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Today's Top Headlines/Must Read

- Rising Bond Yields Rattle 2023 Stock Rally

- Stablecoins Attract Scrutiny in SEC's Drive to Control Crypto

- Jeep Maker Stellantis to Hand $4.5 Billion to Shareholders

- ChatGPT Fever Sweeps China as Tech Firms Seek Growth

- CoStar Group CEO Says Firm Not Acquiring Move Real-Estate Business From News Corp

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Opening Call:

Stock futures inched higher on Wednesday ahead of Fed minutes that will be scrutinized for signals about interest-rate policy.

"Investors are waking up to a stark realization that the Fed's work is not done, and that interest rates may have to be hiked even higher to cool hot inflation," Hargreaves Lansdown said.

With this in mind, traders will warily eye the minutes of the Fed. New York Fed President John Williams will deliver a speech on inflation.

Fundstrat noted the relatively low volume that accompanied the stock market's slide yesterday and suggested the pullback may have already run its course.

"Overall, equities should be nearing an appealing area to expect some stabilization and a reversal back higher," Fundstrat said, adding that "only if SPX undercuts 3945" would it "fear a larger decline might be in store."

Stocks to Watch

Coinbase's fourth-quarter revenue beat expectations while its loss per share was narrower than anticipated, but regulatory and legislative concerns dominated its earnings call. Shares fell 0.4% premarket.

CoStar Group issued a weaker-than-expected forecast for the first quarter on Tuesday. WSJ also reported that News Corp's talks to sell the parent of to CoStar have ended without a deal. Shares fell 15% in after-hours trading.

La-Z-Boy reported higher earnings and a slight boost to sales in the third quarter. Shares increased 5.2% in after-hours trading.

Palo Alto Networks raised its guidance for fiscal 2023 after swinging to a profit. Shares rose 7.5% in after-hours trading.

Stellantis said it plans to hand $4.5 billion of dividends to shareholders, and to buy back stock. Shares rose 3.2% before the open.

ZipRecruiter said January revenue took a 15% hit as employers slowed their hiring and reduced recruiting budgets. Shares declined 14% in after-hours trading.

1Life Healthcare will be able to be purchased by Amazon without a legal challenge by the FTC, WSJ reported . Shares increased 8.7% in after-hours trading.


Higher long-term Treasury yields following the improvement in the purchasing managers' survey--with the 10-year yield back above 3.90%--is helping to prop up the dollar, UniCredit Research said.

"This is preventing any concrete downward correction of the dollar," it added. "The dollar index (DXY) is stuck at around 104 with lingering geopolitical tensions offering additional support."


A resurgence of geopolitical risk in the Russia-Ukraine conflict is curbing appetite in the euro, ING said.

Markets may need to get some reassurance on that issue before jumping back into EUR/USD long positions, which expect the exchange rate to rise, ING said.

"At this stage, support around EUR/USD 1.0640-1.0660 is enough of an encouraging sign for EUR/USD given the strength of the dollar against other pro-cyclical currencies."

However, EUR/USD could fall below support if the Fed's meeting minutes deliver a "hawkish surprise" on the need for further interest rate rises and/or more geopolitical risk is priced in, ING said.


Sterling has limited potential to appreciate against the euro as U.K. interest rate rise expectations look overdone, ING said.

The overnight index swap pricing for the BOE's peak rate has increased around 15 basis points to 4.55% since Monday--factoring in at least two more rate rises--boosted by Tuesday's strong U.K. PMI data, ING added.

"We are not convinced the BOE will ultimately deliver more than one hike, and given the pound's high sensitivity to the BOE story, we are struggling to see a sustainable outperformance of sterling against the euro in the coming months."


BlackRock increased its exposure to short-term Treasurys to an overweight.

"The jump in yields--the two-year Treasury yield is now near 4.6% compared with 1.5% a year ago--that now means short-term bonds provide income," the asset manager said.

BlackRock also likes the ability of Treasurys to preserve capital at higher yields in this more volatile macro and market regime, it added.


Oil futures were around 1% lower in Europe, with investors concerned that U.S. economic resilience will drive the Fed to be more aggressive on interest rates.

"Markets continue to come to terms with expectations of a more hawkish Fed, following a raft of economic data suggesting the Fed still has quite a bit of work to do," ING said.

Oil Outlook

China's reopening has been mixed for commodities but oil remains the most primed to benefit, JPMorgan said.

"China's economic recovery will drive its demand for all commodities higher, but we still believe oil is positioned to benefit the most," the bank said.

Travel has been the most impacted by the reopening, prompting China's refineries to snap up large amounts of oil. But, while other commodities such as metals have rallied in anticipation of extra demand, there have been few signs of it.

"Outside of oil we so far see few signs of a stronger-than-normal demand recovery," JPM said.


Base metals fell in early London trading, with gold slightly firmer, as hawkishness from central banks continued to keep a cap on prices of commodities.


Jeep Maker Stellantis to Hand $4.5 Billion to Shareholders

Stellantis NV is planning to distribute $4.47 billion in dividends to shareholders and buy back up to $1.60 billion worth of shares after revenue and net profit surged in 2022, a year marked by a steep rise in electric-vehicle sales.

Stellantis and other car makers have had to contend with supply chain snags caused by the war in Ukraine and a surge in Covid-19 infections in China, a key car market.

ChatGPT Fever Sweeps China as Tech Firms Seek Growth

The viral popularity of ChatGPT has stirred a frenzy within China where tech companies, battered by a two-year regulatory clampdown and the Covid-19 pandemic, have been seeking new sources of growth.

Search engine owner Baidu Inc., e-commerce giant Alibaba Group Holding Ltd. and social-media conglomerate Tencent Holdings Ltd. are among those that have announced investments to develop their own equivalents to the artificial-intelligence chatbot, which isn't available in China. Stocks of other Chinese companies have surged in recent weeks as they have jumped on the bandwagon, triggering state media to issue a warning about the speculative rally.

Crypto Company Circle Focuses on Growth After Canceled SPAC Merger

Circle Internet Financial Ltd. wants to increase its workforce by as much as 25% this year, finance chief Jeremy Fox-Geen said, as the cryptocurrency operator pushes ahead with expansion despite its recently canceled deal to go public and industrywide layoffs.

The Boston-based company, which operates the USD Coin stablecoin, or USDC, had about 900 employees at the end of last year and in 2023 it expects an increase of 15% to 25%, or an additional 135 to 225 workers, he said. That's a lower growth rate than it had in 2022, when head count roughly doubled from 2021.

CoStar Group CEO Says Firm Not Acquiring Move Real-Estate Business From News Corp

News Corp's talks to sell the parent of to CoStar Group Inc. have ended without a deal.

CoStar had been in talks to purchase Move Inc. from News Corp for about $3 billion.

Amazon Purchase of One Medical Health Clinics Won't Be Blocked by FTC Inc. will be able to close its purchase of 1Life Healthcare Inc., the operator of the One Medical line of primary-care clinics, without a legal challenge by antitrust enforcers.

The Federal Trade Commission won't sue in time to block the $3.9 billion deal, including debt, but will continue its investigation of the merger, an agency spokesman said. The decision clears a path for Amazon to substantially expand its healthcare offerings and operate physical medical clinics. Amazon has invested in the healthcare space for years, including with an online pharmacy and other health ventures.

Rio Tinto Full-Year Profit, Dividend Down on Weaker Commodity Prices

Rio Tinto PLC reported a 41% fall in net profit for 2022 and cut its payout to shareholders, reflecting a downswing in iron ore and copper prices from elevated levels a year earlier.

The world's second-biggest miner by market value on Wednesday said it made a net profit of $12.42 billion last year, down from $21.09 billion in 2021.

Citigroup CEO Jane Fraser Gets $24.5 Million 2022 Paycheck, Up 9%

Citigroup Inc. paid Chief Executive Jane Fraser $24.5 million for 2022, up 9% from the prior year.

Ms. Fraser received a $1.5 million salary and a $3.45 million cash bonus, according to a filing on Tuesday. The bulk of her pay comes in restricted stock units that will ultimately be determined by the bank's performance in the coming years.

McKinsey Intends to Eliminate as Many as 2,000 Jobs

McKinsey & Co. plans to eliminate thousands of positions, adding the consulting giant to a wave of companies that are cutting corporate jobs.

The firm, which is known for helping companies streamline their operations, could shed as many as 2,000 jobs in what would be one of its biggest headcount reductions to date, according to a person familiar with the matter.

Chesapeake to Sell Shale Oil Assets to British Chemical Maker Ineos for $1.4 Billion

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02-22-23 0627ET