OPENING CALL
Stock futures gained on Thursday and bond yields fell as traders bet that Federal Reserve forecasts and comments from Jerome Powell increase the likelihood that borrowing costs will start to be cut in the summer.
Investor sentiment has also been buoyed by Powell indicating he was not too concerned about the recent uptick in inflation and that the central bank may consider cutting rates even if the labor market remained strong.
"Powell painted a dovish picture by noting that, even though the firmed January and February inflation prints did little to reinforce this confidence, monetary policy remains restrictive and inflation is set to slow in coming months, thereby opening the door to cuts 'at some point this year'," Barclays said.
Markets are pricing in a 94% probability that the Fed will leave interest rates unchanged at a range of 5.25% to 5.50% after its next meeting on May 1st, according to the CME FedWatch tool.
The chances of at least a 25 basis point rate cut by the subsequent meeting in June is priced at 76.1%, up from around 64% on Tuesday. The central bank is expected to take its Fed funds rate target back down to around 4.60% by December, according to 30-day Fed Funds futures.
Premarket Movers
Apple was down 1.1% as the Department of Justice is expected to file a long-anticipated lawsuit against the iPhone maker possibly as soon as this month, alleging antitrust behavior.
Astera Labs was up 6.6% after shares rose 72% in their trading debut on Wednesday and closed at $62.03, well above the initial public offering price of $36.
Shares of Chewy fell 1.4% after it reported fourth-quarter net earnings of 7 cents a share, better than analysts' forecasts.
Five Below shares were fell 12% after it issued a fiscal-year forecast for earnings and sales below Wall Street's expectations.
Guess rose 11% after it posted better-than-expected fourth-quarter earnings and said it expected fiscal 2025 revenue to increase 11.5% and 13.5%.
Micron Technology rose 17% after it reported a surprise fiscal second-quarter profit. Shares of fellow memory-chip maker Western Digital rose 5.9%.
Paramount Global rose 1.7%, having gained 12% on Wednesday after The Wall Street Journal reported that Apollo Global Management made an $11 billion offer to buy Paramount's film and TV studio.
Watch For:
Weekly Jobless Claims; Existing Home Sales; earnings from FedEx, Nike
Today's Headlines/Must Reads:
- Amazon's New Focus: Fending Off Rivals Temu and Shein
- As Fisker Fails, EV Startups Need to Learn From China
- The Fed's Conundrum: Interest Rates Are Both Too High-and Too Low
- America Is Sliding Toward Chinese-Style Capitalism
MARKET WRAPS
Forex:
The dollar was lower after the Fed kept its forecast for three interest-rate cuts this year, and ING said a "dollar bear trend" could now gain momentum over the coming months.
ING noted that many Fed policymakers cited "seasonal problems" with January's high inflation reading and Jerome Powell said strong employment data wouldn't delay a rate cut.
"The Fed seems biased to cut rates even though the economy is doing quite well," ING said.
The Swiss franc hit a multi-month low against the euro after the Swiss National Bank lowered its policy rate by 25 basis points to 1.5%, citing falling inflation, when a majority had expected unchanged rates.
Capital Economics said the SNB could follow Thursday's cut with two more reductions in September and December.
"With the Bank sounding more dovish and inflation likely to undershoot its forecasts, we continue to expect two more rate cuts this year."
Energy:
Oil prices rose on signs of a tighter market and a weaker dollar after Fed officials reaffirmed they see three interest-rate cuts this year despite firmer-than-anticipated inflation.
Oil is still hovering around levels last seen in early November, propped up by concerns over supply amid Ukrainian attacks against Russia's refineries.
Metals:
Metals rose after the Fed proved more dovish than the market had expected, denting the dollar, and helping gold gain more than 2%.
Peak Trading said investors were surprised by the Fed's reaction to higher inflation metrics and strong jobs data, shrugging off this month's stronger U.S. inflation numbers as a "bumpy road towards 2%" and confirming it sees three interest rate cuts over 2024, analysts say in a note.
Peak said this is good news for commodity markets, getting a boost from the softer dollar and better U.S. growth prospects.
Meantime, ICICI Direct Research said gold may extend its rally toward $2,230/oz on the lower dollar and Treasury yields.
TODAY'S TOP HEADLINES
Amazon's New Focus: Fending Off Rivals Temu and Shein
Amazon.com is training its attention on emerging e-commerce players Temu and Shein, viewing the newer platforms as significant threats to its online shopping dominance.
Temu and Shein have, for now, supplanted Walmart and Target as focal points in internal Amazon meetings related to retail, people familiar with the matter said. The companies with Chinese roots are expanding in the U.S. and targeting Amazon customers. Temu has gone on an advertising blitz, spending billions of dollars and becoming the top advertiser by revenue on Meta Platforms in 2023, The Wall Street Journal reported this month.
Shein to Market Its Unique Supply-Chain Technology to Global Brands
China-founded Shein has built a bargain fashion empire with a pioneering small-batch manufacturing model. Now it is planning to open that up to global brands and designers.
The move represents a shift in business strategy as Shein faces challenges in the U.S., its biggest market.
Elon Musk's Neuralink Shows First Patient Using Its Brain Implant
Elon Musk's Neuralink introduced the first patient to receive its brain-computer implant, a 29-year-old diving-accident victim who showed during a livestream that he can now move a computer cursor using the device.
In a nine-minute presentation streamed on Musk's X platform Wednesday, Neuralink showed Noland Arbaugh directing the cursor around a screen to play a game of chess. Arbaugh said it feels like "using the force on a cursor," referring to a concept from movies such as "Star Wars." He said his surgery went well and he left the hospital after one day.
China's Central Bank Hints at More Monetary Easing
China's central bank hinted at more monetary easing ahead and pledged more support for technological innovation, as Beijing doubles down on efforts to juice up its economy and manufacturing sector.
Xuan Changneng, a deputy governor at the People's Bank of China, said that there is still room to cut the amount of cash that lenders have to keep in reserve, adding that the central bank will launch a new relending facility to aid the country's high-end manufacturing and digital economy.
Japan Export Growth Surprises in February
Japan's exports rose by more than expected in February, led by growth in shipments of autos and auto parts, data from the Ministry of Finance showed Thursday.
Exports jumped 7.8% from a year earlier in February, compared with a 11.9% increase in January. The result was higher than the 3.5% rise expected by economists polled by data provider FactSet.
Biden Has Massive Campaign Cash Lead Over Trump as General Election Begins
WASHINGTON-Donald Trump crushed his opponents in nearly every Republican primary this year. But when it comes to the money race, President Biden has a big head start on his predecessor.
In February, Biden's campaign apparatus said it brought in more than $53 million, leaving it with more than $155 million on hand at the end of the month. Trump's operation by comparison reported raising $39.3 million-with $74.4 million in the bank-across his campaign committee, the Republican National Committee, a supportive super PAC and a leadership PAC, which has been drained by shelling out more than $53 million in legal-related expenses since early last year.
Trump Is in Line for a $3.5 Billion Windfall From Stake in Truth Social
Donald Trump's supporters are pushing to hand him a nearly $3.5 billion windfall by driving up the value of his also-ran social-media platform, which is on the cusp of getting approval to list on the stock market.
Trump's winning lottery ticket would come from Truth Social, the social-media platform he launched in 2021. After a twisted path that included tens of millions of dollars in losses and insider-trading convictions, the shell company taking Truth Social public became the market's latest meme stock. Trump's supporters banded together to push up the stock, valuing Truth Social to a staggering $6 billion.
Write to paul.larkins@dowjones.com TODAY IN CANADA
Earnings [4Q unless stated otherwise]:
Diversified Royalty
ECN Capital
K-Bro Linen
Knight Therapeutics
Largo
LifeSpeak
Lithium Americas
Skeena Resources
Vitalhub
Economic Calendar (ET):
0830 Feb New Housing Price Index
0830 Jan Employment Insurance
Stocks to Watch:
Baylin Technologies 4Q Loss/Shr C$0.08; 4Q Cont Ops Loss/Shr C$0.07; 4Q Rev C$16.1M
Epsilon Energy 2023 EPS 31c; 2023 Rev $30.7M
Filo 4Q Loss/Shr C$0.25
Expected Major Events for Thursday
00:30/JPN: Mar Japan Flash Manufacturing PMI
05:00/JPN: Feb Convenience Store Sales
07:00/UK: Feb Public sector finances
07:45/FRA: Mar Monthly business survey (goods-producing industries)
08:15/FRA: Mar France Flash PMI
08:30/GER: Mar Germany Flash PMI
09:30/UK: Mar Flash UK PMI
10:00/ITA: Jan Balance of Payments
12:00/UK: Agents' Summary of Business Conditions
12:00/UK: UK interest rate decision
12:30/US: Mar Philadelphia Fed Business Outlook Survey
12:30/CAN: Feb New Housing Price Index
12:30/US: 4Q International Transactions
12:30/CAN: Jan Employment Insurance
12:30/US: U.S. Weekly Export Sales
12:30/US: 03/16 Unemployment Insurance Weekly Claims Report - Initial Claims
(MORE TO FOLLOW) Dow Jones Newswires
03-21-24 0613ET
