Stock futures rise with Treasury yields in focus; Week Ahead: Retail Earnings, ISM Data, Fed Speakers On Deck; Warren Buffett Bullish on America After Record Annual Earnings; Seagen shares rise on reports of early takeover talks with Pfizer and Union Pacific shares rise as CEO Lance Fritz plans exit.
Five things to know before the market opens on Monday, February 27:
1. — Stock futures rise with Treasury yields in the spotlight
US stock futures rose on Monday, after the worst week of the year for domestic stocks, as investors continue to reset the Fed’s rate forecasts amid a surprisingly resilient economy and higher inflation readings. quicker than expected.
The S&P 500 fell 3.2% last week, wiping out nearly half of its 2023 gains, amid rising Treasury yields and a disappointing set of retail earnings and Walmart prospects. (WMT) – Get a free reportand Home Depot (High Definition) – Get a free report.
Friday’s hotter-than-expected PCE price index reading, which showed central pressures rising at the fastest pace since July, with the biggest rise in consumer spending in two years, added further downward pressure. on stocks and had yield trades on 10-year Treasuries. within a millimeter of 4% for most of the session.
Futures traders are now pricing in a top federal funds rate of around 5.42%, implying at least three more rate hikes from current levels, while CME Group’s FedWatch indicates at least 26.2%. chance the Fed will raise its benchmark rate by 50 basis points next month in Washington.
Benchmark 10-year notes traded around 3.963% overnight, while 2-year notes held at 4.847%. The US dollar index, which tracks the dollar against a basket of six global currencies, was down 0.1% at 105.1141.
Stocks also have to contend with increasing market volatility just as fourth-quarter earnings season draws to a close (only 26 S&P 500 companies are set to report this week) and overall momentum wears off, with the volatility gauge CBOE Group key VIX rising. another 2.7% in the night session to 21.70 points.
That indicates that traders expect a daily swing of around 54 points, or 1.36%, for the S&P 500 over the next thirty days.
Heading into the trading day on Wall Street, futures contracts linked to the S&P 500 indicated an opening bell gain of 18 points ahead of January durable goods orders data at 8:30 am ET. and pending home sales numbers at 10:00 am.
Futures linked to the Dow Jones Industrial Average indicated a 136-point gain, while the tech-heavy Nasdaq is looking for a more modest 60-point gain.
In overseas markets, Europe’s Stoxx 600 rose 1.1% in early Frankfurt trading, while Britain’s FTSE 100 gained 0.82% in London.
In Asia last night, the MSCI ex-Japan index of the entire region fell 0.82% at the end of the day, following Friday’s sell-off on Wall Street, while the Nikkei 225 closed 0.11% lower in Tokyo.
2. — Week ahead: Retail earnings, ISM data, Fed speakers on deck
Retail and tech earnings are likely to dominate a light schedule of headline releases this week, with the February jobs report scheduled for release on March 10.
Aim (TGT) – Get a free reportLowe’s (LOW) – Get a free reportBest Buy (BBY) – Get a free reportand dollar tree (DLTR) – Get a free reportThey are set to post earnings for the three months ending in December this week as fourth-quarter earnings season comes to a close.
Sales force (CRM) – Get a free reportHP Inc. (HPQ) – Get a free reportbroadcom (AVGO) – Get a free reportand Hewlett Packard Enterprises (H.P.E.) – Get a free reportThey are also scheduled to report updates for the December and January quarters this week.
With 465 companies reporting, collective earnings for the S&P 500 are forecast to fall about 3.2% from last year, according to Refinitiv data, to $441.2 billion stock-weighted. For the current quarter, profit is expected to fall 4.3% to around $424.5 billion.
With little on the board for this week in terms of economic releases, attention is likely to once again turn to the weekly jobless claims data on Thursday as traders and investors look for further clues on the strength of the labor market. after readings faster than expected. for January inflation and the strongest retail sales and consumer spending numbers in two years.
ISM surveys of US economic activity are also scheduled for Wednesday and Friday, while six Federal Reserve officials are expected to mark public comments over the next five days.
3. — Warren Buffett bullish on America after record annual earnings
Berkshire Hathaway (BRK.A) – Get a free reportShares were little changed in premarket trading after the investment vehicle controlled by billionaire investor Warren Buffett posted record annual profits despite a softer-than-expected fourth quarter.
Berkshire Hathaway, which said about 75% of its fair value investments were concentrated in five stocks: Apple (AAPL) – Get a free reportBank of America bacamexpress (AXP) – Get a free reportchevron (CLC) – Get a free reportand coke (IS) – Get a free reportIt posted full-year operating profit of $30.8 billion and ended the year with about $129 billion in cash after dumping about $16.3 worth of stock during the three months ending in December.
Buffett, in his annual letter to shareholders, also took an optimistic tone about the health of the US economy, arguing that “I have yet to see a time when it makes sense to make a long-term bet against the United States.” And I highly doubt that any reader of this letter will have a different experience in the future.”
“We have the American Tailwind and although it has subsided from time to time, its propulsive force has always returned,” Buffett said.
Berkshire Hathaway shares closed up 0.51% in New York on Friday at 461,705 apiece, paring their year-to-date decline to around 1.7%.
4. — Seagen shares rise on reports of early takeover talks with Pfizer
Seen (NMS) – Get a free reportshares rose in premarket trading after reports that cancer drug specialists are in early merger talks with pharmaceutical giant Pfizer (PFE) – Get a free report.
The Wall Street Journal reported that Seagen, who saw merger talks with Merck (MRK) – Get a free reportcollapsed late last year, it could add notable weight to Pfizer’s near-term oncology sales and partly offset the loss of about $17 billion in projected revenue from patent expiration between now and 2030.
Seagen, which has developed treatments known as antibody-drug conjugates that target specific cancers, generated about $2 billion in revenue last year and has a market value of about $30 billion. Pfizer generated about $3 billion in oncology-related revenue last year, most of it coming from its Ibrance breast cancer treatment.
Seagen shares rose 15.26% in premarket trading to indicate an opening bell price of $186.00 each. Pfizer shares were down 2% at $40.90 each.
5. — Union Pacific shares jump as CEO Lance Fritz plans departure
Pacific Union (ONE P) – Get a free reportshares rose higher in premarket trading after the rail operator said chief executive Lance Fritz would step down at the end of this year due to pressure from a key shareholder.
Soroban Capital, which owns about a 1.35% stake in the group, wrote an open letter to investors on Sunday calling for Fritz to be replaced, arguing that it saw a “greater risk of permanent damage to the franchise” if the new leadership was not to put in place
“Unlike typical shareholder commitments that come with numerous lawsuits, Soroban has only one request: to install new leadership that can keep trains running safely and on time,” said Soroban founder Eric Mandelblatt.
Union Pacific, whose stocks have actually outperformed the S&P 500 in the past five years, said it is now looking to “identify a CEO capable of leading the company for a long-term period.”
“Union Pacific has been my home for 22 years and I am confident that now is the right time for the next Union Pacific leader to take the helm,” said Fritz.
Union Pacific shares rose 5.92% in premarket trading to indicate an opening bell price of $205.50 each.
