MARKET WRAPS
Watch For:
ADP National Employment Report for February; Trade Balance for January; JOLTS Job Openings Survey; Fed's Beige Book; EIA Weekly Petroleum Status Report; World Agricultural Supply & Demand Estimates; Jerome Powell presents Monetary Policy Report to U.S. House Financial Services Committee; Bank of Canada Rate Decision; Canada Trade for January; earnings from Campbell Soup, Brown-Forman, MongoDB
Today's Headlines/Must Reads
International Stocks Lure Investors Seeking Bargains
U.S. Shale Boom Shows Signs of Peaking as Big Oil Wells Disappear
Tesla Rival BYD Plans Big Commercial-Vehicle Push
Eli Lilly's Insulin Decision Puts Others in Hot Seat
U.S., China Plunge Further Into a Spiral of Hostility
Follow WSJ markets coverage here .
Opening Call:
Stock futures were struggling to recover from the latest selloff, as worries about a more hawkish Federal Reserve continued to push up bond yields.
Market sentiment remains fragile after Jerome Powell's testimony on Tuesday, with his comments hammering government bonds, forcing short-term yields to fresh four-decade highs.
The sight of rising implied borrowing costs, and the prospects of a recession they may cause, have pushed the S&P 500 stock barometer back below both the 4,000 level and its 50-day moving average.
And talk of the Fed taking rates 'higher for longer' continued to rattle equity investors on Wednesday.
"The global stock sell-off is continuing with investors jolted by the realization that the work of the Fed in trying to tame wild inflation in the U.S. far from over," Hargreaves Lansdown said.
Read Powell Returns to Congress for Second Day of Hearings
Stocks to Watch
CrowdStrike rose 6% in premarket trading after fourth-quarter adjusted earnings beat analysts' forecasts and the company issued an outlook for the fiscal first quarter and year also higher than estimates.
Energy Vault rose 12% after it reported fourth-quarter sales that topped Wall Street estimates but its revenue outlook for the current fiscal year was below the company's own guidance.
Fresh Tracks Therapeutics reported positive topline results from a trial evaluating FRTX-02, an inhibitor that aims to restore immune balance in patients with autoimmune and inflammatory diseases. The company's shares rose 56% in after-hours trading.
Occidental Petroleum gained 3% after a filing disclosed that Berkshire Hathaway bought almost 6 million shares of the energy company in recent days, bringing its stake in Occidental to 200.2 million shares worth $12.2 billion.
SoundHound AI was down 8% in premarket trading after reporting a fourth-quarter loss of $30.7 million, wider than a year earlier.
Stitch Fix declined 8% after fiscal second-quarter revenue of $412.1 million fell from $516.7 million a year earlier and missed analysts' expectations.
Synchronoss Technologies posted a drop in revenue in its latest quarter, as the macroeconomic environment weighed on foreign currency and delayed decisions by customers. Its shares fell 13% in after-hours trading.
Forex:
The dollar was slightly higher in early European trading, adding to Tuesday's post-Powell gains, and ING said it's risky to bet the currency has peaked.
ING said EUR/USD could fall below 1.0500 ahead of Friday's jobs data due to elevated volatility and deteriorating market sentiment.
"Such a break lower would however continue to mirror primarily dollar strength as opposed to a lack of faith in the euro's fundamentals," ING added.
The euro currently lacks catalysts to fight dollar strength in the absence of any market-moving eurozone data.
Read Sterling May Fall Vs Euro on Risk Aversion, Euro's Better Fundamentals
Bonds:
While the yields of shorter-dated German Bunds and U.S. Treasuries still haven't really reached their highs, letting the inversion of the two bond curves continue, prominent intermediate highs in the 10-year maturity are shaping , Metzler said.
Although inflation surprises have once again caused longer yields to rise significantly, they are reaching marks that are no longer easily exceeded, at least in the long term , Metzler said.
Should yields be able to hold at these levels, Metzler believes this development will create good conditions for a much more pronounced countermovement as soon as the expected decline in inflation rates materializes.
Energy:
Oil prices retreated in Europe, giving up minor gains in Asia, as hawkish comments from Jerome Powell weighed on sentiment.
Powell's comments mean oil is "snared between misaligned macro drivers--a more robust China outlook versus hawkish Fed," SPI Asset Management said.
Metals:
Base metals and gold prices were lower in Europe following Jerome Powell's hawkish testimony.
Markets are pricing in four interest-rate hikes, with a terminal rate of 5.7%, Peak Trading Research said.
"This hawkish shift in interest-rate expectations has strengthened the U.S. dollar, a structural headwind for our commodity markets."
TODAY'S TOP HEADLINES
Tesla Rival BYD Plans Big Commercial-Vehicle Push
China's BYD Co., having risen over the past decade to become one of the top global sellers of electric passenger cars, is now plotting a big push into battery-electric commercial vehicles.
Over the next three years, BYD plans to introduce new commercial-vehicle models in markets including China, Europe and Japan, according to people familiar with the company's plans. It has mapped out a budget of more than $20 billion for its commercial-vehicle unit through 2025, with major outlays planned for research, product development and expansion of production capacity, the people said.
Eli Lilly's Insulin Decision Puts Others in Hot Seat
Americans pay several times as much for insulin as people in other developed countries. In any other industry, competition rather than public outrage would fix that problem for a product that no longer enjoys patent protection. But when a little-known nonprofit named Civica Rx announced plans last year to make low-cost insulin, the move didn't spook the companies that profit from high insulin prices. Though Civica had some high-profile partners such as Blue Cross Blue Shield, insiders knew that many of the industry's middlemen would resist the push. Pharmacy-benefit managers, which control 80% of the prescription-drug market, profit from high list prices.
Keeping Civica Rx at bay is one thing. It would be something altogether different if, say, one of the huge pharma companies that makes insulin broke ranks and offered a low list price, effectively cutting into potential profits for the middlemen who decide which drugs insurers will cover. That is exactly what happened last week when Eli Lilly decided to drastically cut the list price of some of its insulin products. Its move was a flesh wound for the PBMs. If it were to be replicated with other drugs, it could be a mortal blow.
Documents From Fox Defamation Suit Spotlight Tension Between Prime-Time Hosts and News Personnel
Newly released court documents from a defamation case against Fox News over its 2020 election coverage show a deep fissure in the network between high-profile prime-time opinion hosts and other personnel who were deeply skeptical of election fraud claims.
The documents, made public in litigation between voting-machine company Dominion Voting Systems and Fox News, depict an organization scrambling over how to cover Donald Trump's failed bid for re-election, as well as claims by the then-president and his supporters that the election was stolen.
Adidas Slashes Dividend as Problems Mount
HERZOGENAURACH, Germany-A slump in China and a $6 billion mountain of unsold products are among the challenges facing Adidas AG after a bruising 2022 in which it dumped its chief executive and ended a partnership with rapper Kanye West.
The German sportswear giant's revenue increased 6% last year to 22.5 billion euros, equivalent to $23.7 billion, while its net profit fell 83% to EUR254 million. For the fourth quarter, Adidas slumped to a EUR482 million loss and slashed its dividend. The results out Wednesday largely confirmed preliminary figures from the company's profits warning in February.
Drug to Prevent Preterm Births to Be Pulled From Market
Covis Pharma Group said it would stop selling its drug to prevent preterm births, after a study couldn't confirm the medicine worked and U.S. health regulators were taking steps that could have it pulled.
Makena was the only drug approved by the Food and Drug Administration to reduce the risk of preterm birth in women with a history of early deliveries.
Binance.US Cleared to Buy Voyager Accounts Despite SEC Warning
Binance's American affiliate won court approval to take over thousands of customer accounts from bankrupt crypto platform Voyager Digital Ltd. despite warnings that the Binance.US exchange faces possible regulatory action.
Judge Michael Wiles of the U.S. Bankruptcy Court in New York approved the companies' deal, undeterred by the revelation last Friday that Securities and Exchange Commission staff have determined that Binance.US, the American affiliate of the world's largest crypto exchange, is operating an unregistered securities exchange.
Samuel Adams Brewer's Finance Chief Steps Down
Boston Beer Co. said Tuesday that Frank Smalla is stepping down as treasurer and chief financial officer to join a KKR-backed private-equity company.
The brewer of Samuel Adams beer said its board on Monday appointed Matthew Murphy to serve as interim treasurer and CFO until a permanent successor is appointed, according to a regulatory filing. Mr. Murphy is currently the chief accounting officer, a position he has held since August 2015.
NTSB to Probe Norfolk Southern Safety Culture After Derailments, Accidents
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03-08-23 0611ET
