Here are five things you must know for Thursday, March 3:
1. -- Russia Attack Against Ukraine Enters Week Two
U.S. equity futures were mixed Thursday while oil prices hovered at 14-year highs as fighting between Russia and Ukraine entered its second week.
With the exception of a Russian advance north of Crimea, Ukrainian defenses continue to hold all major urban areas under attack, with Russia's efforts to quickly seize the capitol city of Kyiv and topple the Ukrainian leadership continuing to meet with fierce resistance.
Ukrainian and Russian officials were slated to hold a second round of cease-fire talks near the Polish border in Belarus on Thursday following a previous round on Monday that failed to achieve concrete results.
Russia’s rouble hit a new record low on Thursday, extending declines for the fourth consecutive day as ratings agencies Fitch and Moody’s downgraded its sovereign bonds to “junk” status, while surging oil prices fanned worries about global inflation.
On Wall Street, futures linked to the Dow Jones Industrial Average are priced for a 15-point opening bell drop, while those linked to the S&P 500 are priced for a 5-point retreat.
Nasdaq Composite futures are indicating a 46.75-point decline for the tech-focused benchmark, while 10-year Treasury note yields were little changed at 1.875%.
Oil prices continued their advance on Thursday, with Brent crude futures touching their highest in 14 years amid U.S. sanctions targeting Russian refineries, disruptions to shipping and fall in U.S. crude stocks to multi-year lows.
Brent-crude futures, the international benchmark, rose 3.5% to as high as $116.93 a barrel on Thursday, the highest since 2008, before settling back to $113.80, a 3.2% rise.
2. -- Quarter-Point Rate Rise Is Coming: Powell
Federal Reserve Chair Jerome Powell told lawmakers Wednesday that he supports a traditional quarter-point increase in the Fed's benchmark short-term interest rate when the central bank's decision-makers meet later this month rather than a larger increase that some policymakers have proposed.
At the same time, Powell left the door open to larger potential rate hikes in the event that inflation, which is currently hovering at a four-decade high, continues to rise -- even as the Russia-Ukraine war prompts a recalibration of global growth expectations.
“I’m inclined to propose and support” a quarter-point rate hike to fight the acceleration of inflation that has engulfed the economy in recent months, Powell told the House Financial Services Committee on the first of two days of semiannual testimony to Congress.
Most other Fed officials have in recent weeks supported a similar modest rise, while a few have said they back a half-point hike or are at least open to such an increase. Higher Fed rates typically lead, in turn, to higher borrowing costs for consumers and businesses.
“We have an expectation that inflation will peak and begin to come down this year,” Powell said, though cautioned that if inflation comes in higher "...then we would be prepared to move more aggressively.”
Powell cautioned that the economic consequences of Russia’s invasion of Ukraine, and the resulting sanctions by the U.S. and Europe, are “highly uncertain” and said “it’s too soon to say” how they might affect the Fed’s policies.
Before Russia’s invasion, the Fed planned to carry out “a series” of rate increases this year, Powell said, potentially at each of the remaining seven Fed meetings. For now, the Fed will “proceed carefully along the lines of that plan.”
Powell will return to Capitol Hill Thursday morning for the second of two days of testimony, this time before the Senate Banking Committee.
3. – Snowflake Plunges After Earnings on Slower Sales
Snowflake (SNOW) shares were down more than 20% in premarket trading Thursday after the data-analytics software company reported its slowest period of revenue growth since at least 2019.
Snowflake’s revenue grew 101% year over year in its fiscal fourth quarter ended Jan. 31, the company reported after the closing bell Wednesday. In the previous quarter, growth reached 110%. The company posted a $132 million net loss, narrower than the near-$199 million loss.
Adjusted gross margin of 70% came in below the StreetAccount consensus of 70.9% though was higher than the 62% registered two years ago, in part thanks to discounts on the third-party cloud infrastructure it relies on to deliver its service to customers.
Snowflake said it expects 79% to 81% product revenue growth in the fiscal first quarter. Analysts polled by StreetAccount had been predicting 78% product revenue growth. In the fiscal fourth quarter, product revenue increased by 102%.
For its 2023 fiscal year, management expects to see 65% to 67% product revenue growth, slightly below analysts' forecasts of 66% revenue growth.
At last check, shares of Snowflake were down 21.87% at $206.79 in premarket trading. Year to date the stock is down about 22%.
4. -- LSE Suspends Trading of Russian Stocks
London Stock Exchange Group (LDNXF) has suspended trading in more than 50 Russian stocks listed on the big European exchange, the latest move to prevent investors both buying and selling Russian securities inside and outside the country.
The trading suspensions, announced Thursday, result from the sanctions against Russia for its invasion of Ukraine, the LSE said, adding that it was acting to “maintain orderly markets” amid mass selling of Russian stock as investors seek to cut ties with the country.
Trading suspensions apply to such high-profile companies as Russia’s biggest bank, Sberbank Russia PJSC (SBER) , which is retrenching to its domestic market as its European subsidiaries faced possible default. The dollar-denominated stock last traded at less than one cent on the LSE.
Other affected stocks include En+ Group International ENG, PJSC Gazprom PJSC and Rosneft Oil Co. (RNFTF) , the LSE said in a statement.
The LSE move follows that by rival Deutsche Boerse AG, which earlier this week closed its doors on trading of Russian securities listed on its market for similar reasons.
The ability of investors to trade Russian stocks is further limited by a decision from Russia’s central bank Thursday to keep the country’s stock market largely closed for the fourth day in a row.
5. – Musk Invites UAW to Hold Union Vote at Tesla
Tesla (TSLA) CEO Elon Musk said he was open to the United Auto Workers union holding a vote about organizing labor at the electric automaker after long resisting such a move.
“Our real challenge is Bay Area has negative unemployment, so if we don’t treat and compensate our (awesome) people well, they have many other offers and will just leave!” Mr. Musk said via Twitter late Wednesday.
“I’d like hereby to invite UAW to hold a union vote at their convenience. Tesla will do nothing to stop them,” he said.
Workers for Tesla, America’s largest car company by value, aren’t currently unionized. Some employees at the company’s plant in Fremont, Calif., sought to organize several years ago with the help of the UAW.
Tesla’s lack of worker labor unionization has left the EV maker as somewhat of an outcast with the Biden administration amid its push to electrify American roads.
President Biden snubbed Tesla in an August White House meeting on electric vehicles with UAW officials and executives from Ford (F), General Motors (GM) and Stellantis (STLA), which count EVs as a fraction of their overall sales.
In this week’s State of the Union address, Biden mentioned Ford and General Motors for their investments in electric vehicles, but not Tesla, despite it producing more EVs than both companies.
