MARKET WRAPS
Watch For:
Producer Price Index for February; Retail Sales for February; Manufacturing and Trade Inventory and Sales for January; EIA Weekly Petroleum Status Report; Canada Housing Starts for February
Today's Top Headlines/Must Reads:
- February Retail Sales to Show if Consumers Pulled Back
- Fed to Consider Tougher Rules for Midsize Banks After SVB, Signature Failures
- Where Investors Are Parking Their Cash Now
- Real-Estate Investor Run on Signature Bank Helped Fuel Its Demise
- Mark Zuckerberg on How to Run a Company in 2023
- Meta Plans 10,000 Job Cuts in New Round of Layoffs
Follow WSJ market coverage here
Opening Call:
Stock futures were moving lower on Wednesday ahead of retail sales data, despite reduced volatility in government bond markets signaling an easing of financial sector angst and less uncertainty about Federal Reserve policy.
Providing there are no shocks from the retail sales and factory gate prices reports, the market expects the central bank to raise interest rates by 25 basis points to a range of 4.7%% to 5.0% after its meeting on March 22nd.
Deutsche Bank said "investors are rowing back on their predictions of an imminent pause in rate hikes, not least after the US CPI print offered a fresh reminder about high inflation."
"Obviously we're still a long way from the pre-SVB state of affairs that prevailed last Wednesday, but with worries about bank contagion starting to subside, we're finally seeing some optimism return to financial markets again," Deutsche concluded.
In Asia, investor sentiment recovered, reversing sharp declines the day earlier. Nervousness continued in Europe, however, with the Stoxx 600 index down 1.3%, led lower by shares of retailers, energy companies and banks. London stocks traded lower as traders awaited the U.K. Treasury spring budget.
Stocks to Watch
Boxed said it is considering selling the whole company or filing for bankruptcy. Shares fell 44% to 24 cents in after-hours trading.
First Republic Bank was rising 12.2% in premarket trading after soaring nearly 27% on Tuesday, while Western Alliance Bancorp was up 7.1% after gaining 14.4% in the previous session as shares of regional banks rebounded.
Guess? warned of an unexpected loss in the first quarter. Shares of the clothing brand and retailer dropped 6.5% to $19.88 in after-hours trading.
Lennar reported fiscal first-quarter earnings and revenue that beat analysts' expectations.
Luna Innovations provided a revenue outlook for the current quarter and 2023 revenue below analysts expectations. Shares fell 12% to $8.40 in after-hours trading.
SentinelOne was rising 4.8% after saying it expects first-quarter revenue of $137 million, higher than year-earlier revenue of $78.3 million.
Smartsheet said it expects to continue achieving growth in the first quarter following a strong set of results for the fourth quarter of 2022. The stock rose 11.7% in premarket trading.
Forex:
The dollar edged higher against a basket of currencies, as the latest inflation data suggested the Federal Reserve still has work to do to combat rising prices.
Meanwhile, "EUR/USD is consolidating its recovery above 1.07 ahead of the European Central Bank meeting tomorrow as investors remain convinced that there is no major obstacle to the bank delivering another 50 basis points rate hike," Unicredit Research said.
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U.K. Treasury chief Jeremy Hunt's spring budget due later Wednesday is likely to prove neutral for sterling, ING said.
"We doubt anything in the budget will be sterling negative--after all taxation levels are near the limit--but equally we do not see it as especially sterling positive either," ING said.
The budget could include measures to improve the cost of living crisis, address labor shortages and incentives on investment.
However, Hunt will probably save more overt fiscal stimulus for the Autumn Statement later this year or next year's budget before the general election later in 2024, ING said.
Energy:
Oil prices recovered somewhat in Europe, however, the gains only go a short way to recouping some of Tuesday's heavy losses.
ING said oil markets have had to grapple both with SVB's failure and U.S. CPI in which core inflation was stronger than expected.
"This makes it increasingly difficult to second-guess what the [Fed] may decide to do at its...meeting next week."
Read Fed Likely to Continue Its Interest-Rate Hiking Cycle Despite Banking Woes
Metals:
Base metals were lower despite a rebound in Chinese economic activity during the first two months of the year and China's central bank keeping its policy rates unchanged.
Meantime, gold was down as Treasury yields recovered after a largely in-line U.S. inflation report quelled notions that the Fed could pause rate increases, Oanda said.
However, ANZ said that looking ahead, the market was expecting the Fed to ease its monetary policy stance, which could be reflected in higher commodity prices.
"The impact of [U.S. CPI] inflation data was unclear. The Fed is likely to maintain its tough position on inflation, but it won't want to add further turmoil to the banking sector," ANZ said.
Steel Mills/Iron-Ore
Some Chinese steelmakers are being slow in replenishing their iron-ore inventories due to robust prices for the steel ingredient, Macquarie said.
Even though steel margins are improving, some mills are "maintaining low stock levels due to 'unattractive' iron-ore prices," Macquarie said.
Exports from Rio Tinto and BHP have softened recently because of port maintenance works.
TODAY'S TOP HEADLINES
Real-Estate Investor Run on Signature Bank Helped Fuel Its Demise
A rush by New York City real-estate investors to yank money out of Signature Bank last week played a significant role in the bank's collapse, according to building owners and state regulators.
The withdrawals gained momentum as talk circulated about the exposure Signature had to cryptocurrency firms and that its fate might follow the same path as Silicon Valley Bank, which suffered a run on the bank last week before collapsing and forcing the government to step in.
Boeing, Families Argue Over Pay for 737 MAX Victims' Suffering
Four years after a second 737 MAX crashed, Boeing Co. and attorneys for families of the dead are arguing over whether the plane maker should have to pay for the victims' suffering.
Boeing attorneys say the crash victims died instantaneously when the Ethiopian Airlines jet slammed into the ground. They argue in court documents that any pain and suffering they may have felt before impact aren't legally relevant for calculating damages.
Mark Zuckerberg on How to Run a Company in 2023
Cancel unnecessary projects. Eliminate middle management. Flatten the corporate hierarchy.
Mark Zuckerberg on Tuesday laid out to staff an updated vision of how he wants Meta Platforms Inc. to operate in what he has coined a "year of efficiency."
Facebook Parent Meta Plans 10,000 Job Cuts in New Round of Layoffs
Meta Platforms Inc. said it would cut roughly 10,000 jobs over the coming months, the Facebook parent's second wave of mass layoffs in what it says is an effort to be more efficient in a difficult economy.
Meta Chief Executive Mark Zuckerberg said in an email to staff on Tuesday that the company would in the coming months conduct multiple rounds of job cuts, as well as cancel some projects and reduce hiring rates as part of what he has dubbed the "year of efficiency."
Foxconn's Fourth-Quarter Net Profit Fell 9.9% as Covid Outbreaks Disrupted China Operations
Foxconn Technology Group's fourth-quarter net profit fell 9.9% from a year earlier as Covid-19 outbreaks disrupted some operations in China and profit margin deteriorated.
The Taiwan-based electronics maker, formally known as Hon Hai Precision Industry Co., said Wednesday that net profit for the quarter ended Dec. 31 fell to 39.98 billion New Taiwan dollars (US$1.31 billion) from NT$44.40 billion during the same period a year earlier. That narrowly beat the estimate of NT$39.78 billion from a poll of analysts by S&P Global Market Intelligence.
BMW Expects Higher Deliveries in 2023 as It Ramps Up Electric, High-End Vehicles
BMW AG said Wednesday that it expects its automotive deliveries to increase in 2023, driven by a ramp-up in battery electric and high-end vehicles.
The German car maker said it is also targeting an earnings before interest and taxes margin of between 8% and 10% this year for its automotive segment. In 2022, the automotive segment EBIT margin was 8.6%
IT Leaders Reassess Vendor Risks After Silicon Valley Bank Collapse
Corporate information technology leaders say they are reassessing vendor relationships and putting greater emphasis on risk management as they navigate the aftermath of the Silicon Valley Bank collapse.
"You can be proactive all you want, but the response to a crisis, the response to a disruption no one saw coming, is just as important," said Sineesh Keshav, chief technology officer and chief information officer at logistics real-estate company Prologis Inc. He and other executives spoke Tuesday at The Wall Street Journal's CIO Network Summit in Palo Alto, Calif.
OpenAI Rolls Out Updated Version of Viral Chatbot ChatGPT
The company behind the viral chatbot ChatGPT launched a new version of its artificial intelligence technology on Tuesday, saying it was more powerful and predictable than previous versions and capable of analyzing images and handling much larger blocks of text.
The announcement from OpenAI-a startup backed by billions of dollars from Microsoft Corp.-is the latest in a string of generative AI announcements as companies try to get ahead in the race to build and use the buzzy new technology.
Diamond Sports Files for Bankruptcy With $8 Billion in Debt
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03-15-23 0625ET
