OPENING CALL
Stock futures were lower on Tuesday ahead of the release of January's inflation data, which could offer clues as to whether the Federal Reserve will cut interest rates as early as next month.
If the report matches expectations or is lower than forecast then traders may consider a cut by the Fed in May is more likely.
Economists forecast that overall consumer prices rose 2.9% in January from a year earlier, which would be the smallest gain since March 2021.
Overseas Markets
European stocks fell slightly, while markets in China and Hong Kong were closed for holidays. The Nikkei Stock Average hit a fresh 34-year high.
Premarket Movers
Arista Networks was down about 6% after it reported results after-hours Monday that underwhelmed investors.
Arm Holdings' ADRs fell more than 4% following a three-session post-earnings rally in which its shares have nearly doubled.
Cadence Design Systems fourth-quarter earnings topped analysts' forecasts but earnings guidance for the first quarter came up short of estimates. Shares fell 7%.
JetBlue was up 14% after Carl Icahn reported that he had a near-10% stake in the company and might push for board representation.
Lattice Semiconductor was down 8% after it posted a fall in quarterly revenue and offered weak sales guidance.
Tripadvisor rose 14% after it said it formed a special committee to consider "any proposals that may be brought forward for a potential transaction."
WM was rising 2.6% after fourth-quarter adjusted earnings topped forecasts and revenue rose 5.7% to $5.22 billion, beating analysts' expectations.
ZoomInfo Technologies was rising almost 25% after its revenue and earnings beat estimates in the fourth quarter.
Watch For:
CPI for January; Earnings from Coca-Cola, Shopify, Airbnb, Zoetis, Marriott International, Datadog, Biogen, GlobalFoundries, Akamai Technologies, Hasbro, MGM Resorts, Zillow, Robinhood Markets, Lyft.
Today's Top Headlines/Must Reads:
- Bitcoin Soars Past $50,000. Can Crypto Follow the S&P 500 to Record Highs?
- China's Shipyards Are Ready for a Protracted War. America's Aren't.
- How Wall Street Won a Battle Over Venezuelan Sanctions
MARKET WRAPS
Forex:
The dollar was slightly firmer ahead of the inflation data.
"The actual data could strongly impact the dollar's performance as well as traders' expectations over the next steps in monetary policy," Exness said.
Traders could also monitor other important data points this week which could generate some volatility for the dollar, Exness added.
Deutsche Bank Research said higher-than-expected inflation data would add to the dollar's strength .
"On stronger-than-expected core data, [and keep in mind 0.4% or above was a rarity in the decade before Covid], dollar gains are likely to be well rounded."
CPI rarely misses by much, but the market reactions are often sharp, Deutsche added.
Sterling rose, reaching its strongest level against the euro since late August, after U.K. jobs market data showing the unemployment rate unexpectedly fell in the three months to December while wage growth eased by less than forecast.
The U.K. labor market remained tight and the data could add to expectations that interest-rate cuts won't come any time soon.
Although down from 6.7% in the three months to November, wage growth remained "too high" for the Bank of England, ING said.
Bonds:
The overwhelming demand during last week's ultra-long sovereign bond sales suggests investors are confident that central banks will deliver aggressive rate cuts by year-end, Saxo said.
However, "a gradual steepening of yield curves, which started last year, and short future position covering in the U.S., may have also played a critical role in igniting investors' demand for the long end."
As the U.S. economy remains robust, and inflation remaining above central banks' target on both sides of the Atlantic, Saxo remains cautious and prefers maturities of up to ten years while taking a selective approach for ultra-long duration.
Energy:
Oil prices edged higher on escalating tensions in the Middle East and uncertainties surrounding the pace of interest-rate cuts ahead of the inflation data.
A strong U.S. economy and China's stimulus measures are positive for demand and should support oil prices, but a shift in market expectations on interest-rate cuts is weighing on the global demand outlook, according to Swissquote Bank.
Meanwhile, all eyes are on OPEC's monthly report due later on Tuesday and any potential revision to forecast.
"One thing is sure, OPEC will keep fighting to maintain oil prices sustained until the last drop," Swissquote said.
Metals:
Base metals and gold were higher ahead of the CPI data.
TODAY'S TOP HEADLINES
Tesla Stock Broke Its Four-Day Rally. Why It's Falling Again Tuesday.
Tesla stock broke a four-day rally Monday failing to build on the previous week's strong gains.
The electric-vehicle maker closed down 2.8% at $188.13.
Super Bowl Ratings: Chiefs' Victory Over 49ers Breaks Viewership Records
Some 123.4 million viewers watched the Kansas City Chiefs beat the San Francisco 49ers in Super Bowl LVIII, according to preliminary data from Nielsen and Adobe analytics, which made it the U.S.'s most-watched television program of all time.
The game benefited from a confluence of factors: an attractive matchup, an overtime comeback victory and increased fan interest surrounding the relationship between singer Taylor Swift and Chiefs tight end Travis Kelce.
Tougher Rent Laws Are Behind Trouble at NYCB
When New York Community Bancorp posted large losses last month and warned of more difficulties to come, it pointed to a significant cause for concern: troubled loans in a sinking corner of the New York City apartment market.
NYCB is the city's largest lender on rent-stabilized apartments. About $18 billion of its loans are backed by the city's rent-stabilized units, representing more than 20% of its total loan book.
MSCI Drops 66 Companies From China Index Amid Market Slump
Stock market index compiler MSCI is cutting dozens of companies from its benchmark China index after a prolonged selloff and volatile trading in the world's second-largest economy.
The global index compiler will remove 66 companies in sectors ranging from property and pharmaceuticals to aviation from its MSCI China Index, a quarterly review showed Monday. The deletions from the broad gauge of Chinese shares, which will take effect at the end of the month, include the likes of China Southern Airlines, Greentown China, Weibo and China Everbright Environment Group.
Senate on Verge of Passing $95.3 Billion Ukraine, Israel Aid Package
WASHINGTON-President Biden's drive to send more aid to Ukraine was set to take a big step forward, with the Senate poised to pass a $95.3 billion package that also includes aid for Israel and other allies following months of political wrangling on Capitol Hill.
The Senate's final passage, expected for early Tuesday, comes amid intense GOP infighting over Ukraine, which has been running short of supplies and manpower after a failed counteroffensive against Russia last year. The measure cleared a procedural hurdle late Monday, by a vote of 66 to 33, and a final vote was expected within hours.
Immigration Takes Center Stage in New York Race for Congress
Thousands of miles from the southern border, candidates in a special election Tuesday on Long Island have put immigration at the center of their closing pitches to voters, offering an early test of the issue in swing congressional districts.
The race in New York's Third Congressional District pits Democrat Tom Suozzi against Republican Mazi Pilip. The campaigns and outside political-action committees have spent more than $20 million on ads and organizing, part of which centers on the record-setting number of illegal crossings at the border which are already a point of scrutiny for President Biden and down-ballot Democrats heading into November.
Write to ina.kreutz@wsj.com
TODAY IN CANADA
Earnings:
goeasy 4Q
Hydro One Limited 4Q
Intact Fincl 4Q
mdf commerce 3Q
NanoXplore 2Q
New Gold 4Q
Restaurant Brnds 4Q
Shopify 4Q
Toromont Indus. 4Q
Waste Connectns. 4Q
Wstrn Frest Pdcts 4Q
Economic Indicators (ET):
Nothing scheduled
Stocks to Watch:
BlackBerry Provides Update on Progress in Separation of Divisions; Targeting $100 Million of Annualized Net Profit Improvements; Divisional Leadership Teams Established; Engagement of External Consulting Firm With Separation Work Now Underway; Sees Added Headcount Reductions in Cybersecurity Business; Backs 4Q Rev $150M-$159M
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Telus Announces Three-Tranche Note Offering; Prices C$1.8B of Senior Unsecured Notes; Offering 4.80% Series CAO Notes Due December 2028; Offering 4.95% Series CAP Notes Due 2031; Offering 5.10% Sustainability-Linked Series CAN Notes Due 2034; to Use Net Proceeds for Debt Repayment, Other General Purposes; Series CAN Notes Mark Its Sixth Sustainability-Linked Bond Offering
Expected Major Events for Tuesday
06:00/JPN: Jan Preliminary Machine Tool Orders
06:30/FRA: 4Q ILO Unemployment and Labour Market-related indicators
07:00/UK: Jan UK monthly unemployment figures
10:00/GER: Feb ZEW Indicator of Economic Sentiment
11:00/US: Jan NFIB Index of Small Business Optimism
13:30/US: Jan CPI
13:30/US: Jan Real Earnings
13:55/US: 02/10 Johnson Redbook Retail Sales Index
16:59/GER: Dec Balance of Payments
21:30/US: API Weekly Statistical Bulletin
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Tuesday
Akoustis Technologies Inc (AKTS) is expected to report $-0.23 for 2Q.
AutoNation (AN) is expected to report $4.88 for 4Q.
Biogen Inc (BIIB) is expected to report $2.71 for 4Q.
Bruker Corp (BRKR) is expected to report $0.58 for 4Q.
Coca-Cola Co (KO) is expected to report $0.47 for 4Q.
(MORE TO FOLLOW) Dow Jones Newswires
02-13-24 0619ET
