OPENING CALL
Stock futures mostly rose on Tuesday ahead of inflation data that are expected to show a leveling off of price growth.
The reading may help determine when the Federal Reserve starts cutting interest rates.
Jerome Powell said last week that the central bank wasn't far from being able to do so, but wanted greater confidence that inflation is returning to its 2% target.
Wall Street traders were pricing in a roughly 60% chance of a rate cut by June.
Premarket Movers
Acadia Pharmaceuticals was falling 17% after the company's drug pimavanserin for the treatment of negative symptoms of schizophrenia didn't demonstrate a statistically significant improvement over a placebo.
Advance Auto Parts said it appointed three new directors to its board and reached cooperation agreements with activist investors Third Point and Saddle Point Management. The stock was up 1.7%.
Asana fell 2.3% after it reported a fiscal fourth-quarter loss of 4 cents a share, narrower than analysts' expectations.
Boeing shares fell ahead of the bell, putting them on track to fall for a third day. Spirit AeroSystems also slipped.
Casey's General Stores fiscal third-quarter earnings fell from a year earlier. Shares declined 1.6%.
New York Community Bancorp gained about 2% premarket after sliding Monday.
Oracle rose about 13% after the company's earnings trumped analysts' expectations, driven in part by AI demand.
Vail Resorts shares slipped after unfavorable weather dented Vail's quarterly earnings by reducing skier visits to its North American resorts.
Monday's Post-Close Movers
CytomX Therapeutics said that after an internal portfolio review, Bristol Myers Squibb has decided not to advance its candidate BMS-986288 as part of a research collaboration between the companies. CytomX shares were down 23%.
Mission Produce broke even in its fiscal first quarter as higher avocado prices boosted sales 21%. Shares rose 5.9%.
Watch For:
CPI for February; Earnings from Kohl's, Archer-Daniels-Midland
Today's Top Headlines/Must Reads:
- CPI Inflation is Being Pushed Up by Gas, Car Insurance and Housing
- New Warning Signs Say Celebrating a Fed Victory Over Inflation is Premature
- Concrete Is One of the World's Worst Pollutants. Making It Green Is a Booming Business
MARKET WRAPS
Forex:
There is a risk that the CPI data come in higher than expected, dampening the likelihood of an earlier interest-rate cut by the Fed and causing the dollar and Treasury yields to rise, Swissquote Bank said.
It cited a jump in gasoline prices in February, a change in the CPI calculation and the third is the rising inflation expectations.
"I think that there is a chance that we have a bad surprise [higher-than-expected inflation]."
Bonds:
For 10-year Treasury yields to break below 4% at this juncture, it needs a 0.2% month-on-month inflation outcome, ING said.
Factors preventing yields from tumbling include a labor market that is not laying down, latest month-on-month inflation readings that are a tad too hot for comfort, and supply pressure remaining intense, ING said.
"Tuesday sees another supply test, but first a key inflation test," it said, adding that "passing both will be tough."
UniCredit Research said that with the 10-year Treasury yield close to 4%, the Treasury market remains more exposed to higher-than-expected data than the other way around.
"Higher-than-expected data that leads to an increase in annual inflation compared to January, cementing inflation above the 3% level, could revamp expectations that the Fed will take more time before acting."
In this scenario, the 10-year U.S. Treasury yield could go back towards 4.30% and two-year yields to the 4.70% area, UniCredit added.
Energy:
Oil prices were rising ahead of the inflation data and OPEC's monthly oil-market report.
"The macro vibe is bullish ahead of today's important CPI inflation data, " Peak Trading Research said. "The dollar is at eight-week lows, the Chinese yuan is rallying, and global stock markets are at all-time highs."
Meanwhile, analysts said they don't expect any major changes in estimates from OPEC, the Energy Information Administration or the International Energy Agency this week, but that any surprise to the upside would ease concerns around the global demand outlook.
Metals:
Base metals prices edged up while gold inched lower as investors' nerves weighed ahead of the CPI data.
Gold was consolidating gains near record high, Swissquote Bank said.
"Any rebound in yields on a potential CPI disappointment could trigger profit taking and a pullback at the current overbought market levels, but softer yields on a soothing CPI could encourage another test of the $2,200 level," Swissquote added.
Gold's one-day implied volatility band suggests a $15/oz move in either direction, based on daily charts, FOREX.com said.
However, a $15/oz move may be on the low end with the looming inflation report, which is arguably more important than the Fed's meeting later this month, it said.
TODAY'S TOP HEADLINES
Having Overtaken Tesla, BYD Is Running Into Problems Overseas
Chinese electric-vehicle maker BYD is running into challenges in its overseas expansion, finding that its rapid growth at home doesn't necessarily translate into quick success in big foreign markets such as Europe.
Executives at BYD, which overtook Tesla late last year as the top global seller of EVs, said the issues included weak market demand, too-high pricing, quality control and internal tension over how quickly BYD should seek to grab market share.
Air New Zealand Pauses Chicago Flights Due to Engine Shortage
SYDNEY-Air New Zealand will pause one of the world's longest nonstop flights for up to six months due to what the carrier said is a shortage of engines for its Boeing Dreamliner aircraft.
New Zealand's national carrier on Tuesday said it would pause its nonstop Auckland-Chicago service from March 31. It cited challenges related to the availability of serviceable Rolls-Royce Trent 1000 engines.
A TikTok Ban May Be Easier in Theory
The move to ban TikTok or force a sale is gaining steam in Congress again. Carrying through with it would mean opening several cans of worms-practical, legal and political.
Discussion of a U.S. ban for TikTok-owned by China's Bytedance-has dragged on for years. But a new fast-track House bill, now set for a vote Wednesday, appears to have caught the short-video platform off guard. The company has appealed to its users to contact their congressmen but that seems to have backfired by raising hackles on both sides of the aisle.
U.K. Labor Market Cools Slightly as Bank of England Weighs Rate Cuts
U.K. wage growth eased marginally, as the unemployment rate ticked up, a small relief to Bank of England policymakers hoping that labor pressures would ease ahead of expected interest-rate cuts later this year.
The headline measure of average annual pay growth, excluding bonuses, was 6.1% in the three months to January, compared with 6.2% in the final quarter of 2023, a fifth fall in as many months, according to data published Tuesday by the Office for National Statistics. The rate was the lowest since October 2022.
China's 'Two Sessions' Doesn't Show Clear Path to Recovery
China's first major policy meeting of the year wrapped up on Monday with more of a sigh than a bang. Anticipation heading into the top policymakers' gatherings, known as the "Two Sessions," was high with expectations for a stronger stimulus to jump-start recovery in China's slowing economy with the property sector still in a slump and sluggish consumption. Those hopes didn't materialize, and the economic targets shed little new light on China's plans to revive its economy. Some announcements gave observers cause to cheer, but mostly left markets wanting more.
UNMEET THE PRESS: The legislative sessions got under way with a surprising announcement: the ending of the decadeslong tradition of holding a press conference with the premier. The presser, held since the early 1990s, received global attention for addressing key policy concerns and social issues in the world's second-largest economy. Axing the event will make policy more opaque, analysts say. "Investors now have to dig deeper into China's official announcements, departmental press conferences, and policy papers to find clues to better understand, " its policies," JLL chief economist for Greater China Bruce Pang said.
Japan Still Hasn't Completely Overcome Deflation, Finance Minister Says
TOKYO-The Japanese economy hasn't completely overcome deflation yet, although there are some positive developments such as wage growth and increasing capital spending, Finance Minister Shunichi Suzuki said Tuesday.
"Japan is facing a once-in-a-lifetime opportunity to get out of deflation," Suzuki said at a news conference. But the country still hasn't avoided the risk of falling back to deflation, he added.
Biden, Trump Poised to Clinch Nominations After Tuesday Balloting
President Biden and former President Donald Trump are likely to win enough delegates in the latest round of primary voting Tuesday to become the presumptive nominees of their parties, more formally marking the start of a bitter and costly eight-month White House campaign.
The day's balloting will likely be enough to push both men beyond the delegate thresholds they need. There has been little uncertainty about their eventual selection-an elderly pairing most Americans don't want-for months.
U.S. Spy Agencies Say Netanyahu's Leadership 'in Jeopardy'
WASHINGTON-A new U.S. global intelligence assessment says that Israeli Prime Minister Benjamin Netanyahu's hold on office "may be in jeopardy" and suggests Israel will fail to achieve its aim in the Gaza war of completely eliminating Hamas.
(MORE TO FOLLOW) Dow Jones Newswires
03-12-24 0614ET
