MARKET WRAPS
Watch For:
Weekly Jobless Claims; Earnings from Oracle, JD.com, BJ's Wholesale Club, FuelCell Energy, DocuSign, Ulta Beauty, HashiCorp; General Electric investor event
Today's Top Headlines/Must Reads:
- Markets on Edge Ahead of Jobs and Inflation Reports
- Now Isn't Time to Change the Fed's 2% Inflation Target, Economists Say
- Biden's Budget Would Cut Deficits by $3 Trillion Over 10 Years, Raise Taxes on Businesses
- China's Inflation Rate Slows to One-Year Low, Casting Doubt on Recovery
- Norfolk Southern CEO to Pledge Change at Senate Hearing on Ohio Train Derailment
- Credit Suisse Delays Annual Report After Last-Minute SEC Request
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Opening Call:
Stock futures fell back on Thursday as worries about further Fed tightening dampened sentiment.
"This morning the low energy in U.S. equity futures continues and it feels like the equity market is back at the wait-and-see mode on inflation and the economy. As we have said before, it is the bond market that will dictate where equities go from here," Saxo Bank said.
"If S&P 500 futures slips below Tuesday's close, then the 3,950 level is the next level to watch and the approximate area for the 200-day moving average," it added.
AJ Bell said that "while Powell softened things a little [on Wednesday] by saying nothing is decided yet, the clear message is future rate decisions will be dependent on the data and for now that seems to be tilting things more towards a 50-basis point rather than 25 basis point rate rise later this month."
Traders will be keenly eyeing the official nonfarm payrolls report on Friday for evidence of whether such a robust jobs market is adding to wage inflation.
Stocks to Watch
Avenue Therapeutics disclosed that it will participate in a Type C meeting with the FDA regarding a study assessing risks related to opioid stacking. Shares surged 19% in after-hours trading.
Asana jumped almost 23% in premarket trading after Chairman and CEO Dustin Moskovitz disclosed plans to buy up to 30 million shares of the software company's Class A common stock.
Credit Suisse fell more than 5% in Switzerland. The bank said it had delayed its annual report after a last-minute call from the SEC.
LoanDepot fell about 5% premarket after saying its net loss rose 15% in the fourth quarter, compared with the third.
MongoDB fell 11.5% in premarket trading after issuing revenue forecasts for the fiscal first quarter and year that were below analysts' expectations.
Neoleukin Therapeutics said it was reviewing strategic alternatives and will reduce its workforce by 70%. Shares jumped 32% in after-hours trading.
Noodles & Co. fell in after-hours trading after the Colorado-based restaurant chain posted results.
Silvergate Capital said it will wind down and return all deposits following a run that forced it to sell off assets at a steep loss to cover billions of dollars worth of withdrawals. Shares fell 42% in after-hours trading.
SVB shares dropped more than 30% before the bell. The group said it plans to hold a stock offering. Moody's Investors Service soon after downgraded its credit ratings for both SVB and Silicon Valley Bank.
Tesla was down more than 2%, extending a decline Wednesday, which came after U.S. regulators said they had opened a probe into a possible steering flaw.
Forex:
The DXY dollar index remained well above 105 and close to a 14-week high after Jerome Powell signaled more rate increases to come, but it has stabilized for now as market players awaited jobs data, UniCredit Research said.
The FX market "seems to have absorbed the hawkish remarks Fed Chair Jerome Powell reiterated before the U.S. Senate yesterday," UniCredit said.
EUR/USD was also "showing quite impressive resilience above 1.05," especially considering yesterday's strong ADP private employment data.
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Sterling is at risk of falling as the Fed and ECB show more resolve to raise interest rates than the Bank of England, ING said.
GBP/USD dropped after Jerome Powell signalled higher rates than previously anticipated on Tuesday and it could depreciate further to 1.1650, ING said.
"We continue to favor EUR/GBP trading up to and staying near 0.90 over coming months given the risk of the BOE shifting to a pause far earlier than the Fed or the ECB."
Bonds:
Bond market observers are struggling to explain why the economy is so robust in both the U.S. and the eurozone, despite central banks having already raised key interest rates significantly, DZ Bank said.
While there are multiple possible explanations, none of them are entirely convincing, DZ said.
"It can be argued for instance that monetary policy measures take effect with a considerable time lag or that governments have pursued an (overly) expansionary fiscal policy both now and in the past."
The argument that real yields are too low for a sufficiently tight monetary environment isn't really cogent either, the bank said, seeing central banks to remain under pressure to continue to raise interest rates.
Metals:
Base metals were lower in Europe, with gold flat, as expectations continue to gather pace for further Fed rate hikes.
Markets are now looking to tomorrow's jobs report and next Tuesday's inflation data, Deutsche Bank said.
However, in the meantime "markets continued to price in a growing chance that the Fed would go for a 50 basis point move at the next meeting," providing further hawkish sentiment to risk assets, DB added.
Read Barron's Platinum Is the New Precious Metal Darling. Why Palladium Lost Its Shine .
TODAY'S TOP HEADLINES
Credit Suisse Delays Annual Report After Last-Minute SEC Request
Credit Suisse Group AG delayed its annual report to address a late-night request from the U.S. Securities and Exchange Commission for more information on how the bank restated cash flows after restructuring its divisions.
The Swiss banking giant said the SEC wants more information on its restated consolidated cash flow statements from 2019 and 2020 and the bank's assessments when it revised the numbers last year.
Norfolk Southern CEO to Pledge Change at Senate Hearing on Ohio Train Derailment
Norfolk Southern Corp. will spend more than $20 million to reimburse residents and clean up a small town in Ohio where one of its trains derailed and spilled toxic chemicals last month, the chief executive of the company plans to tell a Senate committee on Thursday.
"I am deeply sorry for the impact this derailment has had on the people of East Palestine and surrounding communities, and I am determined to make it right," Norfolk Southern Chief Alan Shaw said in prepared remarks to the Senate's Environment and Public Works Committee.
Eli Lilly Drug Fails to Prevent Alzheimer's in Study
An experimental drug from Eli Lilly & Co. failed to prevent memory loss in a study of healthy older people with a high risk of developing clinical Alzheimer's disease in one of the first studies aimed at stopping symptoms before they start.
The drug was no better than a placebo over about 4 1/2 years of treatment at slowing patients' decline in areas including memory and the ability to plan and complete tasks, Lilly said Wednesday.
Crypto Bank Silvergate to Shut Down, Repay Deposits
The crypto meltdown has claimed its first big casualty in the mainstream financial system: Silvergate Capital Corp.
The California lender, one of the crypto market's top banks, said it would wind down and return all deposits following a run that forced it to sell off assets at a steep loss to cover billions of dollars of withdrawals. Silvergate "is also considering how best to resolve claims and preserve the residual value of its assets," the bank said in a news release Wednesday.
GTCR Seeks $1 Billion to Extend Ownership of TerSera Therapeutics
Buyout firm GTCR LLC is pitching a fund that would allow the midmarket firm to extend its ownership of a pharmaceuticals business it helped form in 2016.
The Chicago-based firm aims to raise around $1 billion for a continuation vehicle to buy TerSera Therapeutics LLC from GTCR Fund XI, its 11th main buyout fund which closed in 2014 with $3.85 billion, according to several people familiar with the matter.
JPMorgan Sues Former Executive Jes Staley Over Jeffrey Epstein Ties
JPMorgan Chase & Co. sued former executive Jes Staley over his ties to Jeffrey Epstein, identifying Mr. Staley as the "powerful financial executive" accused of sexual assault in a lawsuit against the bank.
Late last year, an unnamed woman alleged that JPMorgan aided Epstein's sex trafficking by allowing him to remain a client and helping him send money to the late financier's victims.
Walgreens Abortion Pill Furor Highlights Complexity of Access in Post-Roe World
Pharmacies and medication abortion are emerging as contentious political battlegrounds in the increasingly complex issue of abortion access in the U.S.
Walgreens Boots Alliance Inc. has found itself at the center of the fray after the pharmacy chain said it wouldn't dispense the abortion pill in states where abortion is illegal and in several states where it is currently legal, including Alaska, Iowa, Kansas and Montana, given the "complexity and flux" of the laws in those places related to medication abortion as legal battles over access continue.
Ernst & Young Pauses on Plan to Spin Off Its Consulting Arm
Ernst & Young has paused its plan to spin off its consulting arm, bowing to pressure from its U.S. partners to rethink how the tax practice will be divided when the firm is split into two, according to people familiar with the matter.
Julie Boland, the head of EY's U.S. firm, told partners on a call Wednesday that the firm was taking a pause to focus on getting the shape of the deal right, one of the people said. Ms. Boland, who is due to run the audit-focused partnership after the split, said she still believed the breakup was the right thing to do, the person added.
(MORE TO FOLLOW) Dow Jones Newswires
03-09-23 0616ET
