Stock futures lower as Fed insists on repeating rate warnings; Retail Sales In Focus As Warm Weather, Job Rise Drive Spending Rise; Airbnb Shares Rise After First Year Gain, Strong Near-Term Outlook; Elon Musk says Twitter will have a new CEO “towards the end of this year” and Devon Energy shares plunge as a cyclonic storm slashes fourth-quarter earnings.
Five things to know before the market opens on Wednesday, February 15:
1. — Stock futures down on repeated Fed Hawks rate warnings
US stock futures were lower on Wednesday, while the dollar added gains against global peers and Treasury yields rose as investors continue to reprice risk on the back of a disappointing January inflation report and aggressive comments from Federal Reserve policymakers.
The ‘sticky’ nature of last month’s inflation report, which indicated a higher-than-expected headline rate of 6.4% and lingering pressures on underlying consumer prices, triggered a new round of betting in interest rate markets. as traders look to catch up. with aggressive signaling from the Fed.
Several Fed officials, including New York Fed President John Williams, cited yesterday’s CPI data, as well as the strong January jobs report, as evidence of the need to raise rates further and hold them. longer to recover inflation. to the central bank’s preferred target of 2%.
“Inflation is normalizing, but it’s coming down slowly,” Richmond Fed President Thomas Barkin said during an interview with Bloomberg TV. “I just think there’s going to be a lot more inertia, a lot more persistence in inflation than maybe we all want.”
CME Group’s FedWatch, in fact, is pricing in a 46.9% probability of a 25 basis point rate hike in June, after similar hikes in March and May. Traders are also abandoning the idea of rate cuts during the second half of the year, with the odds of a 5.5% terminal federal funds rate rising sharply.
Benchmark 10-year bonds were trading at 3.734% during the overnight session, a move reflecting rising general market rates, with 2-year bonds fixed at 4.597% during the overnight session and Treasury bills at 6 months trading at 5.028%, the highest since 2007.
The US dollar index, which tracks the dollar against a basket of its global peers, rose 0.29% to 103.537.
On Wall Street, stocks are looking to extend Tuesday’s slide ahead of January retail sales data, expected at 8:30 am ET, and industrial production numbers due 45 minutes later.
Futures contracts linked to the S&P 500 indicate an opening bell drop of 15 points and those linked to the Dow Jones Industrial Average have a price retracement of 80 points. The tech-heavy Nasdaq indicates an opening bell drop of 60 points.
In foreign markets, Europe’s Stoxx 600 rose 0.11% in early Frankfurt trading, while Britain’s FTSE 100 fell 0.02% in London after lower-than-expected inflation figures.
In Asia last night, the MSCI ex-Japan index of the entire region fell 1.44% at close of trading, while the Nikkei 225 fell 0.37% after last night’s weaker close on Wall Street.
2. — Retail sales in focus as hot weather, job gains boost spending
The Commerce Department will publish its January estimate for retail sales before the start of trading with investors looking at the impact of last month’s huge job creation on overall consumer spending.
January headline retail sales are expected to rise about 1.8% from December, according to Street forecasts. Headline sales are not adjusted for inflation and include the impact of gasoline purchases, which were slightly higher compared to December levels.
Core retail sales, which exclude autos, are likely to have risen by around 0.8%.
Consumer strength is increasingly seen as the key pillar in the US effort to stave off recession, particularly if the boost from the January jobs report, which showed a much larger-than-expected gain of 517,000 new jobs , moves to the first half of the year.
The Atlanta Fed’s GDPNow forecasting tool currently pegs the pace of US economic growth at around 2.2%. The estimate will be updated today after the release of retail sales data.
3. — Airbnb shares rise after maiden annual gain, strong near-term outlook
airbnb (ABNB) – Get a free reportShares rose in premarket trading after the home rental and experience booking group posted stronger-than-expected fourth-quarter earnings and issued a strong near-term outlook.
Airbnb said the ongoing travel boom, which has propped up earnings for airlines and credit card companies, will likely support first-quarter revenue, estimated at $1.75 billion to $1.82 billion, beating estimates. of the analysts.
Meanwhile, the group’s 2022 net income of $1.9 billion marked its first full-year profit.
For the three months ending in December, Airbnb said earnings were pegged at 48 cents a share, well above the Street consensus forecast of 25 cents, on revenue of $1.9 billion. Books overall, the group said, rose 20% to $13.5 billion.
Airbnb shares ticked up 9.4% in premarket trading to indicate an opening bell price of $132.25 apiece.
4. — Elon Musk says Twitter will have a new CEO “by the end of this year”
Twitter owner Elon Musk said Wednesday that he will likely run the microblogging website until the end of this year, calling it “a good time” in terms of finding and naming a new chief executive.
Speaking at the World Government Summit in Dubai, Musk, who bought Twitter for around $46 billion late last year and later told users he would quit as soon as he found someone “dumb” enough to run it, he said Twitter would be in a stable enough position by the end of 2023 to allow a handover.
“I think I need to stabilize the organization and make sure it’s in a financially healthy place and the product roadmap is clearly in place,” Musk said. “I guess probably the end of this year would be a good time to find someone else to run the company, because I think it should be in a stable position, you know, by the end of this year.”
Musk conducted a poll to his 128 million Twitter followers on December 18, asking “Should I resign as head of Twitter?” and promising to honor the result of the ‘vote’. Around 17.5 million people responded, with 57.5% in favor of his departure.
5. — Devon Energy shares tumble as bomb cyclone storm cuts into fourth-quarter profit
devon energy (dvn) – Get a free reportShares fell lower in premarket trading after the group posted weaker-than-expected fourth-quarter earnings, linked in part to the effects of the bomb cyclonic storm that crippled the Midwest late last year. .
Devon said oil and gas wells were crippled by Winter Storm Elliott, halting production and driving up operating costs. The group reported adjusted earnings of $1.66 a share for the three months ending in December, about 9 cents below the Street consensus forecast, on revenue of about $4.3 billion.
However, the group increased its fixed quarterly dividend by 11%, from the 89 pence per share approved for the fourth quarter.
Devon Energy shares were marked 7.1% lower in premarket trading to indicate an opening bell price of $59.64 apiece.
