MARKET WRAPS
Watch For:
Weekly Jobless Claims; Current Account for 4Q; New Home Sales
for February; President Biden visits Canada; earnings from
Accenture, General Mills, Darden Restaurants
Today's Headlines/Must Reads
Pro Take: The Fed Hits Inflation With Ninth Rate Hike as Banks
Reel
Fed Walks Tightrope Between Inflation, Bank Turmoil-but for How
Long?
Macro Hedge Funds Hit by Financial Turmoil
What Does 'Made in America' Mean? In Green Energy, Billions
Hinge on the Answer.
Big Oil Eyes New Deals in North Africa Amid Rising Energy
Demand
Electric-Vehicle Growth Expands GM Cyber Chief's Concerns to
Charging Stations
Follow WSJ markets coverage here .
Opening Call:
Stock futures were slightly firmer on Thursday as investors
reassessed the market's negative reaction to events late in the
previous session.
SPI Asset Management said the improvement in market sentiment
reflected a belief that Jerome Powell will be proven wrong after he
made clear he disagreed with investors' bets the Fed will have cut
rates to about 4.2% by the end of the year.
"U.S. futures are nudging higher as the market bets the Fed
loses its nerve and downshifts anyway. Note the modern-day history
book of Fed pauses is very bullish for stocks," SPI said.
Track reactions in Europe to the Fed interest rate hike.
Calmer conditions in bond markets were also supporting the mood,
while a strong showing for some Asian bourses helped to underpin
sentiment.
"Some relatively strong gains were recorded [in Asia], with
investors choosing for the moment to focus on the possibility of
stronger conditions in the region, propelled by the reopening of
the Chinese economy," Interactive Investor said.
Stocks to Watch
Agile Therapeutics reported higher revenue and a narrower loss
in its latest quarter. Its stock rose 16% in after-hours
trading.
Chewy fell 2% after reporting a surprise profit in its fiscal
fourth quarter but posting a drop of 1.2% in active customers from
a year earlier to 20.41 million.
Coinbase was down 11% in premarket trading after saying it
received a "Wells Notice" from the SEC, which warned that the
agency's staff had made a preliminary determination to recommend an
enforcement action against the crypto exchange.
First Republic Bank gained 4% in premarket trading, while fellow
regional lender PacWest Bancorp rose more than 5%. First Republic
dropped more than 15% on Wednesday, and PacWest slumped more than
17% following conflicting messages from government officials about
the safety of deposits.
KB Home rose 2% after reporting fiscal first-quarter earnings
and sales that beat analysts' estimates. The company said it began
to see an increase in demand as it entered the spring selling
season.
SQZ Biotechnologies said its Phase 1 SQZ-AAC-HPV-101 clinical
trial would continue. Its shares rose 33% in after-hours
trading.
Steelcase posted fiscal fourth-quarter sales that beat Wall
Street expectations. The stock rose 3% in premarket trading.
Forex:
The dollar hit a seven-week low against a basket of currencies
and is likely to stay weak after the Fed signaled rates may be
close to a peak, ING said.
"The dollar weakened on the back of the moderate dovish surprise
by the Fed yesterday, and reluctance from the Treasury to consider
an extension to the deposit insurance," ING said.
Sentiment towards the dollar should stay bearish especially
against European currencies, albeit with small corrections high
rather than a straight-line dollar depreciation, ING added.
UniCredit Research said falls in the dollar could propel the
euro rapidly above $1.10. EUR/USD received a big boost after the
Fed, reaching a seven-week high of 1.0931.
"This reopens the chance of a relatively rapid test of the
year-to-date peak of 1.1033 [in EUR/USD], with no major obstacle in
between," UniCredit Research said.
Once above 1.10, EUR/USD's path towards 1.12--UniCredit's
current target for this year--could also be quite smooth, with only
1.1073 as a notable resistance level.
---
The Swiss franc turned higher on the day against the euro, after
the SNB raised interest rates by 50 basis points to 1.5% and
declared an end to the bank crisis.
Although the decision had been widely expected, some analysts
had warned beforehand of the risk of the central bank opting for a
smaller 25 basis point rate rise or even no rise at all due to
recent banking-sector troubles, particularly with Credit
Suisse.
Measures taken by Swiss authorities, including the SNB, to
rescue Credit Suisse have "put a halt to the crisis," the SNB said
in a statement accompanying the rate decision.
Read Swiss Central Bank Lifts Key Rate, Declares End to Bank
Crisis
Energy:
Crude futures were slightly lower having made solid post-Fed
gains. Despite the losses, analysts said demand for oil remains
strong and is likely to strengthen further.
"The Energy Information Association's weekly report highlighted
strong exports, while domestic fuel stockpiles declined," ANZ
Research said, adding that Asian demand also remained firm, while
the prospect of no more rate hikes this year was providing impetus
for oil.
Read Big Oil Eyes New Deals in North Africa Amid Rising Energy
Demand
Metals:
Base metal prices were mixed while gold rose more than 1%, as
investors reacted to a "dovish" Fed.
"This was a 'dovish hike', i.e., higher rates but with lower
projections, " Peak Trading Research said.
The dollar fell following indications from Jerome Powell that
fewer or possibly no more rate hikes are set to happen for the rest
of this year, a bullish trend for commodity markets, Peak said.
TODAY'S TOP HEADLINES
Big Oil Eyes New Deals in North Africa Amid Rising Energy
Demand
CAIRO-After years of underinvestment in North Africa's energy
infrastructure, global oil-and-gas giants from Halliburton Co. and
Chevron Corp. to Eni SpA are ramping up their presence in the
region as demand from Europe grows.
Executives in the industry are betting it is worth drilling
again in some of the hardest places to do business in the world as
Europe increasingly turns to other sources for its energy needs
after shunning its main supplier, Russia, over the invasion of
Ukraine. In recent months, a string of European officials have
visited the region to help advance talks over potential supply
deals.
TikTok CEO Seeks to Convince Congress Chinese-Owned App Isn't
Security Threat
WASHINGTON-TikTok CEO Shou Zi Chew testifies Thursday morning at
a high-stakes congressional hearing, as safety and security
concerns over the Chinese-controlled platform deepen even as its
popularity in the U.S. grows.
Mr. Chew, a Harvard-educated Singaporean army reservist and
former Goldman Sachs banker, will testify before the House Energy
and Commerce Committee, whose members have already signaled
concerns that Beijing could influence TikTok content and harvest
user data.
Electric-Vehicle Growth Expands GM Cyber Chief's Concerns to
Charging Stations
Electric vehicles are taking General Motors Co.'s cyber chief
into new territory.
Kevin Tierney, the auto maker's chief cybersecurity officer,
often finds himself monitoring risks across information-technology
systems, autonomous vehicles and manufacturing plants. Now, he's
adding power-grid security to his day-to-day work.
Banks Are Risky. Silicon Valley Bank's Risk Officer Was
AWOL.
James Lam had just been hired by a new financial division of GE
Capital when he walked into his boss's office with a problem: He
was ordering business cards and had no idea what to put on them.
Since his position didn't really exist, it also didn't have a
title, so he was given permission to invent one. He called himself
a chief risk officer.
Thirty years later, as he followed the spectacular implosion of
Silicon Valley Bank, there were few people more qualified than Mr.
Lam to ask two simple questions.
Starbucks's New CEO Brews Coffee at Stores to Prepare for
Role
CHICAGO-New Starbucks Corp. Chief Executive Laxman Narasimhan
plans to be in regular contact with departing CEO Howard
Schultz-but it will be clear who is in charge, both men said.
"There's places where he can be really helpful. The world,
though, needs boxes and lines," Mr. Narasimhan said in an
interview. "There's one CEO, and that's me."
China Evergrande Reaches Debt-Restructuring Deal With
Bondholders
China Evergrande Group has reached an agreement with its
offshore debtholders under which the property developer will issue
new bonds and equity-linked products.
Binding agreements have been entered into with bondholders,
including for $19.15 billion of notes the company had previously
issued, Evergrande said late Wednesday.
SEC Plans Lawsuit Against Coinbase, According to Exchange
The Securities and Exchange Commission has told Coinbase Global
Inc. that it plans to take enforcement action against the company,
escalating its crackdown on digital-currency firms by targeting the
biggest U.S. crypto exchange, Coinbase said Wednesday.
Coinbase said it had received a letter from the SEC known as a
Wells notice, in which regulators say they believe companies or
individuals violated investor-protection laws. The notices aren't
final because the agency's commissioners must authorize any
lawsuits or enforcement settlements.
Avaya Cleared to Hand Control to Lenders in Repeat
Bankruptcy
Avaya Holdings Corp. won court approval Wednesday on a
lender-backed chapter 11 exit plan that trims nearly $2.6 billion
in debt from its balance sheet and provides new financing to
continue transforming itself from a traditional provider of office
telecommunications equipment to a subscription-based software
provider.
Senior lenders including Apollo Global Management Inc. and
Brigade Capital Management LP have agreed to exchange top-ranking
debt for the equity in reorganized Avaya, which will become a
private company upon leaving bankruptcy while wiping out existing
Avaya shareholders.
Carvana Debt Exchange Lacks Support From Bondholder Group
Carvana Co.'s debt swap proposal launched on Wednesday doesn't
have support from the group of investors who own a majority of the
company's nearly $6 billion in unsecured bonds, people familiar
with the matter said.
The used-car retailer is asking bondholders to swap some of
their holdings at a discount into an up to $1 billion new secured
bond, which would have a second-priority claim on collateral
including certain assets and property owned by the Tempe,
Ariz-based company, such as some of its vehicles.
Pro Take: The Fed Hits Inflation With Ninth Rate Hike as Banks
Reel
The Federal Reserve on Wednesday stuck with its inflation fight
as banks and regulators sort out the Silicon Valley Bank mess that
has spread fear throughout the banking sector.
Its quarter-percentage-point interest-rate increase, though
smaller than most of the hikes seen over the last year, feels like
it packs more of a punch amid worries about the health of banks.
But Fed Chairman Jerome Powell made clear that the Fed, even though
it considered a pause, isn't bowing out of its inflation
battle.
Fed Walks Tightrope Between Inflation and Bank Turmoil-but for
How Long?
The Federal Reserve is responsible for the financial system and
the macroeconomy. In theory, these are different jobs calling for
different tools.
The Fed is trying to stay faithful to that separation of roles.
On Wednesday, it continued its campaign to slow the economy and
bring down too-high inflation, with a quarter-percentage-point
increase in interest rates and a forecast of one more. Meanwhile,
though, it has been lending generously to banks through its
discount window to contain the damage caused by the failure of
Silicon Valley Bank two weeks ago.
Swiss Central Bank Lifts Key Rate, Declares End to Bank
Crisis
Switzerland's central bank raised its key interest rate Thursday
and said the country's bank crisis had ended, the latest sign that
policy makers are determined to press down on inflation despite
strains in the banking system.
The Swiss National Bank increased its key interest rate by a
half-percentage point to 1.5%, a move economists had expected
before the banking strains that started in the U.S. spread to
Switzerland. The central bank also indicated that it may again
raise its key rate later this year.
Macro Hedge Funds Hit by Financial Turmoil
Hedge funds that bet on big-picture market moves have been hit
with steep losses as a spate of recent bank failures upends bets
that interest rates would remain elevated.
The souring of the wager led some, including Maniyar Capital
Advisors and Haidar Capital Management, to lose more than 20% this
month. Many of the funds, which had notched big gains as rates
marched steadily upward in 2022, are now flat to down for the year
following a steep recent drop in Treasury yields. So-called
trend-followers, which try to take advantage of momentum in
markets, also were hurt.
What Does 'Made in America' Mean? In Green Energy, Billions
Hinge on the Answer.
Virginia-based power company AES Corp. says it is ready to push
the button on a solar-panel order of more than $1 billion if a
manufacturer will commit to building a factory in the U.S.
If that factory gets built, AES can buy its panels and apply for
federal subsidies recently made available to clean-energy
developers that use equipment made in the U.S.
Diesel Prices May Reflect Weakness in U.S. Economy
Diesel prices at the pump have fallen to their lowest in over a
year. That's good news for consumers, but the decline in prices for
the fuel suggests a gloomy outlook when it comes to the U.S.
economy.
"Diesel fuel is ubiquitous in our economy," says Brian Milne,
product manager, editor, and analyst at DTN. It's a "critical
component in industrial production and...supply-chain
dynamics."
Grand Jury Weighing Donald Trump Hush-Money Payment Scheduled to
Return Thursday
A Manhattan grand jury considering Donald Trump's role in paying
hush money to a porn star is scheduled to meet Thursday, according
to people familiar with the matter, in what will likely be the
panel's last day of deliberations this week as it moves closer to a
potential indictment of the former president.
Ron DeSantis Clarifies Comments on Ukraine War, Calls Russian
Invasion Wrong
WASHINGTON-Florida Gov. Ron DeSantis, a likely 2024 Republican
presidential candidate, sought to qualify his recent contentious
remarks that Russia's invasion of Ukraine was a "territorial
dispute" and not vital to U.S. interests.
"Well, I think it's been mischaracterized," he told broadcaster
Piers Morgan for an interview to be shown Thursday on the streaming
service Fox Nation. Mr. Morgan included the comments in a column
Wednesday evening for the New York Post.
Write to paul.larkins@dowjones.com TODAY IN CANADA
Earnings:
Aptose Biosciences 4Q
Badger Infrastructure Solutions 4Q
BRP 4Q
Copperleaf Tech 4Q
dentalcorp Hldgs 4Q
Karora Resources 4Q
Knight Therapeutics 4Q
MDA 4Q
Economic Calendar (ET):
0830 Jan Employment Insurance
Stocks to Watch:
Parkland Announces Agreement With Largest Shareholder Simpson
Oil, Builds on Longstanding Relationship; Agreement Provides
Simpson Oil the Right to Designate Up to Two Board Nominees,
Includes Customary Voting Support Obligations in Favor of Bd
---
Payfare 4Q Rev C$38.4M
Expected Major Events for Thursday
05:00/JPN: Feb Steel Production
05:00/JPN: Feb Supermarket sales
05:30/JPN: Feb Tokyo area department store sales
05:30/JPN: Feb Nationwide department store sales
12:00/UK: Agents' Summary of Business Conditions
12:00/UK: UK interest rate decision
12:30/US: Feb Chicago Fed National Activity Index (CFNAI)
12:30/US: 4Q International Transactions
12:30/CAN: Jan Employment Insurance
12:30/US: U.S. Weekly Export Sales
12:30/US: 03/18 Unemployment Insurance Weekly Claims Report -
Initial Claims
13:00/RUS: Weekly International Reserves
14:00/US: Feb New Residential Sales
14:30/US: 03/17 EIA Weekly Natural Gas Storage Report
15:00/US: Mar Federal Reserve Bank of Kansas City Survey of
Tenth District Manufacturing
20:30/US: Federal Discount Window Borrowings
20:30/US: Foreign Central Bank Holdings
23:30/JPN: Feb CPI (Nation), CPI ex-food (Nation)
All times in GMT. Powered by Onclusive and Dow Jones.
Expected Earnings for Thursday
AVROBIO Inc (AVRO) is expected to report $-0.49 for 4Q.
Accenture PLC (ACN) is expected to report $2.51 for 2Q.
Advaxis Inc (ADXS) is expected to report for 1Q.
Alimera Sciences Inc (ALIM) is expected to report for 4Q.
Amerityre Corp (AMTY) is expected to report for 2Q.
Applied Therapeutics Inc (APLT) is expected to report for
4Q.
AstroNova Inc (ALOT) is expected to report for 4Q.
Atlantic American (AAME) is expected to report for 4Q.
BRP Inc (DOO.T,DOOO) is expected to report $3.70 for 4Q.
Canlan Ice Sports (ICE.T) is expected to report for 4Q.
Commercial Metals Co (CMC) is expected to report $1.52 for
2Q.
ContraFect Corp (CFRX) is expected to report for 4Q.
Darden Restaurants (DRI) is expected to report $2.24 for 3Q.
Disc Medicine Inc (IRON) is expected to report for 4Q.
ENGlobal (ENG) is expected to report for 4Q.
Edgio Inc (EGIO) is expected to report $-0.16 for 4Q.
Energy Focus Inc (EFOI) is expected to report for 4Q.
Exscientia PLC - ADR (EXAI) is expected to report for 4Q.
Factset Research Systems (FDS) is expected to report $3.22 for
2Q.
General Mills (GIS) is expected to report $0.93 for 3Q.
Knight Therapeutics Inc (GUD.T) is expected to report $-0.06 for
4Q.
Lithium Americas Corp (LAC,LAC.T) is expected to report for
4Q.
MarketWise Inc (MKTW) is expected to report for 4Q.
Movado Group Inc (MOV) is expected to report $0.87 for 4Q.
Noranda Income Fund (NIF.UN.T) is expected to report for 4Q.
Ocuphire Pharma Inc (OCUP) is expected to report for 4Q.
Orbit International (ORBT) is expected to report for 4Q.
Perma-Fix Environmental Services Inc (PESI) is expected to
report for 4Q.
Priority Technology Holdings Inc (PRTH) is expected to report
for 4Q.
Rex American (REX) is expected to report for 4Q.
Rubicon Technology Inc (RBCN) is expected to report for 4Q.
SecureWorks Corp (SCWX) is expected to report $-0.42 for 4Q.
Spectral Medical Inc (EDT.T) is expected to report $-0.01 for
4Q.
Synlogic (SYBX) is expected to report $-0.26 for 4Q.
TOR Minerals International Inc (TORM) is expected to report for
4Q.
TherapeuticsMD Inc (TXMD) is expected to report for 4Q.
Urban One Inc - Class A (UONE,UONEK) is expected to report for
4Q.
Vera Therapeutics Inc (VERA) is expected to report for 4Q.
Werewolf Therapeutics Inc (HOWL) is expected to report for
4Q.
Wireless Telecom (WTT) is expected to report $-0.02 for 4Q.
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ANALYST RATINGS ACTIONS
Altimmune Cut to Neutral From Buy by Goldman Sachs
Antero Resources Cut to Market Perform From Outperform by BMO
Capital
Apple Hospitality REIT Cut to Neutral From Buy by Compass
Point
Consolidated Edison Raised to Buy From Hold by Argus
Research
Correcting to Luminar Technologies Rating Headline
Cyxtera Technologies Cut to Market Perform From Outperform by
Raymond James
DoubleVerify Raised to Overweight From Sector Weight by
Keybanc
DR Horton Cut to Peer Perform From Outperform by Wolfe
Research
Enphase Energy Raised to Positive From Neutral by
Susquehanna
Host Hotels & Resorts Cut to Neutral From Buy by Compass
Point
Invitation Homes Cut to Neutral From Buy by Mizuho
Knight-Swift Transport Raised to Outperform From Peer Perform by
Wolfe Research
Krispy Kreme Raised to Buy From Hold by Truist Securities
Luminar Technologies Cut to Sell From Neutral by Goldman
Sachs
Meta Platforms Raised to Overweight From Sector Weight by
Keybanc
Nike Raised to Overweight From Equal-Weight by Barclays
PulteGroup Raised to Outperform From Peer Perform by Wolfe
Research
Ross Stores Raised to Buy From Hold by Loop Capital
Semtech Raised to Buy From Neutral by B. Riley Securities
Sunstone Hotel Investors Cut to Sell From Neutral by Compass
Point
Warner Music Group Raised to Buy From Neutral by Guggenheim
This article is a text version of a Wall Street Journal
newsletter published earlier today.
(END) Dow Jones Newswires
March 23, 2023 06:10 ET (10:10 GMT)
Copyright (c) 2023 Dow Jones & Company, Inc.