NEWSLETTER
Stock futures extend slide as Treasury yields rise; Moderna Slumps After Mixed Flu Vaccine Trial Data; DraftKings Jumps Out With Narrower Q4 Loss, Strong Revenue Outlook; Deere’s earnings are covered with global demand for equipment in the spotlight and Applied Materials sees demand for AI chips supporting stronger second-quarter sales.
Five things to know before the market opens on Friday, February 17:
1. — Stock futures extend slide as Treasury yields jump over Hawkish Fed
US stock futures extended declines on Friday as the dollar hit multi-week highs against global peers and Treasury yields rose as investors continue to reset the forecast for rising prices. rates after a series of hot inflation data and hawkish signals from the Federal Reserve.
Thursday’s faster-than-expected readings for January factory inflation, coupled with another decline in weekly jobless claims, added to market concerns that the Fed will need to accelerate its rate-hike strategy to steer pricing pressures on consumers towards their preferred 2% target. .
That view echoed comments by Cleveland Fed President Loretta Mester, who told reporters after a speech in Florida that the January CPI reading was a “cautionary story” that could cement the case. faster rate increases.
Meanwhile, St. Louis Federal Reserve Chairman James Bullard noted that “continued policy rate increases can help block a disinflationary trend through 2023, even with continued growth and strong labor markets, by keeping low inflation expectations”, as he defended. a 50 basis point rate hike in March.
CME Group’s FedWatch is now pricing in at least an 18% chance of that half-point increase next month in Washington, with the bulk of bets now pointing to a terminal fed funds rate of between 5.25% and 5. .5% for mid-June. .
That’s driving up bond yields across the curve, with benchmark 10-year notes hitting 3.902% in overnight trading and 2-year notes rising to a three-month high at 4.696%, ahead of about of $120 billion in new offering scheduled for next week.
Stocks are also under pressure, given the higher-yielding alternatives in the fixed-income markets, as well as the fact that fourth-quarter earnings will essentially wrap up next week on reports from Walmart. (WMT) – Get a free reportAim (TGT) – Get a free reporthouse deposit (High Definition) – Get a free reportand nvidia (NVDA) – Get a free report.
Market volatility is also rising, with the CBOE VIX Index rising 14.4% in the overnight session to 20.86 points, a level that suggests traders expect daily moves around 53 points, or 1.3%, 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 indicate an opening bell drop of 29 points and those linked to the Dow Jones Industrial Average have a price drop of 156 points. The tech-heavy Nasdaq indicates a small retracement of 122 points.
In foreign markets, Europe’s Stoxx 600 was down 0.74% in early Frankfurt trading, while Britain’s FTSE 100 fell just 0.17% in London after a stronger-than-expected reading for the January retail sales.
Overnight in Asia, the MSCI ex-Japan index of the entire region plunged 1.36% at close of trading, while the Nikkei 225 ended 0.66% in Tokyo.
2. — Moderna slumps after mixed data from flu vaccine trial
modern (mRNA) – Get a free reportShares moved firmly lower in premarket trading after the drugmaker posted mixed results from a late-stage trial of its flu vaccine in development.
Moderna said the drug was superior to the marketed vaccine it was tested against when used to treat so-called A strains of influenza, but fell short of its goal of “non-inferiority” compared to a marketed vaccine that treats B strains. . .
“While we did not achieve non-inferiority for influenza B strains that are more prevalent in younger populations, we have already updated the vaccine that we believe might improve immune responses against influenza B and will seek to quickly confirm those improvements in an upcoming clinical study.” “. study thanks to the agility of our mRNA platform,” said Moderna President Stephen Hoge.
Last month, Moderna said another vaccine, known as mRNA-1345, was 83.7% effective in preventing at least two RSV virus symptoms in adults 60 and older.
Moderna’s shares were marked 5.6% lower in premarket trading to indicate an opening bell price of $162.63 apiece.
3. — DraftKings jumps over narrower Q4 losses, strong revenue outlook
DraftReyes (DKNGW) – Get a free reportShares rose in premarket trading after the sportsbook group posted a smaller-than-expected fourth-quarter loss and raised its full-year revenue forecast.
DraftKings, which operates sportsbooks in 20 US states, generated revenue of $855 million for the three months ending in December, well above Street’s forecasts, with a quarterly loss of 53 cents per share. , since the number of monthly unique players within its infrastructure increased. by about 31% to 2.6 million
Looking ahead to the current fiscal year, DraftKings said it sees revenue growth between 27% and 36% from 2022 levels.
“We performed very well in the fourth quarter and drove better-than-expected sportsbook retention primarily due to our investments in product innovation,” said Chief Financial Officer Jason Park. “We are also seeing strong customer retention and better monetization as promotional intensity decreases in our more mature states.
Draft Kings shares ticked up 6.3% in pre-market trade to indicate an opening bell price of $18.93 apiece.
4. — Deere earnings on deck with global equipment demand in focus
deere and company (OF) – Get a free reportShares rose in premarket trading ahead of the industry group’s first-quarter earnings ahead of the opening bell.
Analysts expect Deere to post a bottom line of $5.57 per share, nearly double last year’s tally, with revenue up 6.7% to $6.7 billion. The group forecast net income of between $8 billion and $8.5 billion for the current fiscal year, which ends in October, thanks to robust global demand for its farm equipment and near-record food prices.
Deere’s biggest rival, Caterpillar (CAT) – Get a free reportIt warned last month that supply chain constraints and a strong dollar would hurt margins in the short term, but noted that demand for heavy equipment remains strong in the mining and energy sectors.
Deere shares ticked up 1.25% in pre-market trading to indicate an opening bell price of $408.00 each.
5. — Applied Materials sees firmer AI chip demand support in Q2 sales
applied materials (ENORMOUS) – Get a free reportShares rose in premarket trading after the semiconductor equipment maker posted stronger-than-expected first-quarter earnings and a solid near-term sales outlook.
Applied Materials, which had been hit by US sanctions on the export of high-tech semiconductor and chip-making equipment to China-based companies, still beat Street’s forecasts with adjusted earnings of $2.03 per share on revenue of $6.74 billion.
Looking ahead to the current quarter, Applied said its strong order backlog, along with easing supply chain disruptions and continued demand for AI chips, would help drive revenue to around $6.4 billion, with a $400 million margin of error on both sides.
Shares of Applied Materials ticked up 0.55% in premarket trading to indicate an opening bell price of $116.03 each.
