Here are five things you must know for Tuesday, March 22:
1. -- Stock Futures Higher As Markets Re-Set To Hawkish Powell, Growth Risks
U.S. equity futures edged higher Tuesday, while Treasury bond yields extended their recent gains and the dollar consolidated its strength on foreign exchange markets, as investors continue to recalibrate growth and rate hike expectations while tracking developments in Russia's war on Ukraine.
A hawkish series of comments from Federal Reserve Chairman Jerome Powell yesterday to the National Association for Business Economics revived bets on faster -- and deeper -- rate hikes over the coming months as inflationary pressures continue to accelerate amid surging commodity prices and supply chain disruptions linked to China's renewed Covid surge.
"The labor market is very strong, and inflation is much too high," Powell said. "If we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings, we will do so."
Bets on a 50 basis point hike at the Fed's May meeting jumped to 63.9% following Powell's speech, according to the CME Group's FedWatch tool, while benchmark 10-year note yields climbed to 2.346% in overnight trading.
Concerns over the impact of the Ukraine invasion on growth, however, as well as the hit to world demand expected from China's attempt to stem Covid infections -- and the possible emergence of a dangerous BA.2 subvariant in the United States -- have short-term rates moving even faster, with 2-year at 2.18%, pegging the spread with 10-year paper at a worryingly low 15.8 basis points.
Still, stocks held up well in the overnight session, with Asia's region-wide MSCI ex-Japan benchmark booking a solid 1.2% gain and Europe's Stoxx 600 rising 0.35% by late-morning trading in Frankfurt even as Russian troops continue their assault on the southern city of Mariupol and Ukrainian president Volodymyr Zelenskiy again pressed for direct peace talks with Russian President Vladimir Putin.
On Wall Street, futures futures contracts linked to the Dow Jones Industrial Average are indicating a 125 point opening bell gain while those linked to the S&P 500, which is down 6.4% for the year, are priced for a 12 point move to the upside. The tech-focused Nasdaq Composite is called 35 points higher.
2. -- Nike Shares Surge on Q3 Earnings Beat, Upbeat Outlook
Nike (NKE) shares leaped higher in pre-market trading after the sports apparel giant posted stronger-than-expected third quarter profits and said supply chain snarls that had limited U.S. inventories were largely behind it.
Nike earned 87 cents per share for the three months ending in February, a 3.3% decline from last year but well ahead of the Street consensus forecast of 71 cents. Group revenues climbed 5% to $10.87 billion, Nike said, thanks to solid demand in the United States that offset an 8% slump in Covid hit China.
Looking into the final months of its financial year, Nike said that, with all of its Vietnam-based factories up-and-running, "we're going to start seeing an improved flow of supply" into north American markets, even as shipping times remain elevated owing to domestic transport issues, amid an ongoing surge in post-pandemic demand.
Nike shares were marked 5.9% higher in pre-market trading to indicate an opening bell price of $137.88 each.
3. -- Tesla Set To Deliver First Model Y From Berlin Gigafactgory
Tesla (TSLA) shares extended their longest winning streak since last November in pre-market trading as the carmaker plans to deliver the first-ever Model Y sedan made in its Berlin factory.
The ceremony, expected to include an appearance from Germany's Chancellor, Olaf Scholz, will mark the beginning of deliveries from Tesla's key European manufacturing hub that is ultimately slated to produce around 500,000 vehicles a year. It will also ease capacity pressures on gigafactories in Freemont, California and Shanghai as Tesla, like virtually every other carmaker in the world, grapples with labor and input cost increases alongside supply chain challenges and parts delays.
Tesla cautioned earlier this year that supply-chain disruptions have held back production capacity and will impact the pace of near-term output, a warning that took some of the gloss from a record fourth quarter, which saw revenues rise 65% from last year to an-all time high of $17.72 billion.
Tesla shares were marked 1.45% higher in pre-market trading to indicate an opening bell price of $934.16 each.
4. -- Alibaba Unveils Record $25 Billion Share Buyback
The U.S.-listed shares of Alibaba Group Holding (BABA) shares surged higher in pre-market trading after the China-based e-commerce giant boosted its stock buyback plan to a record $25 billion.
"Alibaba's stock price does not fairly reflect the company's value given our robust financial health and expansion plans," said Deputy CFO Toby Xu, possibly referencing the hit many China-based tech stocks have taken from a series of moves by Beijing to tame the sector's growth, as well as ongoing speculation that U.S. authorities may force the de-lisiting of shares fore failing to meet the standards set by the recently-approved Holding Foreign Companies Accountable Act.
Alibaba shares were marked 8.5% higher in pre-market trading to indicate an opening bell price of $112.40 each, a move that would still leave the stock with a six-month decline of around 26%.
5. -- Apple Resolves App System Outage
Apple (AAPL) shares edged higher in pre-market trading after the tech group resolved a service outage that had affected its App Store, Apple TV and music streaming businesses.
The outage, while not widespread in global terms, was an otherwise rare disruption for Apple and affected both its corporate and retail operations as well as App-related services such as music and podcasts.
Apple's status page noted the issued was resolved late Monday afternoon, with Bloomberg reporting that the outage was linked to a DNS, or Domain Name System error similar to those which triggered disruptions for Facebook and Instagram last year.
Apple shares were marked 0.25% lower in pre-market trading to indicate an opening bell price of $165.80 each.
