The S&P 500 futures trade four points, or 0.1%, above fair value as investors continue to show a lack of conviction. Buying interest has been restrained by a lackluster response to earnings news, hawkish-sounding Fed commentary, and upwards pressure in long-term interest rates.
Starting with earnings, Dow components Johnson & Johnson ( JNJ 176.95, -0.71, -0.4%) and Travelers ( TRV 181.75, -3.47, -1.9%) are both trading lower in pre-market action despite beating EPS estimates, but to be fair, JNJ also lowered its FY22 EPS guidance below consensus.
In Fedspeak, St. Louis Fed President Bullard (FOMC voter) said in a speech yesterday that he wants rates to go to 3.5% by end of the year and that the Fed shouldn’t rule out the use of 75-basis-point rate increases, according to Bloomberg . As a reminder, the Fed’s next policy meeting is in two weeks.
The 10-yr Treasury note yield continues to head toward 3.00%, topping 2.90% overnight. Right now, the benchmark yield is up three basis points to 2.89% while the 2-yr yield trades unchanged at 2.47%. The U.S. Dollar Index is up 0.1% to 100.92. WTI crude futures are down 1.2%, or $1.34, to $106.87/bbl.
On the data front, investors will receive Housing Starts (Briefing.com consensus 1.750 million) at Building Permits (Briefing.com consensus 1.840 million) for March at 8:30 a.m. ET.
In U.S. Corporate news:
- Johnson & Johnson (JNJ 176.95, -0.71): -0.4% after lowering its FY22 EPS guidance below consensus. JNJ beat EPS estimates.
- Travelers (TRV 181.75, -3.47): -1.9% despite beating top and bottom-line estimates. TRV also raised its quarterly dividend by 6%.
- Lockheed Martin (LMT 460.06, -7.38): -1.6% after reporting mixed earnings results, beating EPS estimates on below-consensus revenue.
- J.B. Hunt Transport (JBHT 174.99, +3.54): +2.1% after beating top and bottom-line estimates.
- American Campus Communities (ACC 65.00, +7.42): +12.9% after agreeing to be acquired by Blackstone (BX 112.73, +0.74, +0.7%) in a $12.8 billion deal, according to The Wall Street Journal .
Reviewing overnight developments:
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Equity indices in the Asia-Pacific region ended Tuesday on a mixed note. Japan’s Nikkei: +0.7% Hong Kong’s Hang Seng: -2.3% China’s Shanghai Composite: -0.1% India’s Sensex: -1.2% South Korea’s Kospi: +1.0% Australia’s ASX All Ordinaries: +0.6%.
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In economic data:
- Japan’s February Industrial Production 2.0% m/m (last 0.1%) and Capacity Utilization 1.5% m/m (last -3.6%)
- Australia’s March New Home Sales 3.9% m/m (last -7.0%)
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In news:
- Toyota expects that global production between May and July will average about 800,000 units per month, down from a recent rate of 840,000 per month.
- Chinese lenders are reportedly being encouraged to cut deposit rates.
- Xinhua speculated that China’s CPI will only grow “modestly” in Q2 and Q3.
- The Minutes from the last Reserve Bank of Australia policy meeting noted that certain developments have pulled forward the timing of the initial rate hike.
- The Japanese yen has weakened to a 20-year low against the dollar.
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Major European indices trade in the red while European debt also trades lower. STOXX Europe 600: -1.2% Germany’s DAX: -0.8% U.K.'s FTSE 100: -0.4% France’s CAC 40: -1.0% Italy’s FTSE MIB: -1.6% Spain’s IBEX 35: -1.7%.
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There was no notable economic data
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In news:
- French Finance Minister Le Maire said that an embargo on Russian oil is in the works.
- Stellantis will suspend its operations in Russia.
- British energy suppliers expect that the number of customers looking to pay their bills over time will increase by about 50% this year.
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U.S. equity futures:
- S&P 500 Futures: +2 @ 4,393
- DJIA Futures: +14 @ 34,426
- Nasdaq 100 Futures: +5 @ 13,916
Overseas:
- Europe: DAX -0.8%, FTSE -0.4%, CAC -1.0%
- Asia: Nikkei +0.7%, Hang Seng -2.3%, Shanghai Composite -0.1%
Commodities:
- Crude Oil -1.45 @ 106.16
- Nat Gas -0.386 @ 7.434
- Gold -3.95 @ 1982.45
- Silver -0.033 @ 26.117
- Copper -0.0555 @ 4.7465