March S&P 500 futures (ESH23) are trending up +0.23% this morning after three major U.S. benchmark indices started the holiday-shortened trading week on a sour note as robust U.S. business activity data fueled investor fears that the Federal Reserve could stick to aggressive tightening to tame inflation. Three major U.S. stock indexes were weighed down primarily by losses in the Consumer Services, Technology, and Industrials sectors.

In Tuesday’s trading session, the S&P 500 slid to a 3-1/2 week low, the Dow fell to a 1-month low, and the Nasdaq dropped to a 2-1/2 week low, while the yield on the U.S. benchmark 10-year Treasury notes reached a 3-1/4 month high.

Data on Tuesday showed that U.S. business activity unexpectedly rebounded to an 8-month high of 50.2 in February from 46.8 in January, pointing to resilience in the U.S. economy. At the same time, existing home sales fell to a 12-year low of 4.00M in January, weaker than expectations of 4.10M.

On the earnings front, Home Depot Inc (HD) dropped over -7% after the retail giant reported an unexpected drop in Q4 comparable same-store sales and issued a grim profit forecast for 2023. In addition, Nordson Corporation (NDSN) plunged more than -13% after the company’s Q1 results fell short of expectations. At the same time, Palo Alto Networks Inc (PANW) climbed over +8% in pre-market trading after the cybersecurity provider reported upbeat Q2 results and lifted its Q3 guidance.

Meanwhile, discount retailer TJX Companies (TJX), semiconductor stalwart Nvidia (NVDA), and e-commerce firm eBay (EBAY) are set to report their quarterly results today.

The spotlight of Wednesday’s trading session will likely be the release of the FOMC minutes from the last meeting. The minutes will be closely watched amid renewed uncertainty over how high the Federal Reserve will eventually hike interest rates in its battle against inflation.

In addition, investors are likely to focus on a speech from New York Fed President John Williams for further clues on the outlook for rates.

In the bond markets, United States 10-Year rates are at 3.955%, up +0.04%.

The Euro Stoxx 50 futures are down -0.24% this morning as investors digested more regional economic data ahead of the release of the minutes from the U.S. Federal Reserve. German consumer prices rose +1.0% m/m and +8.7% y/y in January amid higher energy prices, up from -0.8% m/m and +8.1% y/y in December. Also, Deutsche bank lifted its forecast for ECB terminal rate to 3.75% from 3.25%, with economists now expecting the ECB to hike interest rates by 50 basis points at its March and May meetings and by 25 basis points in June. In corporate news, shares of Stellantis NV (STLAP.FP) rose over +1% after the carmaker reported a better-than-expected annual profit and announced a new share buyback program for 2023.

Italy’s CPI, Germany’s Business Expectations, Germany’s Current Assessment, and Germany’s Ifo Business Climate Index data were also released today.

The Italian January CPI stood at +0.1% m/m and +10.0% y/y, weaker than expectations of +0.2% m/m and +10.1% y/y.

The German February Business Expectations came in at 88.5, stronger than expectations of 88.3.

The German February Current Assessment was at 93.9, weaker than expectations of 95.0.

The German February Ifo Business Climate Index has been reported at 91.1, weaker than expectations of 91.4.

Asian stock markets today closed in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.47%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -1.34%.

China’s Shanghai Composite today closed lower following sharp losses on Wall Street as concerns over the Fed’s further tightening largely offset optimism over a Chinese economic recovery this year. Also, the Reserve Bank of New Zealand increased its interest rates by 50 basis points to 4.75%, its highest level since late 2008, weighing on sentiment in the region. Investor focus is now on the minutes from the Federal Reserve’s latest policy meeting, which could throw some light on the outlook for rates.

Japan’s Nikkei 225 Stock Index closed lower, weighed down by losses in the Power, Railway & Bus, and Transport sectors. The Bank of Japan conducted emergency bond buying on Wednesday to control elevated yields as Japan’s 10-year government bonds climbed to 0.505% for a second straight session, breaking the BOJ’s 0.5% cap. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up 4.15% to 16.32.

Pre-Market U.S. Stock Movers

CoStar Group Inc (CSGP) plunged over -16% in pre-market trading after the company reported better-than-expected Q4 results but issued below-consensus Q1 and FY23 guidance.  

Ziprecruiter Inc (ZIP) slid about -15% in pre-market trading after the company posted upbeat Q4 results but provided a weak Q1 and FY23 revenue outlook.

Toll Brothers Inc (TOL) rose over +3% in pre-market trading after the company’s Q1 results topped Wall Street expectations.

1Life Healthcare Inc (ONEM) gained more than +8% in pre-market trading after Bloomberg reported that the U.S. Federal Trade Commission wouldn’t challenge Amazon’s deal to buy the company.

American International Group Inc (AIG) fell about -1% in pre-market trading after Atlantic Equities downgraded the stock to neutral from overweight.

You can see more pre-market stock movershere

Today’s U.S. Earnings Spotlight: Wednesday - February 22nd

NVIDIA (NVDA), TJX (TJX), Baidu (BIDU), Pioneer Natural (PXD), Lloyds Banking ADR (LYG), eBay (EBAY), ANSYS (ANSS), Extra Space Storage (EXR), Sun (SUI), Coterra Energy (CTRA), Lucid Group (LCID), Garmin (GRMN), Mosaic (MOS), Targa Resources (TRGP), Etsy Inc (ETSY), Unity Software (U), NetApp (NTAP), Texas Pacific Land Trust (TPL), Charles River Laboratories (CRL), APA Corp (APA), United Therapeutics (UTHR), Fidelity Financial (FNF), NiSource (NI), Western Midstream Partners (WES), Allegion PLC (ALLE), Repligen (RGEN), Churchill Downs (CHDN), ageas SA/NV (AGESY), DaVita (DVA), Valmont Industries (VMI), Bausch + Lomb (BLCO), iQIYI (IQ), Marriot Vacations Worldwide (VAC), Stantec (STN), Vertiv Holdings Co (VRT), PDC Energy (PDCE), Dutch Bros (BROS), Five9 (FIVN), Ionis Pharma (IONS), Chord Energy (CHRD), Civitas Resources (CIVI), Gildan Activewear (GIL), Sunrun Inc (RUN), Owl Rock Capital (ORCC), Ormat (ORA), Wingstop Inc (WING), Cerevel Therapeutics Holdings (CERE), Coca-Cola Bottling (COKE), Wix.Com Ltd (WIX), Integra (IART), Driven Brands Holdings (DRVN), Teladoc Inc (TDOC), Comfort Systems (FIX), One Gas Inc (OGS), GlobalE Online (GLBE), Alamos Gold (AGI), Merit (MMSI), Powerschool Holdings (PWSC), SM Energy (SM), B2Gold (BTG), Physicians Realty Trust (DOC), Pan American Silver (PAAS), Travel + Leisure Co (TNL), Evolent Health Inc (EVH), Cactus (WHD), EPR Properties (EPR), Broadstone Net (BNL), Outfront Media (OUT), Park Hotels & Resorts (PK), Avista (AVA), Installed Building (IBP), LivaNova PLC (LIVN), Bumble (BMBL), Brinks (BCO), SSR Mining (SSRM), Joby Aviation (JOBY), Permian Resources (PR), McGrath (MGRC), Tandem Diabetes Care (TNDM), Glaukos Corp (GKOS), Gentherm (THRM), SJW (SJW), Evertec Inc (EVTC), Strategic Education (STRA), NuVasive (NUVA), Callon Petroleum (CPE), Chesapeake Utilities (CPK), Sunstone Hotel Investors (SHO), TransMedics (TMDX), The Cheesecake (CAKE), Remitly Global (RELY), Constellium Nv (CSTM), AssetMark (AMK), Altice USA (ATUS), Maravai Lifesciences (MRVI), Sunnova Energy (NOVA), Liberty Latin America (LILA), Masonite Int (DOOR), Magnite (MGNI), H&E Equipment (HEES), Cannae (CNNE), ACV Auctions (ACVA), Veracyte Inc (VCYT), Gibraltar Industries (ROCK), MYR Group (MYRG), Par Pacific Holdings (PARR), Ultra Cleans (UCTT), Ryerson Holding (RYI), Rent-A-Center (RCII), Fiverr International (FVRR), Mativ Holdings (MATV), Fresh Del Monte Produce (FDP), Everbridge (EVBG), Encore Capital (ECPG), Genesis Energy LP (GEL), Sinclair (SBGI), US Physicalrapy (USPH), Olo (OLO), Safety Insurance (SAFT), Enovix (ENVX), PGT Innovations (PGTI), Ligand (LGND), Consensus Cloud Solutions (CCSI), Wolverine (WWW), Energy Recovery (ERII), Franklin BSP Realty Trust (FBRT), PROG Holdings (PRG), Lemonade (LMND), New York Mortgage (NYMT).

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