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S&P 500 Futures Dip Amid Economic Data and Fed Watch

Bruno T
Latest News
February 28 2024 1:54AM

This morning, March S&P 500 E-Mini futures (ESH24) are experiencing a slight decline of 0.30% as investors await a fresh batch of U.S. economic indicators, remarks from Federal Reserve officials, and earnings disclosures from major cloud computing companies Salesforce and Snowflake.

During Tuesday’s market session, the leading indexes on Wall Street had a mixed close. Notably, Norwegian Cruise Line Holdings (NCLH) saw a significant surge of over 19%, leading the S&P 500 gains, after the cruise operator announced Q4 revenues that exceeded forecasts, projected an unexpected profit for Q1, and provided an optimistic adjusted EBITDA outlook for 2024.

Similarly, Constellation Energy Corp (CEG) experienced a more than 16% increase, topping the Nasdaq 100 gainers following its announcement of Q4 adjusted EBITDA that surpassed expectations and its projection of FY24 adjusted EPS above market consensus.

Zoom Video Communications Inc (ZM) also enjoyed an 8% rise after reporting strong Q4 earnings, providing promising Q1 guidance, and revealing a new $1.5 billion share buyback initiative.

On the downside, Workday Inc (WDAY) saw a decline of over 3%, making it the most significant loser on the Nasdaq 100 after the company forecasted a weaker-than-expected full-year subscription revenue.

Unity Software Inc (U) also fell more than 6% after it set its FY24 revenue expectations below market consensus.

Recent economic data revealed that the U.S. CB consumer confidence index unexpectedly dropped to 106.7 in February, falling short of the anticipated 114.8.

Additionally, January’s U.S. durable goods orders decreased by 6.1% month-over-month, and core durable goods orders for the same period declined by 0.3%, both performing below market expectations. In contrast, the U.S. S&P/CS HPI Composite – 20 n.s.a. reported a year-over-year increase of 6.1% in December, slightly above the forecasted 6.0%.

The U.S. February Richmond Fed manufacturing survey presented a more favorable outcome of -5, surpassing the expected -9.

Fed Governor Michelle Bowman reiterated on Tuesday her expectation that inflation would continue to diminish if interest rates remain at their current levels.

However, she highlighted that it is premature to commence rate reductions. Bowman stated, “Should the incoming data continue to show that inflation is steadily moving towards our 2% target, it will eventually be prudent to gradually reduce our policy rate to avoid overly restrictive monetary policy. In my opinion, we have not yet reached that stage.”

U.S. rate futures currently indicate a minimal 0.5% likelihood of a 25 basis point reduction in rates at the upcoming March FOMC meeting, with the probability of a cut at the May meeting standing at 20.8%.

Today, investors are poised for quarterly earnings announcements from prominent companies such as Salesforce Inc (CRM), TJX (TJX), Snowflake (SNOW), and HP Inc (HPQ).

Attention is also turned towards the Commerce Department’s revised GDP estimate for the fourth quarter, expected later today. The consensus among economists is for a +3.3% q/q growth rate, a slowdown from the +4.9% q/q growth observed in the third quarter.

Additionally, the focus will be on the U.S. GDP Price Index for the fourth quarter, anticipated to be +1.5% q/q, following a +3.3% q/q increase in the third quarter.

Preliminary data on U.S. Wholesale Inventories for January is due, with economists forecasting a slight increase of +0.1% m/m, down from the previous +0.4% m/m.

The U.S. Crude Oil Inventories report is also expected today, with an estimated inventory build of 3.100M barrels, slightly below last week’s 3.514M.

Market watchers will also be attentive to speeches from Fed officials Bostic, Collins, and Williams.

In bond markets, the U.S. 10-year yields have declined to 4.295%, a drop of -0.46%.

Euro Stoxx 50 futures are down -0.27% amidst a mix of disappointing earnings and anticipation of inflation data from the U.S. and Eurozone. Real estate and technology sectors are leading the downturn, with investors awaiting core PCE inflation data from the U.S. and Eurozone inflation figures later this week. In corporate news, Asm International N.V. and Reckitt Benckiser Group Plc have seen notable declines after their respective earnings reports, and Worldline reported a full-year loss with a cautious outlook for 2024.

Eurozone’s Consumer Confidence for February was reported at -15.5, aligning with expectations.

Asian markets closed lower, with China’s Shanghai Composite and Japan’s Nikkei 225 seeing declines. Profit-taking in China and cautious trading in Japan following recent highs influenced the markets. Noteworthy developments include Hong Kong’s policy changes to stimulate the property market and tourism, and corporate updates from NetEase Inc. and Nishi-Nippon Financial Holdings Inc. Investors are also awaiting key economic data from China and developments from the National People’s Congress.