Here are five things you must know for Wednesday, March 30:
1. -- Stock Futures Edge Lower As Bond Market Signals Dampen Risk Appetite
U.S. equity futures edged lower Wednesday, putting a four-day rally on Wall Street at risk, as investors retreated from risk markets following worrying moves n the bond market and uncertain action from Russia in it war on Ukraine.
Deputy Defense Minister, Aleksey Krivoruchko, had said yesterday that Russia military would “fundamentally cut back activity in the direction of Kyiv and Chernihiv” following peace talks in Istanbul, but reports of attacks on cities in eastern Ukraine continued on Wednesday, even as some troops began to withdraw back towards Belarus and the Russian border.
A brief inversion of the U.S. Treasury yield curve yesterday, the first since September 2019, also sparked a reset in terms of global risk appetite as investors worried that its record in predicting recession in the world's biggest economy remains accurate.
Benchmark 10-year note yields held their ground at 2.402% in overnight trading, while 2-year notes pulled back to 2.324%, allowing for a 8 basis point widening in this key portion of the yield curve as bets on a 50 basis point Federal Reserve rate hike in May eased to around 66.6% from 69.4% earlier this week.
On Wall Street, futures contracts tied to the Dow Jones Industrial Average indicating a 90 point opening bell decline ahead of payroll processing group ADP's National Employment report at 8:30 am eastern time, while contracts linked the S&P 500, which is up 5.9% for the month, are priced for a 15 point pullback. Futures linked to the tech-focused Nasdaq are looking at a 70 point opening bell decline.
2. -- Oil Prices Resume Rally On Stockpiles Dip, Russia Sanctions Bets
Global oil prices jumped higher Wednesday, pulling U.S. crude back towards the $110 per barrel mark, as traders reacted to data showing a decline in domestic crude stocks and reports of possible sanctions on Russian energy exports.
The American Petroleum Institute said late Tuesday that U.S. crude stocks fell by a bigger-than-expected 3 million barrels last week, with inventories at the key Cushing, Oklahoma delivery hub down by just over 1 million.
The Energy Department will publish official data at 10:30 am eastern time today.
Germany's enactment of an emergency plan to deal with the potential cut-off of Russian natural gas, a key component in the energy mix of Europe's biggest economy, also has traders betting on a near-term reaction from western leaders as Moscow continues to demand payment for its products in rubles following sanctions against if central bank and broader financial system.
WTI crude futures for May delivery were marked $2.81 higher from Tuesday's close at $107.05 per barrel in overnight trading, while Brent contracts for the same month, the global pricing benchmark, added $2.51 to trade at $112.75 per barrel.
3. -- Micron Shares Jump After Q2 Earnings, Chip Demand Outlook Impress
Micron Technology (MU) shares powered higher in pre-market trading after the chipmaker posted stronger-than-expected second quarter earnings paired with a robust near-term outlook.
Micron's second quarter profit of $2.14 per share handily beat the Street consensus forecast of $1.97, while revenues came in nearly 25% higher from last year at $7.8 billion, a figure Micron said could rise to between $8.5 billion and $8.9 billion in the current quarter, as prices for its NAND and DRAM memory chips continue to rise amid solid global demand.
Data center is the largest market for memory and storage, and we expect it to outpace the broader memory and storage market over the next decade," Sanjay Mehrotra told investors on a conference call late Tuesday. "We anticipate underlying demand in calendar 2022 to be led by increasing volume of data center server deployments, 5G mobile shipments and continued strength in automotive and industrial markets."
Micron shares were marked 4.5% higher in pre-market trading to indicate an opening bell price of $85.76 each.
4. -- Lululemon Shares Leap After Q4 Profit Beat, Solid 2022 Outlook
Lululemon Athletica (LULU) shares jumped firmly higher in pre-market trading after it posted stronger-than-expected fourth quarter earnings and said it could offset input cost increases with 'selective' price hikes for its athletic and leisure apparel.
Vancouver-based Lululemon said 2022 revenues would likely come in between $7.49 billion and $7.62 billion, with adjusted profits in the region of $9.15 and $9.35 per share, following a robust holiday quarter that saw sales rise 23% to $2.13 billion even as some of it north American stores remained hit by Covid-linked closures and reduced shopping hours.
Supply chain snarls, particularly in ocean freight, has forced a move towards air cargo options in order to keep inventories fresh, the company said, with costs rising as a result.
"We plan to take some selective price increases over the course of the year on a small portion of our styles," CEO Calvind McDonald said during a conference call with investors late Tuesday. "Our pricing also factors in the value of our innovation and we will continue to monitor the competitive environment to ensure we maintain our price position relative to our key peers."
Lululemon shares were marked 7.65% higher in pre-market trading to indicate an opening bell price of $370.25 each.
5. -- Judge Allows Class Action Suit By Small Ad Buyers Against Facebook
Facebook parent Meta Platforms FB shares slipped lower in pre-market trading after a judge in California paved the way for a class action lawsuit against the social media group.
U.S. District Judge James Donato in San Francisco ruled that a group of advertisers, who accused Facebook in 2018 of exaggerating the reach of individual ads on various platforms while inflating their price, could proceed with their lawsuit as a collective group.
“For years Facebook repeatedly confronted a choice between telling customers the truth or preserving its revenue," the plaintiffs alleged. "At every turn, Facebook chose its revenue.”
Meta, for its part, had argued that the number and composition of potential plaintiffs was "too diverse" to allow for a class action, a notion that was rejected by Judge Donato.
“It may be that class members differ in advertising budgets and scope of purchases, as Meta suggests, but Meta has not shown that these differences," he said.
Meta Platforms shares were marked 0.75% lower in pre-market trading to indicate an opening bell price of $228.17 each.
