Five things you need to know before the market opens on Tuesday February 14:
1. -- Stock Futures Higher As Inflation Data Looms
U.S. equity futures edged modestly higher Tuesday, while the dollar slipped lower against its global peers and Treasury yields stabilized, as investors braced for what could be a crucial inflation reading prior to the start of trading.
Longer-dated Treasury yields have been trending higher over the past few sessions, but held at just under 3.7% in overnight trading, following comments from Federal Reserve Governor Michelle Bowman that indicated the central bank is "still far from achieving price stability” and is likely to continue raising interest rates over the coming months.
A reported move by Fed Vice Chair Lael Brainard to the White House, where she'll serve as Director of the National Economic Council, would also remove one of the Fed's more dovish policymakers.
Economists expect January inflation to have eased to around 6.2% on an annual basis, down from 6.4% in December, with core prices slowing to 5.7%. Monthly readings, however, could tick higher thanks to both a new method of calculation and strength in both used car prices and housing costs.
A faster-than-expected reading could both challenge the market's forecast for a pause in Fed rate hikes by the spring, and test the solid 6.5% year-to-date gain for the S&P 500.
The CME Group's FedWatch, in fact, is pricing in a 42.9% chance of a rate hike in June, following on from increases in March and May, on the back of both hawkish Fed signaling and January's scorching jobs report, which showed 517,000 new positions added to the economy last month.
On Wall Street, stocks are looking to extend Monday's gains ahead of the inflation data, expected at 8:30 am Eastern time, with futures contracts tied to the S&P 500 indicating a 6 point opening bell gain and those linked to the Dow Jones Industrial Average priced for a 32 point advance. The tech-heavy Nasdaq is indicating a 22 point opening bell gain.
Benchmark 10-year notes were trading at 3.692% and 2-year notes at 4.505% in the overnight session, while the U.S. dollar index, which tracks the greenback against a basket of its global peers, was marked 0.36% lower at 102.975.
In overseas markets, Europe's Stoxx 600 was marked 0.44% higher in early Frankfurt trading while Britain's FTSE 100 gained 0.46% in London.
Overnight in Asia, the region-wide MSCI ex-Japan index edged 0.3% higher into the close of trading while the Nikkei 225 gained 0.64%.
2. -- New Calculation Creates Upside Risk To CPI Reading
The Bureau of Labor Statistics will publish its firs inflation reading under a new system of weights and seasonal adjustments Tuesday that could deliver both headline and core readings that exceed analysts forecasts.
The BLS has tweaked the way in which it calculates inflation readings, based on changes in consumption patterns since the last alteration was made in 2020. The new method will modestly raise the weight of housing costs -- a key figure in the Fed's inflation fight -- while trimming the weights of food and transportation costs.
Re-worked methods to take into account seasonal price adjustments will also be used in the January report. Last week, the BLS said its original estimate for December inflation, a -0.1% decline, was revised to a 0.1% gain after the new seasonal adjustments were applied.
3. -- Palantir Shares Surge After Q4 Earnings Beat, Data Analytics Outlook
Palantir Technologies (PLTR) shares surged higher in pre-market trading after the data analytics group posted better-than-expected fourth quarter earnings and forecast its maiden annual profit for its current fiscal year.
Palantir, which is heavily involved with the defense sector, in part through its work with the Central Intelligence Agency, posted adjusted earnings of 4 cents per share on revenues of $509 million, an 18% increase from the same period last year that topped Street forecast.
Business investment in AI, the company said, will support earnings growth over the current financial year with revenues likely coming in between $2.18 billion and $2.23 billion.
"This is a world that is dangerous, that needs AI-driven and, in general, software-driven weaponry," said CEO Alex Karp. "And no other company in the world has been focused on this for the last 20 years, and we are."
Palantir shares were marked 17.5% higher in pre-market trading to indicate an opening bell price of $8.94 each.
4. -- Coca-Cola Edges Higher Ahead of Q4 Earnings Will Price Plans In Focus
Coca-Cola (KO) shares edged higher in pre-market trading ahead of the iconic drinks group's fourth quarter earnings prior to the opening bell.
Analysts expect Coca-Cola to post an adjusted bottom line of 45 per share, a tally that would be essentially flat to last year, with revenues rising 5.8% to $10.02 billion, but investors are likely to focus on the impact of price hikes on the group's operating margins and its ability to extend those increases into the coming year.
Last week, Coca-Cola's main drinks rival, PepsiCo (PEP), said it was done raising prices, even as it forecast higher input costs, as it relies on firming consumer demand to make up the difference.
Coca-Cola shares were marked 0.5% higher in pre-market trading to indicate an opening bell price of $60.92 each.
5. -- Ford Plans Deep European Job Cuts Amid Renewed EV Investment Focus
Ford Motor Co (F) shares edged higher in pre-market trading after the carmaker said it would cut around 3,800 jobs, mostly in Germany, as it accelerates its electric vehicle investment drive.
Ford said the cuts will be spread over the next three years and largely focus on operations linked to the manufacture of combustion-engine cars. Ford plans to launch its first European EV, built on a Volkswagen platform, later this year, and says its region-wide fleet will be all electric by 2035.
"There is significantly less work to be done on drivetrains moving out of combustion engines," said Ford's European general manager Martin Sandler. "We are moving into a world with less global platforms where less engineering work is necessary. This is why we have to make the adjustments."
Ford shares were marked 0.1% higher in pre-market trading to indicate an opening bell price of $13.10 each..
