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U.S. stocks slipped lower Tuesday, matching similar moves in Treasury bond yields, as investors appear reluctant to extend the recent tech-led rally ahead of key economic data releases later in the week.
Updated at 1:07 PM EST
7-Up
The U.S. Treasury sold another $42 billion in new 7-year notes Tuesday, following on from two record-sized auctions of 2-year and 5-year notes yesterday, attracting a modest uptick in overall demand.
Investors placed around $108.5 billion in total bids, generating a demand ratio of 2.58, just ahead of last month's 2.57 tally. Foreign participation was solid, as well, with so-called indirect bidders taking down 69.57% of the sale, compared to 69.15% last month.
Benchmark 10-year notes were marked at 4.291% immediately following the sale, with 2-year notes pegged at 4.695%
US 7-YEAR NOTE AUCTION
— FinancialJuice (@financialjuice) February 27, 2024
BID-TO-COVER RATIO 2.58
HIGH YIELD 4.327% VS WI YIELD 4.329%
US SELLS $42 BLN
AWARDS 59.81% OF BIDS AT HIGH
PRIMARY DEALERS TAKE 15.6%
DIRECT 14.83%
INDIRECT 69.57%
Updated at 11:01 AM EST
Deal or no deal?
Warner Bros. Discovery (WBD) shares are moving higher in mid-day trading following a report that suggests the media and entertainment group has walked away from merger talks with Paramount Global (PARA) .
Warner Bros. shares were last marked 2.05% higher at $8.72 each while Paramount rose 1.97% to $11.31 each.
$WBD is “no longer” pursuing a merger with $PARA as its shares trade near a 52-week low, per @CNBC https://t.co/QSDWfHtjiX
— notreload (@thudderwicks) February 27, 2024
Updated at 11:01 AM EST
Atlanta Fed boost
The Atlanta Fed's GDPNow forecasting tool, a real-time tracker of U.S. growth, pegs the country's current-quarter growth rate at 3.2%, up from its prior estimate of 2.9%, with consumer spending powering most of the stronger-than-expected increase.
GDPNow model from @AtlantaFed (a now cast, not a forecast) now has 1Q2024 growth at +3.2% (q/q ann.) … all components are contributing positively to growth, with consumer spending responsible for 1.8% of the 3.2% increase pic.twitter.com/Ij5Hw3hI4U
— Liz Ann Sonders (@LizAnnSonders) February 27, 2024
Updated at 10:41 AM EST
Macy's earnings parade
Macy's shares are powering higher, rising 6.1% in mid-morning trading to change hands at $20.47 each, as investors cheer the group's stronger-than-expected fourth quarter earnings and plans to shutter around 150 stores as part of a major strategic overhaul.
Updated at 10:05 AM EST
Fading confidence
The Conference Board's benchmark survey of U.S. consumer confidence came in lower than expected, and followed a downward revision of the January tally, with the lowest rating for 'current conditions' since November of last year.
🇺🇸 *US FEB. CONSUMER CONFIDENCE 106.7; EST. 115.0 - BBG
— Christophe Barraud🛢🐳 (@C_Barraud) February 27, 2024
*Present situation fell to 147.2 from revised 154.9 in January
*Expectations index fell to 79.8 from revised 81.5 in January
Updated at 9:50 AM EST
Softish open
The S&P 500 is down around 2 points at the open, with the Dow falling 103 points and the Nasdaq essentially unchanged as stocks ease in to what is likely to be a muted session on Wall Street, with eyes on Thursday's PCE inflation report.
Indices Update: As of 14:00, these are your best and worst performers based on the London trading schedule:
— DailyFX Team Live (@DailyFXTeam) February 27, 2024
Germany 40: 0.44%
France 40: 0.17%
US 500: 0.14%
Wall Street: -0.08%
FTSE 100: -0.14%
View the performance of all markets via https://t.co/2NUaqnUPED pic.twitter.com/ha88j9q0sn
Updated at 8:39 AM EST
Durables goods
Durable goods orders for the month of January showed a rare pullback in economic activity, with orders falling by a larger-than-expected 6.1%, lead to the downside by a slump in non-defense activity.
Stocks gave back earlier gains following the data release, with futures indicating a 3 point gain for the S&P 500 and a 27 point pullback for the Dow.
January durable goods orders (blue) -6.1% month/month vs. -5.0% est. & -0.3% prior (rev down from 0.0%); orders ex-transportation (orange) -0.3% vs. +0.2% est. & -0.1% prior (rev down from +0.5%) pic.twitter.com/3QVaTz2EVg
— Liz Ann Sonders (@LizAnnSonders) February 27, 2024
Updated at 8:10 AM EST
Netflix winner
Netflix NFLX shares were marked 1.25% higher in pre-market trading following an upgrade from UBS analyst John Hodulik, who sees the streaming service emerging as the clear sector leader following a series of consolidation moves from rivals and its own plans to boost subscription costs and grow its ad business.
$NFLX | UBS raised Netflix PT to $685 from $570 while maintaining a Buy rating, citing the ‘ultimate beneficiary’ of media industry shifts.
— Wall St Engine (@wallstengine) February 27, 2024
"Sustainable double-digit growth ahead" for Netflix, says UBS.
Despite slower net adds, a "significant runway" remains as Netflix shifts…
Stock Market Today
Stocks ended lower Monday, with the S&P 500 falling for the first time in four trading days, amid minimal headline drivers and a light calendar for corporate and economic releases.
Treasury yields, however, were active in the wake of two benchmark auctions, which saw record sales of 2-year and 5-year notes over the same session.
The overall $127 billion in supply was taken down relatively smoothly, however, with only a modest dip in demand metrics, suggesting that investors are content to remain cautious over the coming days, and possibly weeks, until they get more clarity from the Federal Reserve on its near-term interest-rate path.
Kansas City Fed President Jeffrey Schmid, speaking to an event in Oklahoma last night, suggested investors will need to settle in for a good few weeks before that happens, given the strength of the economy, the resilience of the labor market and elevated inflation.
“I believe that the best course of action is to be patient, continue to watch how the economy responds to the policy tightening that has occurred, and wait for convincing evidence that the inflation fight has been won,” Schmid said.
The CME Group's FedWatch suggests no chance of a Fed rate move in March and only a 17.4% chance of a reduction in the central bank's main lending rate in May.
Traders are, however, betting on rate cuts to begin in June, assigning a 53.3% chance of a quarter point reduction and a 9.6% chance of a half-point cut.
On Wall Street, stocks look set for another muted open, with only a few blue-chip names seeing action in premarket trading, including Lowe's Companies (LOW) , which edged 0.6% lower after posting better-than-expected January-quarter earnings but issuing a muted 2025 sales forecast.
Coinbase Global (COIN) was also active, along with Robinhood Markets (HOOD) , after bitcoin prices topped the $57,000 mark for the first time since 2021 as the world's largest digital currency continues to see investor demand tied to the approval of spot-price ETFs earlier this year.
Macy's (M) shares, meanwhile, fell 0.6% after the retailer posted better-than-expected fourth-quarter earnings while unveiling a major strategy shift that will see it close 150 stores while expanding its upscale Bloomingdale's presence.
In broader markets, futures tied to the S&P 500 are indicating a 9 point opening-bell gain while those linked to the Dow Jones Industrial Average suggest a 38 point advance. The Nasdaq is called 65 points higher.
Overnight in Asia, Japan's Nikkei 225 extended its run of records, rising 0.015% to 39,239.52 points. That's even after data showed a faster-than-expected reading for February inflation that could test the Bank of Japan's negative rate policy over the coming months.
In Europe, the regionwide Stoxx 600 was marked 0.03% lower in Frankfurt while Britain's FTSE 100 slipped 0.03% in London.
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