Pre-Market Brief: Stocks Mostly Higher As Investors Await U.S. Inflation Data

March S&P 500 futures (ESH23) are trending up +0.32% this morning after three major U.S. benchmark indices finished the regular session higher as market participants awaited U.S. inflation data for further clues on the Federal Reserve’s interest rate policy. Three major U.S. stock indexes were fueled primarily by gains in the Telecoms, Consumer Services, and Basic Materials sectors. 

In his first public appearance of the year, Federal Reserve Chair Jerome Powell refrained from commenting on the monetary policy outlook but indicated the central’s bank resolve, saying that unpopular decisions may be needed to curb inflation. Also, recent remarks by other Fed officials have reiterated the view that the Federal Reserve needs to continue raising interest rates to combat high inflation. Fed Governor Michelle Bowman said on Tuesday the central bank has more work to do to bring down inflation to its 2% goal, noting that higher rates should prevail for some time to stabilize prices.

The World Bank on Tuesday slashed its forecast for world GDP in 2023 from 3% to 1.7% as the impact of central bank rate hikes intensifies. The bank also reduced its guidance for 2024 to a gain of 2.7% and said average growth for 2020-2024 would be under 2%, the slowest five-year pace since 1960.

Investor attention will squarely be on the U.S. consumer prices index reading due on Thursday, which is expected to show December’s headline inflation at 6.5% y/y compared to 7.1% y/y in November.

“There are some indications that inflation is slowing significantly. What investors are really looking for is a gap down in major inflation data that could probably get the Fed’s attention,” said Tim Ghriskey, a senior portfolio strategist at Ingalls & Snyder in New York.

Meanwhile, U.S. rate futures have priced in a 79.2% chance of a 25 basis point rate increase and a 20.8% chance of a 50 basis point hike at February’s monetary policy meeting. 

Today, all eyes are focused on the U.S. Crude Oil Inventories data in a couple of hours. Economists, on average, forecast that Crude Oil Inventories will stand at -2.243M, compared to last week’s value of +1.694M.

Also, investors are likely to focus on the U.S. Gasoline Inventories data, which was at -0.346M last week. Economists foresee the new figure to be +1.186M.

In the bond markets, United States 10-Year rates are at 3.569%, down -1.39%.

The Euro Stoxx 50 futures are up +0.89% this morning as investors digested a hefty flow of quarterly corporate results, with the retail sector in focus. The retail sector is widely expected to have tough times ahead, with consumer demand set to deteriorate in 2023 as growth in many European economies slows down. On the positive side, shares of JD Sports Fashion Plc (JD-.LN) gained over +6% after the fashion retailer lifted its annual profit forecast to the top end of expectations.

The European economic data slate is largely empty on Wednesday.

Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.24%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +1.03%.

China’s Shanghai Composite today closed lower amid caution over upcoming U.S. inflation data. However, losses were limited as major technology stocks surged after the government signaled less severe measures against the sector. Investors are awaiting Chinese consumer price index data due on Thursday to assess whether price pressures improved with the relaxation of anti-COVID measures.

At the same time, Japan’s Nikkei 225 Stock Index closed higher as export-oriented stocks gained on the recent weakness in the Japanese yen. The index’s upward momentum was fueled by gains in the Machinery, Glass, and Mining sectors. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up 0.38% to 18.28.

Pre-Market U.S. Stock Movers

Hepion Pharmaceuticals Inc (HEPA) jumped over +38% in pre-market trading after the company presented new findings from a preclinical study on the company’s lead drug candidate, rencofilstat, in a presentation at the 2023 State of Florida Cancer Symposium in Tampa, Florida.

Broadwind Energy Inc (BWEN) spiked more than +69% in pre-market trading after the company announced a $175M wind tower order from a leading global wind turbine manufacturer.

ProKidney Corp (PROK) climbed about +19% in pre-market trading after the company published design data for the trial of REACT for diabetes related to CKD.

Conns Inc (CONN) gained over +5% in pre-market trading, extending yesterday’s gains on a report from WSJ that Franchise Group is eyeing a potential deal to acquire the furniture chain.

Sotera Health Co (SHC) rose more than +4% in pre-market trading, extending yesterday’s gains after Barclays upgraded the stock from underweight to overweight with a price target of $22.00.

STMicroelectronics NV ADR (STM) dropped over -1% in pre-market trading after Goldman Sachs downgraded the stock to sell from neutral.

You can see more pre-market stock movershere

Today’s U.S. Earnings Spotlight: Wednesday - January 11th

J Sainsbury PLC (JSAIY), KB Home (KBH), Oramed (ORMP), Concrete Pumping A (BBCP), Blade Air Mobility (BLDE), Lifecore Biomedical (LFCR), Byrna Technologies (BYRN), Loop Industries (LOOP), Loop Industries (LOOP), Sono-Tek Corp (SOTK).

More Stock Market News from Barchart

• Stock Climb on U.S. Inflation Optimism
• Unusual Options Activity Booms for Novavax (NVAX) But Concerns Remain
• Job Cuts from Big Tech Signal Weaker Demand
• Stocks Little Changed as Powell Refrains from Commenting on Monetary Policy

On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes.