Here are five things you must know for Wednesday, March 16:
1. -- Stock Futures Extend Gains on China Stimulus, Russia-Ukraine Talks
U.S. equity futures extended gains Wednesday, with Treasury bond yields moving firmly higher, as investors reacted to a pledge from authorities in China to support the Covid-hit economy while bracing for today's Federal Reserve rate decision later this afternoon.
China Vice Premier Liu He said Beijing would roll out a series of measures in the coming weeks to support growth in the world's second largest economy, which is seeing a worrying spike in coronavirus infection, while pledging at the same time to ensure financial market stability.
The move powered China stocks sharply higher, and lifted the region-wide MSCI ex-Japan index from its nineteen-month low into a 4.2% gain that spilled over into the European session.
Hopes of near-term peace talks between Russia and Ukraine, where fighting has entered its 21st day, also lifted sentiment, with President Joe Biden pledging further relief to Kyiv as he prepared for meeting of NATO leaders in Brussels on March 24.
Ukrainian President Volodymyr Zelenskiy said Russia has become "more realistic" in recent negotiations with Kyiv, and more talks with Foreign Minister Sergei Lavrov were scheduled for later today.
Investors are also tracking Russia's ability to pay around $117 million in interest on two dollar-denominated bonds, due today, following sanctions that have kept its central bank from tapping U.S. dollar reserves.
On Wall Street, benchmark 10-year Treasury note yields rose to 2.18% in overnight trading ahead of today's Fed rate decision at 2:00 pm Eastern time, with markets looking to comments from Chairman Jerome Powell for direction on the central bank's rate path in the face of slowing growth and faster inflation prospects.
February retail sales data is also expected at 8:30 am Eastern time, with analysts looking for a month-on-month gain of around 0.4%.
Futures futures contracts linked to the Dow Jones Industrial Average are indicating a 275 point opening bell gain heading into the start of trading, while those linked to the S&P 500 are priced for a 44 point move to the downside.
The tech-focused Nasdaq Composite is also called higher, with a 230 point gain, as benchmark 2-year Treasury note yields hold at $1.861% in overnight trading.
2. -- Fed Readies First Rate Hike Since 2018, Markets Brace For Tightening Path Details
The Federal Reserve is almost certain to unveil its first rate hike since December of 2018 Wednesday, as the central bank responds to a series of the fastest inflation readings in four decades, plunging unemployment and stable growth forecasts.
The CME Group's FedWatch tool sees a 98.3% chance of the Fed lifting its base rate to between 0.25% and 0.5% this afternoon, with bets now set on how many further hikes the economy -- which is slowing notably but its still expanding -- can withstand throughout the rest of the year.
"Chair Powell doubtless will say that the Fed is alert to the dangers posed by the war in Ukraine and the accompanying surge in energy prices, and is prepared to change tack if the economic data deteriorate sharply or financial conditions tighten materially," said Ian Shepherdson of Pantheon Macroeconomics. "But the Fed's base case for this year likely will shift from the three hikes projected at the December meeting to five, and we would not be much surprised by six."
The Fed is also likely to punt on winding down its $8.9 trillion balance sheet, but will issue new economic projections for 2022 that are likely to reflect that energy-price and supply chain-driven slowdown captured by the Atlanta Fed's GDPNow forecasting tool.
3. -- Foxconn 'Cautious' on Supply Chain, Apple Assembler Sees Flat Smart Phone Revenues in 2022
Apple (AAPL) shares moved higher in pre-market trading, alongside solid gains for the Nasdaq, even as its biggest and most important supplier cautioned it may not have certainty on supply chain disruptions until later in the year.
Foxconn (FXCNY) , the world's biggest electronics manufacturer, said net profits for the three months ending in December fell 4% from last year to T$44.4 billion ($1.55 billion), topping Street forecasts, as revenues fell 6%.
Foxconn chairman Liu Yougn-way said he was "cautiously positive" on sales for the coming year, but forecast a range of between -3% and +3% from 2021 levels -- with flat smartphone sales -- owing to supply chain uncertainty and the impact of Covid infections and shutdowns in the Asia region.
Apple told investors in late January that, "given the continued uncertainty around the world in the near term, we are not providing revenue guidance" but said March quarter sales would likely decelerate from their December period growth rate of 11.2%.
Apple shares were marked 2% higher in pre-market trading to indicate an opening bell price of $158.13 each.
4. -- Tesla Shutters Shanghai Gigafactory As City's Covid Cases Spike
Tesla (TSLA) shares powered higher in pre-market trading despite concerns linked to the closure of its Shanghai gigafactory linked to the Chinese city's recent Covid outbreak.
Reuters reported that a notice was sent to employees at the Shanghai plant, which makes both the Tesla Model 3 sedan as well as the Model Y SUV, would close for two days this week. While no reason was provided for the shutdown, Shanghai schools were closed this week, and government officials asked citizens not to leave unless travel was 'absolutely necessary', amid the country's rising Covid infection rate.
Tesla sold around 116,360 China-made cars over the first time months of the year, according to official trade data, most of which were bound for export to markets in Europe and Asia.
Tesla shares were marked 3.1% higher in pre-market trading to indicate an opening bell price of $826.20 each.
4. -- Live Nation Shares Slide As Senators Urge DoJ Pricing Probe
Live Nation Entertainment (LYV) shares moved sharply lower in pre-market trading after two Senate lawmakers urged the Department of Justice to probe the group's 'exorbitant fees' for concert and event tickets.
Democratic Senators Amy Klobuchar and Richard Blumenthal said Live Nation, which merged with Ticketmaster in 2010, said the group's "aggressive acquisition strategy" and event pricing had violated a previous DoJ agreement that allowed for the combination with tickermaster to go ahead.
"As live events continue to open up, American consumers are confronting skyrocketing ticket prices, opaque terms, and exorbitant fees. Yet live entertainment markets, especially ticket markets, are dominated by one corporation," the Senators wrote. "We are deeply concerned that the Department’s past enforcement and negotiated remedies in this industry have failed to adequately foster and protect competition in live entertainment and ticketing markets."
Live Nation shares were marked 2.5% lower in pre-market trading to indicate an opening bell price of $109.00 each.
