OPENING CALL
Equity index futures indicated the S&P 500 could hit another record high on Friday, with the technology sector likely to see a third-straight winning session, as a fresh batch of economic data loomed.
The fall in January's retail sales soothed some expectations about the pace of Federal Reserve interest rate cuts, following a jarring inflation report earlier in the week.
"We are coming to a point where the economic data becomes meaningless. Whatever the data prints, the stock markets find a positive narrative to keep the rally going. It's, of course, blind optimism; investors are blinded by the brilliance of the rate cuts at the tunnel's end," Swissquote Bank said.
Another busy day of data was ahead for investors, with January housing starts and the producer price index due.
Overseas Markets
Asian stocks gained, following U.S. markets' strong performance Thursday. The Hang Seng Index added 2.5%, while mainland Chinese markets remained closed for the Lunar New Year holiday. The Nikkei 225 notched a fresh 34-year high.
Elsewhere, stocks rose too, as Europe's Stoxx 600 edged higher.
Stocks to Watch
Nike plans to reduce its workforce by about 2%, or more than 1,600 people, in a bid to cut costs, WSJ reported.
Premarket Movers
Applied Materials rose 13% after its revenue outlook and results came above analysts' forecasts.
Coinbase's fourth-quarter earnings and revenue handily beat Wall Street expectations and shares of the crypto trading platform were rising 13% in premarket trading.
DoorDash posted a wider-than-expected loss. Uber last week reported its first full year of profitability, but DoorDash hasn't outlined when it will post positive earnings. The stock was down 6.1%.
DraftKings reported a fourth-quarter loss of 10 cents a share compared with a year-earlier loss of 53 cents. Analysts were expecting a profit of 8 cents a share. Shares declined 3.3%.
Roku was down more than 15% after the streaming-services provider put out a profit forecast that missed expectations, amid a weaker advertising environment.
Toast's fourth-quarter revenue jumped 35% to $1.04 billion from a year earlier, beating forecasts, and shares rose 5.3%.
Trade Desk was rising 20% after the company issued a first-quarter outlook that topped analysts' expectations.
Yelp forecast first-quarter and 2024 revenue below analysts' expectations. Shares were down 9.2%.
Watch For:
Housing Starts for January; PPI for January; University of Michigan Prelminary Consumer Survey for February; Canada Wholesale Inventories for December
Today's Top Headlines/Must Reads:
- The Government Will Soon Spend More on Interest Payments Than Defense
- America's Economy Slowed-It Probably Won't Stumble
- Why U.S. Stocks Are Still the World's Best Bet
- The Newest Trump Trade: Betting on Truth Social in an Election Year
MARKET WRAPS
Forex:
Danske Bank Research said it remains inclined toward selling EUR/USD on rallies, adding the market seems volatile and scrutinizes every data point to assess when to expect the first Federal Reserve rate cut.
It added that the PPI data features among Friday's potential forex movers.
"If PPI data mirrors earlier CPI results, indicating a halt in disinflationary progress, the USD may rebound."
Energy:
Oil futures inched lower as fears of disruptions to supply chains and hopes for early rate cuts continued to support prices, but the IEA's demand forecast and a recent surge in U.S. stockpiles weighed on sentiment.
"Oil has come under some pressure over recent months, as market fundamentals have been generally looser than expected, while the macroeconomic outlook has grown more challenging," BMI said.
Shell's LNG portfolio has been somewhat unreliable in recent years, RBC Capital Markets said. However, if utilization rates move up for Prelude, Nigeria and Trinidad, in addition to the start-up of LNG Canada in late 2024, the energy giant's liquefaction volumes could potentially rise by 2.3 million metric tons this year, or 8%.
Metals:
Gold edged up while copper made solid gains as mixed U.S. economic data this week have offered some hopes of early Fed rate cuts.
TODAY'S TOP HEADLINES
Chinese EV Maker BYD Exploring Mexico Factory as Entry to U.S. Market
Chinese automaker BYD has set its sights on Mexico as its quest for global expansion turns toward North America.
The Shenzhen-based car company, whose rapid growth has made it one of the world's largest electric-vehicle sellers, is scouting locations in the country for a factory, from which it would consider exporting cars to the U.S., according to people familiar with the matter.
Tesla and Elon Musk Show Why Governance Doesn't Matter-Until It Does
Elon Musk's Tesla is an extreme example of an uncomfortable truth for investors: Companies run by big shareholders often give smaller shareholders good returns-while also flouting rules and norms designed to protect them.
Tesla's governance, long a target for the car maker's critics, is back in the spotlight after last month's ruling against Musk's $50 billion-plus pay packet from 2018. The case was brought in Delaware by a small shareholder who was concerned about the potentially dilutive effect of stock options amounting to a gargantuan 12% of the share count at the time they were granted, even though the performance hurdles for them to vest were set very high.
Fed's Bostic Argues for Patience on Rate Cuts. Here's His Case.
There's no urgency for the Federal Reserve to cut interest rates and the battle with inflation is not over yet, Atlanta Fed President Raphael Bostic said late Thursday.
He said the strong labor market and "muscular economic growth" along with resurgent business optimism makes the argument for continued patience when it comes to easing monetary policy.
Mike Johnson's Chaotic House Searches for Path on Ukraine
WASHINGTON-For House Speaker Mike Johnson, it was a pretty standard afternoon: Republican colleagues rebelled and votes got canceled. Meanwhile, the path forward on a major policy debate-whether to further fund Ukraine in its war with Russia-remained unresolved.
This sort of dysfunction has become increasingly routine for Republicans since they took over the chamber with a razor-thin majority in January 2023. Several frenetic hours this week showed just how difficult the job of running the House is for Johnson, a 52-year-old conservative from Louisiana, who vaulted to the post in October as a consensus candidate after Republican infighting doomed the candidacies of more senior Republican leaders following the ouster of Kevin McCarthy (R., Calif.).
House Committee Subpoenas Harvard Over Antisemitism Response
A House committee escalated its battle with Harvard University on Friday, pursuing subpoenas for a range of records and accusing the school of obstructing an investigation into how it has responded to antisemitism.
The House Committee on Education and the Workforce formally opened an investigation into Harvard after the school's then-president testified at a hearing about the treatment of Jewish students at colleges after Hamas attacked Israel in October. Harvard has been one of the committee's main targets, though campuses across the country have been rocked by student protests in support of Palestinians and charges of antisemitism.
Write to ina.kreutz@wsj.com
TODAY IN CANADA
Earnings:
Air Canada 4Q
TC Energy 4Q
Economic Calendar (ET):
0830 Dec Wholesale Inventories
0830 Dec International Transactions in Securities
Stocks to Watch:
Interfor Announces Lumber Production Curtailments in Oregon and British Columbia; Interfor to Indefinitely Curtail Its Sawmill Ops in Philomath, Ore., Due to High Log Costs and Weak Lumber Market Conditions;
Philomath Sawmill Production Will Be Curtailed Immediately Followed by Orderly Wind-Down Expected to Be Completed by the End of 1Q; Interfor to Temporarily Reduce Lumber Production at Its British Columbia Ops by Approximately 30M Board Feet in 1Q; British Columbia Curtailments Are Due to Weak Market Conditions, Low Log Inventory Levels and Unseasonably Warm Weather That Continues to Negatively Impact Log Deliveries in Many Areas
Expected Major Events for Friday
04:30/JPN: Dec Tertiary Industry Index
07:00/GER: Jan WPI
07:00/UK: Jan UK monthly retail sales figures
07:45/FRA: 4Q New home sales
07:45/FRA: Jan CPI
09:30/UK: Nov Card Spending statistics
13:30/CAN: Dec Wholesale trade
13:30/US: Jan PPI
13:30/US: Jan New Residential Construction - Housing Starts and Building Permits
13:30/CAN: Dec International transactions in securities
15:00/US: Feb University of Michigan Survey of Consumers - preliminary
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Friday
ASA Gold & Precious Metals Ltd (ASA) is expected to report for 4Q.
AdvanSix (ASIX) is expected to report $-0.06 for 4Q.
Air Canada is expected to report $0.01 for 4Q.
American Axle & Manufacturing Holdings Inc (AXL) is expected to report $-0.27 for 4Q.
Amerityre Corp (AMTY) is expected to report for 2Q.
Arbor Realty Trust (ABR) is expected to report $0.36 for 4Q.
Balchem Corp (BCPC) is expected to report $0.86 for 4Q.
Barnes Group (B) is expected to report $0.02 for 4Q.
CenterPoint Energy Inc (CNP) is expected to report $0.36 for 4Q.
Cinemark Holdings Inc (CNK) is expected to report $-0.07 for 4Q.
Clairvest Group is expected to report for 3Q.
DT Midstream Inc (DTM) is expected to report for 4Q.
Daily Journal (DJCO) is expected to report for 1Q.
Espey Manufacturing & Electronics Corp (ESP) is expected to report for 2Q.
Healthcare Realty Trust Inc (HR) is expected to report for 4Q.
Liberty Global Corp - Class A (LBRDA,LBRDB,LBRDK) is expected to report $3.44 for 4Q.
Liberty TripAdvisor Holdings Inc (LTRPA) is expected to report for 4Q.
MVB Financial Corp (MVBF) is expected to report $0.33 for 4Q.
(MORE TO FOLLOW) Dow Jones Newswires
02-16-24 0622ET
