3 Hots Things to Know About Stocks Right Now
- The S&P 500 Net Earnings Revisions Index (NERI) popped to 21.0% during February, the highest positive reading since the start of the data in 1985, points out Yardeni Research.
- Papa John's (PZZA) - Get Report shares will be under pressure after an ugly fourth quarter. It will exit its contract with the NFL.
- Netflix (NFLX) - Get Report is closing in on one hot month: shares have spiked about 5% month to date.
European stocks opened lower Wednesday, although U.S. equity futures edged modestly higher, as global investors parse potentially hawkish comments from Federal Reserve chairman Jerome Powell yesterday on Capitol Hill.
Germany's DAX performance index slipped 0.18% by mid-day in Frankfurt while Britain's FTSE 100 was marked 0.38% lower in London. The Stoxx Europe 600 was marked 0.4% lower at 380.87 points while investors focused on a weakening euro, which extended its 1.6% February decline against the dollar after currency area inflation slowed for the third consecutive month in February and a slower-than-expected reading of 1.2% from Germany yesterday.
Early indications from Wall Street futures point to modest gains at the opening bell, with contracts tied to the Dow Jones Industrial Average marked 46 points higher from Tuesday's close and those linked to the broader S&P 500 marked 4 points to the upside after last night's 1.27% decline.
Powell's maiden Humphrey-Hawkins testimony Tuesday in Washington, before a panel of lawmakers on the House Financial Services Committee, went largely to-script, with the newly-appointed Fed chair rarely deviating from his prepared remarks as he fielded question on the economy, interest rates and financial regulation.
However, his inference that the Fed's Open Markets Committee was mindful of the strength of the world's biggest economy, coupled with a much-stronger-than-expected reading of U.S. consumer confidence -- the highest since 2000 -- for the month of February, convinced investors of the hawkish subtext in Powell's otherwise tepid appearance.
"In the (Fed Open Markets Committee's) view, further gradual rate increases in the federal funds rate will best promote attainment of both of our objectives" of price stability and full employment, Powell noted, and will "continue to strike a balance between avoiding an overheating economy and bringing ... price inflation to 2 percent on a sustained basis."
The CME Group's FedWatch tool is now pricing in a near-certain 81.7% chance of a rate hike at the Fed's March meeting and a 71.1% chance of a follow-up move in June, up from just 58.5% last week.
Asia responded to Wall Street's bearish reaction last night, with Japan's Nikkei 225 falling 1.44% to end the session at 22,068.24 points while the broader MSCI Asia ex-Japan index slid just over 1% into the close of the session.
Benchmark U.S. Treasury bond yields jumped around 3 basis points following Powell's testimony and held at 2.9% in overnight Asia trade while the dollar index, which pegs the greenback against a basket of its global peers, edged modestly higher to around 90.405.
Investors were also taken by surprise by weaker-than-expected economic data from China, where the country's official purchasing managers' index slipped to 50.3 in February, the lowest in more than 18 months, while the yuan's recent strength against a weakened U.S. dollar pushed the sub-index of new export orders to 49.0, below the 50.0 mark that separates growth from contraction and the lowest level in a year.
Global oil markets were also on the back foot, following on from the weaker China data and figures from the American Petroleum Institute yesterday that showed domestic crude stocks rose by 933,000 barrels last week.
Brent futures for April delivery, the global benchmark, were seen 7 cents higher from their Tuesday close at $66.51 per barrel while WTI contracts for the same month were marked 6 cents lower at $62.94 per barrel.