Markets Today: Stocks Consolidate Ahead of Tuesday’s U.S. CPI Report

Morning Markets

March E-Mini S&P 500 futures (ESH24) are down -0.03%, and March Nasdaq 100 E-Mini futures (NQH24) are down -0.01%. 

Stock index futures this morning are little changed as prices consolidated last week’s rally, when the S&P 500 and Nasdaq 100 posted all-time highs.  A decline in bond yields today is supportive of the overall market.

The markets are awaiting Tuesday’s U.S. Jan CPI report for direction.  The consensus is for Jan consumer prices to ease to +2.9% y/y from +3.4% y/y in December.  Also, Jan CPI ex-food and energy is expected to ease to +3.7% y/y from +3.9% y/y in Dec. 

M&A activity is supporting stocks after Diamond Back Energy agreed to acquire Endeavor Energy for about $26 billion.  Aldo, Gilead Sciences agreed to buy CymaBay Therapeutics for about $4.3 billion.

The markets are discounting the chances for a -25 bp rate cut at 18% for the March 19-20 FOMC meeting and 73% for the following meeting on April 30-May 1.

U.S. and European government bond yields today are lower.  The 10-year T-note is down -1.9 bp at 4.156%.  The 10-year German bund yield is down -3.3 bp at 2.349%.  The 10-year UK gilt yield is down -3.5 bp at 4.052%.  

Overseas stock markets are higher.  The Euro Stoxx 50 is up +0.28%.  China’s Shanghai Composite Index and Japan’s Nikkei Stock Index are closed for holidays.

The Euro Stoxx 50 today climbed to a new 23-year high and is moderately higher.  European stocks are climbing on positive carryover from last Friday’s rally in U.S. markets when the S&P 500 and Nasdaq 100 posted record highs.  European government bond yields fell today on dovish comments from ECB Governing Council member Panetta, which sparked a rally in rate-sensitive real estate, consumer product, and construction stocks.  On the negative side, some German bank stocks are under pressure today on concern the German office property market has worsened after Q4 German office building prices dropped -13% y/y and for the full year slumped more than -10%, the most since records began in 2003. 

ECB Governing Council member Panetta said, "The time for reversal of the monetary policy stance of the ECB is fast approaching as macroeconomic conditions suggest that disinflation is at an advanced stage, and progress toward the ECB's 2% target continues to be rapid."

Swaps are pricing in the chances for a -25 bp rate cut by the ECB at 12% for its next meeting on March 7 and 59% at the following meeting on April 11.

China’s Shanghai Composite Index today was closed for the week-long Lunar New Year holiday.  Chinese markets will reopen on Monday, February 19. 

Japan’s Nikkei Stock Index today was closed for the National Foundation Day holiday. The markets will reopen on Tuesday. 

Swaps are pricing in the chances for a +10 bp rate increase by the BOJ at 32% for its next meeting on March 19 and at 79% for the following meeting on April 26.

Pre-market U.S. Stock Movers

Diamondback Energy (FANG) is up more than +1% in pre-market trading after agreeing to buy Endeavor Energy for about $26 billion.

Lowe’s (LOW) rose more than +1% after JPMorgan Chase upgraded the stock to overweight from neutral with a price target of $265 and added the stock to its Analyst Focus List as a value-stock idea. 

Corteva (CTVA) climbed more than +1% in pre-market trading after Loop Capital Markets upgraded the stock to buy from hold with a price target of $65. 

Kyndryl Holdings (KD) rose more than +2% in pre-market trading after Susquehanna Financial upgraded the stock to positive from neutral with a price target of $27. 

PepsiCo (PEP) gained nearly +1% in pre-market trading after Citigroup upgraded the stock to buy from neutral with a price target of $195. 

Monday.com (MNDY) dropped more than -9% in pre-market trading as analysts were unimpressed with the company’s Q4 results, even though Q4 revenue of $202.6 million was better than the consensus of $197.6 million. 

Trimble (TRMB) tumbled more than -4% in pre-market trading after forecasting full-year revenue of $3.57 billion-$3.67 billion, below the consensus of $3.84 billion. 

Rivian Automotive (RIVN) fell more than -3% in pre-market trading after Barclays downgraded the stock to equal weight from overweight. 

Citigroup (C) slid more than -1% in pre-market trading after Reuters reported that the Federal Reserve told the company to change how it measures the risk of default by counterparties in derivative transactions.   

Palantir Technologies (PLTR) fell more than -1% in pre-market trading on signs of insider selling after an SEC filing showed CEO Karp sold $21.9 million of shares last Wednesday.

Owens Corning (OC) slid nearly -1% in pre-market trading after Barclays downgraded the stock to equal weight from overweight.

Earnings Reports (2/12/2024)

Arista Networks Inc (ANET), Avis Budget Group Inc (CAR), Brighthouse Financial Inc (BHF), Brixmor Property Group Inc (BRX), Cadence Design Systems Inc (CDNS), Federal Realty Investment Trus (FRT), Lattice Semiconductor Corp (LSCC), Medpace Holdings Inc (MEDP), Principal Financial Group Inc (PFG), Service Corp International/US (SCI), Teradata Corp (TDC), Trimble Inc (TRMB), Vornado Realty Trust (VNO), Waste Management Inc (WM), ZoomInfo Technologies Inc (ZI).

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On the date of publication, Rich Asplund 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. For more information please view the Barchart Disclosure Policy here.