Daily Markets: Federal Reserve's Two-Day Policy Meeting Kicks Off Today

Today’s Big Picture

Equity indices in Asia finished the day mostly higher, led by the 0.8% move in China’s Shanghai Composite and the 0.7% climb in Hong Kong’s Hang Seng. By mid-day trading, European equity indices were also predominantly higher while U.S. futures point to a mixed market open later this morning. Before U.S. equity markets open, the February Retail Sales and February Industrial Production data will be reported and those figures could shape the day’s market open.

While the yield on the 10-year Treasury traded off modestly earlier this morning, odds are the market is waiting for the outcome of the Federal Reserve's next two-day policy meeting that kicks off today and concludes tomorrow with its official policy statement and follow up presser. Following the year-to-date move in Treasury yields, we suspect that once again investors and economists will be breaking out their decoder rings as they parse the language used by Powell and Fed.

In Washington, the focus will shift from the recently passed $1.9 trillion relief plan to President Biden’s plan for the first major federal tax hike since 1993 that will help pay for the next step in his economic plan. This next initiative, which could reportedly bring in $2-$4 trillion, is expected to target infrastructure and climate change.

Data Download

Coronavirus

Germany, Italy, France, and Spain joined the ranks of European countries that have temporarily halted the use of AstraZeneca's (AZN) COVID-19 shots after several countries reported possible serious side-effects, according to Reuters. Denmark and Norway stopped giving the shot last week after cases of blood clots and a low platelet count. Iceland and Bulgaria followed suit and Ireland and the Netherlands suspended the vaccine use on Sunday.

According to a Partnership for New York City survey, just 22% of Manhattan’s large employers will require all workers to return to the office full-time when they do eventually go back. Roughly 66% shared they would adopt a hybrid model of days in the office and days at home, while 9% said they would not require workers to return to the office at all, and 4% said it would ultimately be role-dependent. Survey respondents expect just 45% of Manhattan's roughly 1 million office workers to be back to the office by this September.

International Economy

Japan’s Industrial Production rose 4.3% MoM in January after falling 1% in December 2020.

The ZEW Economic Sentiment Index for the Eurozone increased to 74 in March from 69.6 in February.

Domestic Economy

Monday, the New York Fed released its Empire Manufacturing Index that measures the performance of factories in the state. The headline index came in stronger than the expected increase to 15, rising to 17.4 from February’s 12.1. This was the ninth consecutive month of expansion and the highest reading since November 2018. The only sub-indices to show deceleration were for New Orders and the Number of Employees. Expectations for six months out remain positive, but more of the sub-indices were lower than last month. Capex expectations are the highest since February 2019 and are in the 79th percentile of all periods and at the 92nd percentile pace in March.

Later today we will get February’s Retail Sales report, Import and Export Prices, Industrial Production, NAHB Housing Market, Business Inventories, and the usual weekly API Crude Oil Stock report.

Markets

The equity party from Friday continued on Monday with indices reaching for new all-time highs again, reversing their morning declines. The Nasdaq 100 and Nasdaq Composite both added 1.1%. Record highs were hit by the S&P 500 as it rose 0.7%, the Dow, which gained 0.5%, and the Russell 2000, which added 0.3%. The strongest S&P 500 sector was Utilities, gaining 1.4% on the day, followed by Consumer Discretionary and Real Estate, which both closed up 1.2%. The weakest sector was Energy, which lost 1.3%. followed by Financials, down -0.6%.

The yield on the 30-year Treasury fell 0.042 to 2.359%, 10-year fell 0.028 to 1.607%, but the 2-year rose 0.002 to 0.153%. This week’s Treasury insurance is lighter than last with $24 billion in 20-year bonds tomorrow afternoon and $13 billion in 10-year TIPS later in the week.

After surging over $61,000 over the weekend, up from $29,000 at the end of 2020, Bitcoin (BTC) dropped back below $56,000 on Monday. The US Dollar Index (DXY) rose 0.15% to 91.81, continuing its slow rise from the lows at the start of the year.

Stocks to Watch

Outsourced semiconductor assembly and test services company ChipMos Technologies (IMOS) reported December quarter earnings of NT$0.94 per share vs. the NT$0.93 consensus. Revenue for the quarter rose 13.3% YoY to NT$6.31 billion beating the NT$6.2 billion consensus.

Report infer that Taiwan Semiconductor’s (TSM) production capacity for the second quarter has been filled by a strong pull-in of orders for 5G, HPC, and automotive electronics chips.

Designer Brands (DBI) reported January quarter EPS of -$0.53, well ahead of the -$0.68 consensus. Revenue for the quarter fell 26.5% YoY to $609.4 million missing the $623.7 million consensus. Comp sales for the quarter fell 20.1% YoY.

Nokia (NOK) outlined plans to reset its cost base while continuing to invest in R&D and future capabilities including 5G, cloud, and digital infrastructure. Total restructuring and associated charges of approximately EUR 600--700 million, of which ~50% is expected in 2021, ~15% is expected in 2022, and ~35% is expected in 2023. Nokia plans to cut up to 10,000 jobs over an 18–24-month period. Additionally, Nokia continues to expect approximately EUR 500 million of cash outflows related to its previous restructuring program. Nokia will host its 2021 Capital Markets Day on March 18 and odds are the company will discuss these plans in greater detail.

In a bid to create a lucrative revenue stream, Huawei Technologies announced it will begin charging “mobile giants” like Apple (AAPL) and Samsung (SSNLF) a “reasonable” fee for access to its wireless 5G patents.

Foxconn Technology (2354:TT), the world’s largest assembler of iPhones, is deciding between Mexico and Wisconsin as the location for its first electric-car plant.

Carrier Transicold (CARR) will accelerate and advance its electrification capabilities through a new strategic partnership with Portuguese technology company AddVolt. The agreement enables Carrier to utilize AddVolt's engine-agnostic technology to develop sustainable transport refrigeration solutions for customers in Europe.

Effective March 15, Intrepid Potash (IPI) increased its Trio price by $20 per ton on all product grades. The company’s price for Trio is now $80 per ton above the 2020 summer-fill price.

TimkenSteel (TMST) announced that it will increase base pricing on special bar quality products 3.500" and below by $55 per ton and $40 per ton for sizes above 3.500".

Microsoft (MSFT) Teams went down for around four hours yesterday, alongside Azure and other Microsoft 365 services. The company blamed the issues on “a recent change to an authentication system.”

Dick’s Sporting Goods (DKS) will enter the men’s athletic apparel with the launch of its own brand called VRST. VRST debuts today on Dick’s website, a standalone VRST.com, and will roll out to more than 400 Dick’s stores in the coming weeks.

Walmart (WMT) announced it is hiring fashion designer Brandon Maxwell as creative director for its Scoop and Free Assembly apparel brands. Maxwell’s first full collections will be available in spring 2022.

After today’s market close, Coupa Software (COUP), CrowdStrike (CRWD) , and Lennar (LEN) among others will report their quarterly results. Investors looking for the full slate should visit Nasdaq’s earnings calendar page.

On the Horizon

• March 17: Building Permits, Housing Starts, EIA Energy Stocks
• March 18: Philadelphia Fed Manufacturing, Weekly Jobless Claims
• March 22: Chicago Fed National Activity Index
• March 23: New Home Sales, API Crude Oil Stocks
• March 24: Durable Goods Orders, Markit Manufacturing and Services PMI, EIA Energy Stocks
• March 25: US Corporate Profits Q4, weekly jobless claims,
• March 26: Personal Income & Spending, PCE Price Index, Goods Trade Balance, Wholesale Inventories, Michigan Consumer Sentiment
• March 29: Dallas Fed Manufacturing
• March 30: S&P/Case-Shiller Home Price report, Conference Board Consumer Confidence, API Crude Oil Stocks
• April 1: Alien Nation IPOs on Nasdaq through a Mars Rover SPAC sponsored by the Wormhole Venture Fund led by Jean Luc Picard from Hawkins, Indiana, Weekly jobless claims, Markit Manufacturing PMI, Construction Spending, ISM Manufacturing PMI, Total Vehicle Sales
• April 2: Nonfarm Payrolls
• April 5: Markit Services PMI, ISM Non-Manufacturing PMI, Factory Orders
• April 6: JOLTS Job Openings, IBD/TIPP Economic Optimism, API Crude Oil Stocks
• April 7: Balance of Trade, EIA Energy Stocks, FOMC Minutes
• April 8: Weekly jobless claims
• April 9: PPI, Wholesale Inventories

Thought for the Day

“Although the world is full of suffering, it is also full of overcoming it.” ~Helen Keller

Disclosures

• Nokia (NOK) is a constituent of the Tematica BITA Digital Infrastructure and Connectivity Index.
• CrowdStrike (CRWD) is a constituent of the Foxberry Tematica Research Cybersecurity & Data Privacy Index.
• Microsoft (MSFT), Walmart (WMT) are constituents of Tematica Research's 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

Central Banks Economy Stocks Coronavirus