Five things you need to know before the market opens on Thursday March 9:
1. -- Stock Slip As Powell Puts Payroll In Focus
U.S. equity futures edged modestly lower Thursday as investors retreated from risk markets ahead of a tomorrow's crucial February jobs reports and continued to re-price interest rate risk following surprisingly hawkish testimony from Federal Reserve Chairman Jerome Powell on Capitol Hill.
Powell wrapped-up his semi-annual appearance before Congress with testimony to the House Financial Services Committee, during which he reiterated the need for "higher for longer" interest rates in order to slow the elevated level of domestic inflation, but noted the incoming data would dictate the size on near-term increases and that no decision has been reached ahead of the Fed's March policy meeting.
That puts Friday's non-farm payroll report in sharp focus, particularly following a hotter-than-expected reading for February private employment additions from payroll processing group ADP yesterday, and JOLTS data showing nearly 10.83 million jobs were left unfilled over the month of January.
Traders seem to be leaning in the direction of an aggressive February jobs tally, with market consensus holding at 205,000 and a headline unemployment rate of 3.4%, with bets on a 50 basis point rate hike on March 23 rising to around 77%, according to the CME Group's FedWatch.
Stocks are likely to take their direction cues from the bond market Thursday, as well, given the dearth of corporate earnings and weekly jobless claims figures that will arrive at 8:30 am Eastern time.
Benchmark 2-year Treasury note yields were last seen holding nearly 15-year highs at 5.035% while 10-year notes remained just below the 4$ threshold at 3.991%. The U.S. dollar index, meanwhile, was marked 0.21% lower at 105.457 against its global peers.
Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500 were indicating an 8 point opening bell decline while those linked to the Dow Jones Industrial Average was looking at a 2 point bump. The tech-focused Nasdaq is looking at a 63 point decline.
In overseas markets, Europe's Stoxx 600 fell 0.52% in early Frankfurt trading, with Credit Suisse falling another 5% after it delayed the publication of its annual report, while Britain's FTSE 100 was marked 0.14% lower in London.
Overnight in Asia, the region-wide MSCI ex-Japan index fell 0.6% following softer-than-expected inflation data from China while the Nikkei 225 ended 0.64% higher in Tokyo after the lower house of parliament approved the appointment of Kazuo Udea as the new Bank of Japan Governor.
2. -- Biden Budget Targets Rich, Companies, For Big Tax Hikes
President Joe Biden is expected to unveil a host of tax hikes on wealthy Americans Thursday, as well as a beefed-up levy on stock buyback and an end to corporate loopholes, when he presents his 2024 budget proposals later today at an event in Philadelphia.
The White House has said the tax and spending plans will reduce the deficit by around $3 trillion over the next ten years by collecting a 25% minimum 'billionaire's tax', increasing levies on those making over $400,000 per year to pay into Social Security, Medicare and Medicaid, quadrupling the 1% tax on corporate buybacks and nearly doubling the current 20% capital gains tax while addressing what it called "wasteful" spending dictated by special interests.
However, with Republicans in control of the House, and Democrats with only a slim majority in the Senate, the President's plans are unlikely to find their way through Congress, particularly given the fact that House Majority Leader Kevin McCarthy has vowed to stand firm on raising the $31.4 trillion debt ceiling without a corresponding pullback in government spending.
3. -- Silvergate Goes Dark As FTX Collapse Echoes
Silvergate Capital (SI) shares plummeted in pre-market trading Thursday after the crypto-focused lender said it would wind down its operations and liquidate its wholly-owned bank following billions in losses linked to the collapse of FTX late last year.
Silvergate saw a rush of withdraws from digital asset customers in the wake of the FTX scandal and the arrest of its founder, Sam Bankman-Fried, with more than $8 billion fleeing over the three months ending in December. The run led Silvergate to sell $5.2 billion of its digital assets at a $718 million loss to their book value in order to maintain liquidity, which continued to deteriorate into the first two months of this year, leading to the closure of its flagship Silvergate Exchange Network payments system.
“In light of recent industry and regulatory developments, Silvergate believes that an orderly wind down of bank operations and a voluntary liquidation of the bank is the best path forward,” Silvergate said. “The bank’s wind-down and liquidation plan includes full repayment of all deposits.”
Silvergate shares were marked 45% lower in pre-market trading to indicate an opening bell price of $2.70 each.
4. -- Senate Looks To Revive 'NOPEC' Bill
Senate lawmakers are set to revive legislation Thursday that would removed the sovereign immunity that protects OPEC, the oil producing cartel, from U.S. anti-trust laws.
Republican Chuck Grassley and Democrat Amy Klobuchar will reintroduce the so-called No Oil Producing and Exporting Cartels bill, better known as NOPEC, to a Senate Judiciary Committee Thursday following years of failed attempts to bring the 13-member group closer in line with U.S. law.
"Current law has made the Justice Department powerless to stop the 13 largest oil-producing countries from manipulating prices and driving up costs," Klobuchar said, referencing the group's decision last year to slash output by around 2 million barrels per day despite the impact of prices from Russia's ongoing war on Ukraine.
Russia, a non-OPEC member, has been tightly-linked to the cartel thanks in part to its close ties with de-facto leader Saudi Arabia.
Brent crude futures for May delivery were marked 9 cents higher at $82.75 per barrel Thursday, while WTI contracts for April, which are tightly-linked to U.S. gasoline prices, were marked 7 cents higher at $76.73 per barrel.
5. -- Oracle Earnings on Deck As AI Race Accelerates
Oracle Corp. (ORCL) shares edged higher in pre-market trading ahead of the cloud-focused software group's third quarter earnings after the closing bell.
Analysts expect Oracle to post a bottom line of $1.20 per share for the three months ending in January, the group's fiscal third quarter, on revenues of around $12.43 billion, an 18..3% increase from the same period last year as it continues to benefit from the impact of its $28 billion purchase of Cenrer (CERN), the second-largest designer of software used by doctors and hospitals to mange and store medical records.
Investors are likely to focus on Oracle's near-term outlook for capital spending, its assessment of corporate demand for cloud expansion and its plans to deploy AI-related technologies across its enterprise product suite.
Oracle shares were marked 0.05% higher in pre-market trading to indicate an opening bell price of $88.50 each.
