in a 2.6 percent surge by the Dow Jones U.S. Software Index.

Oracle (ORCL) led the sector higher, soaring by 11.8 percent after reporting better than expected fiscal third quarter earnings and strong cloud revenue growth.

Semiconductor stocks also showed a significant move back to the upside, driving the Philadelphia Semiconductor Index up by 2.1 percent.

Considerable strength was also visible among retail stocks, as reflected by the 1.5 percent gain posted by the Dow Jones U.S. Retail Index.

On the other hand, gold stocks moved sharply lower along with the price of the precious metal, dragging the NYSE Arca Gold Bugs Index down by 2.0 percent.

Commodity, Currency Markets

Crude oil futures are jumping $1.34 to $78.90 a barrel after falling $0.37 to $77.56 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $2,169.60, up $3.50 compared to the previous session’s close of $2,166.10. On Tuesday, gold slumped $22.50.

On the currency front, the U.S. dollar is trading at 147.97 yen compared to the 147.68 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0936 compared to yesterday’s $1.0927.

Asia

Asian stocks ended on a lackluster note on Wednesday as hopes faded for an early rate cut by the U.S. Federal Reserve and investors monitored the early headlines on Japan’s spring wage negotiations for clues on a possible shift in policy.

The dollar steadied and gold was marginally higher in Asian trading, while oil prices rebounded on industry data showing a large, unexpected draw in U.S. crude inventories.

China’s Shanghai Composite Index dropped 0.4 percent to 3,043.83, with property developers falling sharply as Country Garden missed a coupon payment.

Hong Kong’s Hang Seng Index finished marginally lower at 17,082.11, while Country Garden Holdings shares tumbled 4.9 percent.

Japanese markets closed modestly lower, while the yen strengthened as the country’s largest employers announced record pay increases, stoking speculation the Bank of Japan could end its negative interest rate policy at its meeting next week.

Following the wage hikes, BoJ Governor Kazuo Ueda noted, “We will scrutinize the wage talk outcome, as well as other data and information from our hearings, in making policy decisions.”

The Nikkei 225 Index slipped 0.3 percent to 38,695.97, while the broader Topix Index settled 0.3 percent lower at 2,648.51.

Toyota Motor shed 0.9 percent and Nippon Steel finished marginally lower after they agreed to historic pay hikes. Panasonic Holdings gave up 1.8 percent.

Seoul stocks eked out modest gains after the jobless rate in the country fell to 2.6 percent in February from 3 percent in the prior month. The Kospi rose 0.4 percent to 2,693.57, hitting a 23-month high.

Chipmaker Samsung Electronics jumped 1.1 percent after reports that it plans to use a chip-making technology championed by rival SK Hynix. Shares of the latter fell 1.3 percent.

Australian stocks closed higher as banks and real estate stocks gained ground, offsetting losses in the mining sector.

The benchmark S&P ASX 200 Index edged up 0.2 percent to 7,729.40 while the broader All Ordinaries Index ended 0.2 percent higher at 7,989.50.

Liontown Resources soared 6.1 percent after the lithium developer secured a debt facility of AU$550 million for the expansion of its Kathleen Valley lithium project.

Across the Tasman, New Zealand’s benchmark S&P/NZX 50 Index eased 0.2 percent to close at 11,809.02.

Europe

European stocks are subdued on Wednesday as investors digest mixed earnings results and look ahead to the release of more U.S. data this week for clues on when the Federal Reserve will begin cutting interest rates.

Meanwhile, new data showed earlier today that German wholesale prices continued to decline in February. Wholesale prices dropped 3.0 percent on a yearly basis, sharper than the 2.7 percent fall in January.

Elsewhere, data showed the U.K. economy grew modestly in January after falling into a technical recession in the second half of last year.

GDP posted an expansion of 0.2 percent in January, reversing a 0.1 percent dip in December, driven by services and construction output.

While the French CAC 40 Index is up by 0.5 percent, the U.K.’s FTSE 100 Index and the German DAX Index are marginally lower.

Spanish clothing company Inditex has jumped after reporting higher profit before tax for the full year, primarily helped by growth in sales.

Advanced Medical Solutions has also rallied in London after it has agreed to the proposed acquisition of Peters Surgical, a global provider of specialty surgical sutures, mechanical haemostasis, and internal cyanoacrylate devices.

Allianz Technology Trust has also moved to the upside after announcing turnaround financial results for fiscal 2023, while Balfour Beatty has soared on share buyback news.

Zalando has also surged higher. After reporting a decline in annual sales, the online fashion retailer said it expects to return to growth in 2024.

E.ON, Europe’s biggest operator of energy networks, has also spiked after its 2024 profit guidance beat expectations.

Meanwhile, Sandoz, the global leader in generic and biosimilar medicines, has declined after core net income for fiscal year 2023 dropped to $953 million from last year’s $1.22 billion.

Hochschild Mining has also tumbled after it slipped to a loss in FY23, while sportswear giant Adidas has fallen after reporting an annual loss for 2023.

German automaker Volkswagen has also dipped despite reporting robust financial results in a challenging environment in 2023.

U.S. Economic Reports

The Energy Information Administration is scheduled to release its report on oil inventories in the week ended March 8th at 10:30 am ET.

Crude oil inventories are expected to increase by 1.3 million barrels after rising by 1.4 million barrels in the previous week.

At 1 pm ET, the Treasury Department is due to announce the results of this month’s auction of $22 billion worth of thirty-year bonds.

Stocks In Focus

Shares of Petco Health and Wellness (WOOF) are moving sharply higher in pre-market trading after the pet supplies retailer reported better than expected fiscal fourth quarter revenues.

Cruise line operators Carnival (CCL) and Royal Caribbean (RCL) may also move to the upside after Goldman Sachs initiated coverage of both companies’ stocks with Buy ratings.

On the other hand, shares of Tesla (TSLA) may move to the downside after Wells Fargo downgraded its rating on the electric vehicle maker’s stock to Underweight from Equal Weight.




Quiet Economic Day May Lead To Choppy Trading On Wall Street

2024-03-13 12:52:31

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