MARKET WRAPS
Watch For:
Personal Income and Outlays; Chicago Business Barometer; University of Michigan Final Consumer Survey for March; Canada GDP for January; speeches by Fed's Williams, Cook; speech by ECB's Lagarde
Today's Headlines/Must Reads
Trump's Indictment Spells Trouble for the U.S. Stock Market and the Economy
The Debt Ceiling Is Forgotten, but Not Gone
Markets' Wild Quarter Might Foretell Further Turbulence
Banks Turn to Federal Home Loan Bank Funding as System Faces Review
Spending Report to Show Whether Strength Continued in February
Bond Rally at Risk as Bank Stress Diminishes
Green Energy Is Stuck at a Financial Red Light
Follow WSJ markets coverage here .
Opening Call:
Stock futures appeared to dismiss the news of Donald Trump's indictment, as Wall Street turned its attention to the release of the Federal Reserve's preferred inflation measure.
Trump's indictment by a New York grand jury might create additional uncertainty in the coming weeks if it leads to political deadlock. On the other hand, investors may ignore political news, focusing instead on things like consumer prices that will impact the Fed.
Equities have bounced this week as fears about the banking sector have subsided. Data released after the close on Thursday showed less usage of Fed lending facilities, and flows to money-market funds over the past week eased to a still large $66 billion.
The PCE price index is due for release alongside the latest numbers on consumer spending and personal income. Economists polled by The Wall Street Journal expect the core measure of PCE, which excludes energy and food, to rise 0.4% for February after 0.6% growth in January.
"It's no secret that the FOMC watches this particular data set more closely than most when it comes to inflation gauges, and if we see a softer reading, I expect markets would see this is a signal to continue with the risk-on theme [on heightening expectations of a Fed pause on rates]," Kohle Capital Markets said.
Overseas
Global markets were muted on Friday. The Stoxx Europe 600 edged up 0.2%, keeping it on track to rise more than 7% for the quarter. China's Shanghai Composite index rose 0.4% and Japan's Nikkei 225 gained 0.9%.
Core inflation in the eurozone hit a record in March, a setback for central bankers whose rapid rate rises have exacerbated financial sector strains and caused pains in part of the bloc's economy without yet reining in prices. Read more here .
Stocks to Watch
BlackBerry fell 5% in premarket trading after fiscal fourth-quarter revenue fell from a year earlier and missed analysts' expectations. Cybersecurity revenue in the quarter was $88 million. BlackBerry reiterated that the cybersecurity business saw the "timing of a number of large government deals slip into later quarters" but said it was "confident" they would close during the current fiscal year.
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Metropolitan Bank said it remains well capitalized after seeing its stock fall nearly 28% during the regular trading session on Thursday. The stock rose 19% in after-hours trading.
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Nikola was down 9% in premarket trading after announcing it would sell $100 million of stock at $1.12 a share.
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Rumble rose 14% and Digital World Acquisition jumped 11% in premarket trading, with shares higher following the indictment of Donald Trump.
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Tesla is expected to release deliveries numbers for the first quarter over the weekend. According to 10 estimates compiled by FactSet, Wall Street expects the electric-vehicle company to have delivered 432,000 units in the first quarter, up from about 405,000 in the fourth quarter of 2022. In the first quarter of 2022, Tesla delivered about 310,000 vehicles. Tesla stock was slightly higher in premarket trading.
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Virgin Orbit fell 49% in premarket trading to about 17 cents after the space launch startup said it would cut 85% of its workforce. The job cuts were made "in light of the company's inability to secure meaningful funding," according to a regulatory filing.
Forex:
The dollar edged higher after earlier losses as investors awaited the release of February's PCE data.
"Barring a major upside surprise, we don't expect a material impact on the dollar from PCE data today," ING said.
As evidenced recently, higher chances of the Fed lifting rates in May don't automatically translate into a stronger dollar in the current market environment, it said.
The dollar may stabilize after a week of losses but the short-term bias remains negative for the currency, ING added.
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The euro could rise if eurozone inflation data show underlying price pressures remained elevated in March, particularly after German inflation data eased by less than expected, UniCredit Research said.
That, combined with a potential mix of sluggish personal income and spending data along with steady personal consumption expenditures price index figures, could help EUR/USD end the week on "quite a firm footing, " UniCredit added.
"EUR/USD has the potential to definitively break above the past peak of 1.0930 and then re-approach the year-to-date high of 1.1033."
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Sterling is set to be the best performing currency of the first quarter, boosted by an improved economic outlook and expectations the Bank of England will raise interest rates further despite recent financial turmoil, ING said.
BOE Governor Andrew Bailey on Monday largely endorsed market pricing, although it's unlikely that upcoming economic data will underpin the need for additional rate rises, ING said.
"This morning's revision of fourth-quarter GDP data on the strong side is probably too outdated to have a material impact in this sense."
Read U.K. Economy Avoids Recession with Modest Growth
Bonds:
In anticipation of an end to the recent interest-rate rises, broker positioning monitors indicate that investors have moved toward a more defensive stance and started to add duration and steepeners to portfolios, J.P.Morgan Asset Management said.
While investors are searching for indicators that the acute phase of stress has cooled down, volatility remains high, JPM added.
"With the market still making up its mind on what's to come, we think that volatility is here to stay," JPM said, positioning for a recession, and making use of backups in yields to add duration to portfolios.
The MOVE index, which reflects rate volatility, is currently at levels only seen in 2020 and not far from levels experienced in the global financial crisis in 2008, JPM said.
Energy:
Oil prices ticked lower ahead of the PCE data, which is expected to show price pressures eased month on month but remained steady on year.
A stronger-than-expected reading could raise concerns the Fed will need to keep monetary policy tighter for longer.
Metals:
Base metals were mixed with gold slightly firmer, with markets having taken a breather this week following price whipsaws for much of the month triggered by banking turmoil.
Peak Trading Research said Friday's PCE outcome "will provide clues as to whether the Fed can pause [rate hikes] in May."
Copper
Low inventories of copper in LME warehouses and growing demand from China are likely to boost prices this year, Fitch said, lifting its annual price forecast for 2023 to $9,000 a metric ton from $8,500.
Rising demand from China as the country emerges from Covid-19 lockdowns and a weaker dollar are likely to act as tailwinds for copper, Fitch said. This, added to the fact that LME warehouse inventories are sitting at multi-year lows, means prices should remain elevated.
That said, countries slipping into recession and jitters around banking are likely to cap prices, Fitch said.
TODAY'S TOP HEADLINES
JD.com's Property and Industrial Units Seek About $1 Billion Each in Hong Kong IPOs
JD.com Inc.'s property and industrials units are targeting to raise about $1 billion each in Hong Kong initial public offerings, people familiar with the matter said, adding to the supply of potentially sizable deals that could hit the market this year.
The Chinese e-commerce giant said on Thursday that it is planning to spin off Jingdong Property Inc. and Jingdong Industrials Inc. by listing both companies in the city.
Pro Take: Retail Investors Flee Bed Bath & Beyond When It Needs Them Most
Bed Bath & Beyond Inc.'s plans to sell up to $300 million in shares on the open market got more difficult Thursday as the retail investors it is relying on fled the stock.
Shares reacted to the dilutive new offering, dropping 26% as stockholders-including the company's meme-stock believers-questioned whether it has enough intrinsic value to support a capital raise many times larger than its current market value.
Ford Raises Price Again on Electric F-150 Lightning Truck
Ford Motor Co. has again raised the starting price of its all-electric F-150 Lightning truck, after temporarily halting production and shipments to address a battery issue.
The cheapest of the company's electric trucks now costs $59,974, marking the latest in a series of price increases since the full-size, battery-powered pickup trucks began rolling off Detroit assembly lines in April of last year. At that time, the starting price was roughly $40,000. By August, it had jumped to $46,974. In October, Ford executives raised it to $51,974, and in December, it increased to $56,000.
Virgin Orbit Holdings to Cut Workforce by 85%
Virgin Orbit Holdings Inc. on Thursday said it reduced its headcount by about 675 employees, about 85% of its workforce, to reduce expenses as it has been unable to secure meaningful funding.
Shares nosedived 39% to 21 cents in after-hours trading.
How Trump's Indictment Spells Trouble for Stocks and the Economy
Former President Donald Trump's indictment by a New York grand jury is one more reason that Congress, which desperately needs to compromise, will have a tough time doing so. And that could spell trouble for the U.S. stock market and economy.
(MORE TO FOLLOW) Dow Jones Newswires
03-31-23 0619ET
