Intel May Help Lead The Way Higher On Wall Street

The major U.S. index futures are currently pointing to a higher open on Wednesday, with stocks likely to regain ground after coming under pressure late in the previous session.

The markets are likely to benefit from an early advance by shares of Intel (INTC), with the semiconductor giant spiking by 3.6 percent in pre-market trading.

The jump by Intel comes after CEO Pat Gelsinger outlined the company’s path forward to manufacture, design and deliver leadership products and create long-term value for stakeholders.

Gelsinger announced significant manufacturing expansion plans, including building two new factories in Arizona. He said Intel also plans to become a major provider of foundry capacity in the U.S. and Europe to serve customers globally.

Buying interest may also be generated in reaction to the recent stabilization in bond yields, which have pulled back after reaching their highest levels in over a year last week.

Yields on ten-year notes and thirty-year bonds are moving modestly lower this morning following the notable downward move seen over the two previous sessions.

However, the early buying interest may be partly offset by a report from the Commerce Department showing an unexpected decrease in durable goods orders in the month of February.

The data follows the recent release of disappointing reports on retail sales, industrial production and home sales, potentially raising concerns about the pace of the economic recovery.

Stocks showed a lack of direction throughout much of the trading day on Tuesday but showed a notable move to the downside in the latter part of the session. The major averages all slid firmly into negative territory.

The major averages ended the session near their worst levels of the day. The Dow slumped 308.05 points or 0.9 percent to 32,423.15, the Nasdaq tumbled 149.85 points or 1.1 percent to 13,227.70 and the S&P 500 slid 30.07 points or 0.8 percent to 3,910.52.

The weakness that emerged on Wall Street partly reflected concerns about extended coronavirus lockdowns in Europe amid worries a new wave of infections.

German leaders agreed to extend the country’s lockdown until April 18, raising concerns about demand from Europe’s largest economy.

The news contributed to a steep drop by the price of crude oil, with crude for May delivery plunging $3.80 to $57.76 a barrel.

Traders also kept an eye on Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen’s virtual testimony before the House Financial Services Committee.

In prepared remarks, Powell reiterated the Fed’s recent assessment that indicators of economic activity and employment have turned up recently.

Powell noted that the economic recovery is “far from complete,” however, and stressed the Fed will continue to provide the support that the economy needs for “as long as it takes.”

On the U.S. economic front, a report released by the Commerce Department showed a nosedive by U.S. new home sales in the month of February.

The Commerce Department said new home sales plummeted by 18.2 percent to an annual rate of 775,000 in February after jumping by 3.2 percent to an upwardly revised rate of 948,000 in January.

Economists had expected new home sales to tumble by 5.2 percent to a rate of 875,000 from the 923,000 originally reported for the previous month.

With the much bigger than expected decrease, new home sales plunged to their lowest rate since hitting 698,000 last May.

Oil service stocks moved sharply lower along with the price of crude oil, dragging the Philadelphia Oil Service Index down by 6.2 percent to its lowest closing level in a month.

Substantial weakness was also visible among airline stocks, as reflected by the 4.1 percent nosedive by the NYSE Arca Airline Index.

Biotechnology stocks also saw considerable weakness on the day, resulting in a 3.7 percent slump by the NYSE Arca Biotechnology Index.

Ionis Pharmaceuticals (IONS) helped the sector lower after announcing its partner, Roche, has decided to discontinue dosing in the Phase III study of tominersen in manifest Huntington’s disease.

Steel, computer hardware and gold stocks also moved sharply lower over the course of the session, while utilities stocks were among the few groups to buck the downtrend.

Commodity, Currency Markets

Crude oil futures are jumping $1.53 to $59.29 a barrel after plummeting $3.80 to $57.76 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,731.10, up $6 compared to the previous session’s close of $1,725.10. On Tuesday, gold slid $13.

On the currency front, the U.S. dollar is trading at 108.69 yen compared to the 108.59 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1828 compared to yesterday’s $1.1849.

Asia

Asian stocks ended mostly lower on Wednesday as investors remained wary of spikes in coronavirus cases in major economies, including Germany, France and Italy.

The sluggish vaccination campaign in Europe, sinking crude oil prices and increasing tensions between China and Western nations also rattled investors.

Chinese shares fell for the second straight day as policy tightening concerns persisted. The benchmark Shanghai Composite Index slumped 44.45 points, or 1.3 percent, to 3,367.06.

Hong Kong’s Hang Seng Index tumbled 2 percent to 27,918.14 as Hong Kong and Macau temporarily suspended Covid vaccines from BioNTech SE due to defective packaging.

Japanese shares extended losses for the fourth straight day as falling oil prices and concerns about the return of coronavirus lockdowns in Europe dented hopes of a broad economic recovery.

The Nikkei 225 Index plunged 590.40 points, or 2 percent, to 28,405.52, while the broader Topix closed 2.2 percent lower at 1,928.58, marking its biggest daily percentage decline since February 26.

Energy shares led the declines as Germany extended its lockdown measures by another month and imposed several new restrictions. Inpex Corp. lost 5.7 percent and Japan Petroleum lost 5.5 percent.

Nikon Corp. surged 6.4 percent on buzz it would benefit from U.S. semiconductor maker Intel’s move to greatly expand its advanced chip manufacturing capacity. Tokyo Electron climbed 5.1 percent.

On the economic front, the manufacturing sector in Japan expanded at a slightly faster pace in March, the latest survey from Jibun Bank showed, with a manufacturing PMI score of 52.0, up from 51.4 in February. The services PMI came in at 46.5, up from 45.8 in February.

Minutes from the Bank of Japan’s meeting on January 20 and 21 revealed that members are ready to maintain stimulus as long as necessary.

Australian markets recovered from a lackluster start to end modestly higher. The benchmark S&P/ASX 200 Index inched up 33.40 points, or half a percent, to 6,778.80, while the broader All Ordinaries Index ended up 27.30 points, or 0.4 percent, at 7,013.90.

Santos dropped 1.5 percent after the oil and gas explorer said it expects to make a final investment decision on its Barossa project in the coming weeks. Origin Energy, Beach Energy, Oil Search and Woodside Petroleum fell 1-3 percent after crude oil prices sank overnight.

Miners ended mostly higher, with Rio Tinto climbing 1.8 percent, while gold miners Evolution Mining and Newcrest rose about 1 percent. Healthcare and tech stocks also finished broadly higher.

Westpac Banking fell about 1 percent after the Reserve Bank of New Zealand ordered the bank to conduct independent reviews and hold additional liquid assets due to problems with its risk governance and liquidity risk management.

In economic news, a survey showed the manufacturing sector in Australia expanded at a slightly faster pace in March, with a manufacturing PMI score of 57.0, up from 56.9 in February. The services PMI came in at 56.2, up from 53.4 in February.

Seoul stocks fell for the fourth straight day on concerns over the resurgence of virus cases in Europe and the United States. The benchmark Kospi slid 8.39 points, or 0.3 percent, to 2,996.35, closing below the psychologically important 3,000-point threshold for the first time in two weeks.

Tech stocks such as Samsung Electronics and SK Hynix fell about 1 percent each, while automaker Hyundai Motor gave up 2.4 percent.

Europe

European shares have fallen on Wednesday as a jump in Covid-19 cases across Europe and concerns over the slow pace of vaccinations have triggered risk aversion.

Germany, France and Italy have expanded virus-related curbs amid a third wave of infections. The head of the World Health Organization said recent increases in deaths and cases represent “truly worrying trends.”

While the German DAX Index has fallen by 0.6 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index are both down by 0.3 percent.

Banks Deutsche Bank, BNP Paribas and HSBC Holding have moved to the downside, while oil majors Total SE, BP Plc and Royal Dutch Shell are also moving lower after crude oil prices plummeted by about 6 percent overnight.

British housebuilder Bellway has also shown a notable downward move after posting lower half-yearly profits.

German real estate investment company Deutsche EuroShop AG has also slumped. The company reported that its funds from operations for the 2020 financial year declined to 123.3 million euros from 149.6 million euros in the previous year.

Meanwhile, French retailer Carrefour SA has risen. Grupo Carrefour Brasil has agreed with Advent International and Walmart for the acquisition of Grupo BIG Brasil SA, Brazil’s third-biggest food retailer.

Halma, a safety, health and environmental-technology group, has also jumped after it forecast adjusted pretax profit for the fiscal year to be higher than previous guidance.

In economic news, German private sector growth accelerated in March, driven by a record expansion in manufacturing, flash data from IHS Markit showed.

The flash composite output index rose to a 37-month high of 56.8 from 51.1 in February. The reading was well above economists’ forecast of 51.6.

U.K. consumer price inflation slowed unexpectedly in February, figures from the Office for National Statistics revealed.

Consumer price inflation eased to 0.4 percent from 0.7 percent in January. The rate was forecast to rise to 0.8 percent. Month-on-month, consumer prices edged up 0.1 percent, in contrast to January’s 0.2 percent drop.

U.S. Economic Reports

New orders for U.S. manufactured durable goods unexpectedly decreased in the month of February, the Commerce Department revealed in a report released on Wednesday.

The Commerce Department said durable goods orders slumped by 1.1 percent in February after spiking by an upwardly revised 3.5 percent in January.

The pullback came as a surprise to economists, who had expected durable goods orders to climb by 0.8 percent compared to the 3.4 percent jump that had been reported for the previous month.

Excluding a steep drop in orders for transportation equipment, durable goods orders still fell by 0.9 percent in February after surging up by 1.6 percent in January. Economists had expected a 0.6 percent increase.

At 10 am ET, Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen are scheduled to testify before the Senate Banking Committee.

The Energy Information Administration is due to release its report on oil inventories in the week ended March 19th at 10:30 am ET.

Crude oil inventories are expected to edge down by 0.9 million barrels after rising by 2.4 million barrels in the previous week.

At 1 pm ET, the Treasury Department is scheduled to announce the results of this month’s auction of $61 billion worth of five-year notes.

New York Federal Reserve President John Williams is due to participate in virtual event hosted by Syracuse University and Onondaga Community College at 1:35 pm ET.

At 3 pm ET, San Francisco Federal Reserve President Mary Daly is scheduled to speak on equitable growth, opportunity and modern Federal Reserve policy before a virtual Northeastern University Economic Policy Forum Series.

Chicago Federal Reserve President Charles Evans is due to participate in moderated question-and-answer session on current economic conditions and monetary policy before a virtual Japan Society of Chicago event at 7 pm ET.

Stocks In Focus

Shares of At Home Group (HOME) are moving sharply higher in pre-market trading after the home décor retailer reported fiscal fourth quarter results that exceeded analyst estimates on both the top and bottom lines.

Recreational vehicle maker Winnebago (WGO) is also likely to see initial strength after reporting better than expected fiscal second quarter results.

On the other hand, shares of GameStop (GME) are likely to come under pressure after the video game retailer reported fiscal fourth quarter results that missed analyst estimates.

Food producer General Mills (GIS) may also move to the downside after reporting weaker than expected fiscal third quarter earnings.