Daily Markets: Waiting for February Inflation Data

Today’s Big Picture

In response to Friday’s U.S. market response to inflation updates and tech profit-taking, Asia-Pacific equity markets finished the day lower except for China’s Shanghai Composite and Hong Kong’s Hang Seng which gained 0.74% and 1.43%, respectively. Taiwan’s TAIEX declined 0.30%, South Korea’s KOSPI fell 0.77%, India’s SENSEX shed 0.83%, Australia’s ASX All Ordinaries gave back 1.77%, and Japan’s Nikkei closed 2.19% lower in what seems like a response to the release of revised Q4 GDP figures which reversed the “technical recession” label that was attached to that economy.

European markets are down just about across the board in midday trading and U.S. equity futures point to a lower start when equities begin trading later this morning.

Last week was the worst week in the market since October and is being chalked up to profit-taking following its stellar run. Tipping the scales for that decision is the growing realization that while the Fed still expects to cut rates this year, the timing for the start of that process continues to slip.

The hope is this week’s February Consumer Price Index and Producer Price Index will help the market pin down that timing. If those figures surprise to the upside as their January reports did, it will reinforce not only the Fed’s measured pace to rate cuts but could mean it wants to see that much more data confirming a sustained move closer to the Fed’s 2% inflation target. Should rate cut expectations get pushed out to the middle or back half of 2H 2024, investors will begin to question 2H 2024 GDP and EPS forecasts more carefully.

Data Download

International Economy

Consumer prices in China rose 0.7% YoY in February, pulling the country out of deflation for the first time since September 2023. Core CPI increased by 1.2% YoY in February, the most since January 2022.

According to data from the China Association of Automobile Manufacturers, China's vehicle sales slumped by 19.9% from a year earlier to 1.58 million units in February. That drop reverses sharply from a 47.9% jump in the previous month due in part to disruption associated with the Lunar New Year holiday.

During a press conference, Ni Hong, minister of China’s Housing and Urban-Rural Development shared that Chinese real estate companies that are "seriously insolvent and have lost their operating capabilities" must go bankrupt and reorganize.

Domestic Economy

At 10 AM ET, February Consumer Inflation Expectations will be released, and the figure is expected to remain unchanged with January’s 3.0% reading.

Markets

Selling in Nvidia (NVDA), Broadcom (AVGO) and Microsoft (MSFT) contributed to two thirds of the 1.49% decline in Technology. Coupled with the returns of Consumer Staples (-0.79%), Consumer Discretionary (-0.37%) and Communications Services (-0.15%), meant that broad indexes ended the day lower across the board. The Russell 2000 shed 0.10%, the Dow declined 0.18%, the S&P 500 gave back 0.65% and the Nasdaq Composite closed 1.16% lower.

While big tech had a down day, small craft was looking up as shares of Etsy (ETSY) gained 5.72% after spending much of the year declining as investors search for what they believe might be undervalued companies. Here’s how the major market indicators stack up year-to-date:

• Dow Jones Industrial Average: 2.74%
• S&P 500: 7.42%
• Nasdaq Composite: 7.15%
• Russell 2000: 2.75%
• Bitcoin (BTC-USD): 62.75%
• Ether (ETH-USD): 69.61%

Stocks to Watch

There are no market-moving earnings reported expected this morning. Pre-market breadth is robust today as 281 names in the S&P 500 have traded hands so far this morning with 127 gainers and 154 decliners. EQT Corporation (EQT) sits atop the decliners leaderboard after the company’s announcement it will seek to acquire Equitrans Midstream in an all stock $5.5 billion deal. Seagate Technology (STX) is poised to open almost 5% higher and other high volume names include Nvidia (NVDA) which is up modestly after Friday’s selling.

Shares of Mesoblast (MESO) are running following the company announcement that the FDA supports an accelerated approval pathway for rexlemestrocel-L, Mesoblast's allogeneic mesenchymal precursor cell product, in patients with end-stage ischemic heart failure with reduced ejection fraction and a left ventricular assist device.

Amid a slowdown in iPhone sales in China, Apple (AAPL) is set to open its eighth store in Shanghai on March 21.

Delta Air Lines (DAL) expects deliveries of Boeing (BA) 737 MAX 10 aircraft it has ordered could be pushed out to as late as 2027. Separately, The Wall Street Journal reports the Justice Department has opened a criminal investigation into the Boeing 737 MAX blowout on an Alaska Airlines flight.

Goldman Sachs (GS) now expects S&P 500 companies to repurchase $925 billion in 2024, up 13% year over year and higher than the initial forecast of 4% growth. The firm sees buyback usage rising another 16% in 2025 to $1.075 billion.

Linde plc (LIN) will become a component of the Nasdaq-100 Index replacing Splunk (SPLK) in that index as well as in the Nasdaq-100 Ex-Tech Sector Index, and the Nasdaq-100 ESG Index before the market open on Monday, March 18.

IPOs

Reports indicate Reddit (RDDT) is looking to raise up to $748 million in its initial public offering and the roadshow for that offering is expected to kick off early this week. Readers who want to dig deeper into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.

After Today’s Market Close

Cavalo Growers (CVGW), Casey’s General (CASY), Mission Produce (AVO), and Oracle (ORCL) are expected to report quarterly results after equities stop trading today. Those looking for more on upcoming quarterly earnings reports should head on over to Nasdaq’s Earnings Calendar.

On the Horizon

Tuesday, March 12

• Japan: Producer Price Index - February
• Germany: Inflation Rate, Consumer Price Index - February
• US: NFIB Small Business Optimism Index - February
• US: Consumer Price Index - February
• US: Treasury Budget - February

Wednesday, March 13

• Eurozone: Industrial Production - January
• UK: Industrial Production, Manufacturing Production - January
• US: Weekly MBA Mortgage Applications
• US: Weekly EIA Crude Oil Inventories

Thursday, March 14

• US: Producer Price Index - February
• US: Retail Sales - February
• US: Business Inventories - January

Friday, March 15

• US: Import/Export Prices - February
• US: Industrial Production & Capacity Utilization - February
• US: The University of Michigan Consumer Sentiment Index (Preliminary) - March

Thought for the Day

“Life is a journey, not a destination.” —Ralph Waldo Emerson

Disclosures

• Nvidia (NVDA), Broadcom (AVGO) are constituents of the Tematica BITA Digital Infrastructure & Connectivity Index
• Microsoft (MSFT) is a constituent of the Tematica Research Thematic Dividend All-Stars Index

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics

Stocks Economy Earnings Central Banks