NEWSLETTER
Stock futures rise with the Fed in the crosshairs; Mr. Powell goes to Washington; Goal making more job cuts; Is time over for TikTok? And Tokyo, we have a problem.
Five things to know before the market opens on Tuesday, March 7:
1. — Stock futures have a bullish lead with the Fed in the crosshairs
US stock futures rose modestly on Tuesday, while the dollar gained against global peers and Treasury yields flattened as investors held their ground ahead of the first of two appearances by Federal Reserve Chairman Jerome Powell on Capitol Hill this week.
Stocks look to extend a three-day winning streak since Powell’s testimony before the Senate Banking Committee, as investors continue to bet markets will remain resilient, fueled in part by consumer spending, through end of the Fed tightening cycle.
Morgan Stanley’s Michael Wilson, who recently warned that the S&P 500 could face a 26% drop in March as the Fed consolidates its interest rate adjustment and corporate earnings tumble in recession, now suggests that Stocks could rally for at least a few more weeks. .
Currently, CME Group’s FedWatch expects rates to top between 5.5% and 5.75% by the end of June, a level that suggests at least four more 25 basis point rate hikes, and to hold there until at least early next year.
Markets were largely bullish in overnight trading, with the US dollar index rising 0.05% against a basket of global peers at around 104.44, while Treasury yields at 10 years of reference remained at 3.936%.
Global oil prices eased, but only slightly, after trade data from China showed a 1.3% year-on-year decline in crude imports. WTI crude futures for April delivery fell 16 cents to $80.30 a barrel as Brent contracts for May fell 18 cents to $86.00 a barrel.
Heading into the trading day on Wall Street, futures contracts linked to the S&P 500 indicated an opening bell gain of 8 points ahead of Redbook’s retail sales numbers as of 8:55 a.m. ET. , while those linked to the Dow Jones industrial average were indicating a 40 point gain. The technology-focused Nasdaq is seeing a 46-point rise.
In overseas markets, Europe’s Stoxx 600 rose 0.17% in early Frankfurt trading, while Britain’s FTSE 100 rose 0.22% in London.
Overnight in Asia, the region-wide MSCI ex-Japan index fell 0.29% on weaker-than-expected China trade data for January and February, while the Nikkei 225 finished higher. 0.25% in Tokyo.
2. — Mr. Powell goes to Washington
Federal Reserve Chairman Jerome Powell will face lawmakers in the Senate Banking Committee on Tuesday in the first of two appearances on Capitol Hill this week focused on the effect of central bank monetary policies on the national economy.
Powell, who is scheduled to present the Fed’s ‘Semi-Annual Monetary Policy Report’ to the Senate Banking Committee at 10:00 am ET, is likely to face questions about his comments earlier this year that the “disinflation” process had already begun. thanks in part to the Fed’s aggressive 2022 rate-hike cycle, and it would continue despite a strong job market and a resilient economy.
However, markets are expected to engage in any comments from the Fed chair regarding central bank policy, which currently calls for at least three more rates between now and June, and could include acceleration in selling. of $8 trillion Federal Reserve bonds. balance sheet if inflationary pressures remain high in the coming months. “I may try to elaborate on the comments made on February 1 that the broad disinflation process has begun, but with inflation proving persistent (not just in the US, but around the world), trends “Consumer and employment remain firm and risk assets supported. It seems unlikely that it will choose to push the ‘all clear’ inflation narrative today,” said Chris Turner, ING markets strategist.
Powell will also appear before the House Financial Services Committee on Tuesday.
3. — Goal to make more job cuts
metaplatforms (GOAL) – Get a free reportThe shares rose higher in premarket trading following a Bloomberg report that the social media and technology group is planning a new round of layoffs that could start as early as this week.
Bloomberg said the cuts will come on top of 11,000 job cuts announced by Meta late last year as part of a major effort to rein in costs and “flatten” CEO Mark Zuckerberg’s management structures.
The current round of job cuts, Bloomberg said, would this time be driven by the group’s financial targets, some of which were unveiled on February 1, when it posted lower-than-expected fourth-quarter earnings of $1.76 a share. thanks in part to a $4.2 billion Charge tied to last year’s layoffs and office closings.
Meta also pledged to reduce operating expenses by about $6.5 billion, still expected to be between $89 billion and $95 billion, amid what CEO Mark Zuckerberg called an “efficiency year.”
Capital spending is also expected to fall $4.5 billion from last year to between $30 billion and $33 billion as Meta looks to redesign some of its data centers to become more efficient as Zuckerberg moves from from a company leader focused on growth, sometimes at any cost, to one who seeks to instill cost discipline and maturity throughout their business.
Shares of Meta rose 1.6% in premarket trading to indicate an opening bell price of $187.83 apiece.
4. — Is time over for TikTok?
Lawmakers are scheduled to introduce new legislation on Tuesday that would seek to ban China’s ByteDance, the owner of the world’s most popular social media app TikTok, from operating in the United States.
Republican Senator John Thune, as well as Democrat Mark Warner, are set to introduce the “Emergency Restriction of Security Threats That Endanger Information and Communications Technology” Act, which they call RESTRICT, to lawmakers on Capitol Hill as scrutiny of the app, which is used by around 100 million Americans, continues to intensify.
ByteDance was told to divest TikTok’s US operations in 2020 following a ruling by the US government’s Committee on Foreign Investment in the United States, better known as CFIUS, but has been locked in negotiations over data protection ever since.
“China is investing in economic areas, they have $500 billion in intellectual property theft and we are in a competition not only on the basis of national security, (but) on the basis of technology,” Senator Warner told Fox. News on Monday. “We have to make the kind of investments to stay ahead, and I think we’re starting that in a bipartisan way.”
5. — Tokyo, we have a problem
Japan’s fledgling space program was dealt a major blow on Tuesday when its new medium-payload rocket, its first in three decades, failed to fully ignite during its highly publicized spaceflight and was destroyed by engineers just minutes after launch.
The H3 rocket, designed to compete with Elon Musk’s SpaceX, was launched by the Japan Aerospace Exploration Agency (JAXA) early Tuesday morning from the Tanegashima spaceport, following a failed attempt last month, with a payload. which included satellite technology used to monitor North Korea. ballistic missile launches.
However, when a second stage engine failed to ignite upon breaking Earth’s atmosphere, the mission was abandoned.
“This is extremely regrettable and we apologize for not meeting public expectations,” Science and Technology Minister Nagaoka said in a statement after the mission failed. “We will work with the relevant organizations to quickly determine the cause and take action.”
