Here are five things you must know for Tuesday, April 12:
1. -- Stock Futures Edge Lower, Treasury Yields Rise Ahead of March CPI Data
U.S. equity futures traded mixed Tuesday, while the dollar breached a fresh two-year high against its global peers and Treasury bond yields extended their recent surge, as investors braced for what could be a market-shaking reading of inflation in the world's biggest economy.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.25% higher in overnight trading at 100.185, the highest in more than two years, as traders re-set currency levels ahead of the Federal Reserve's signaling on higher interest rates.
Benchmark 10-year notes followed suit, rising to 2.817% in European dealing, the highest since 2018, pulling 10-year German bund yields -- which traded with a negative yield late last year -- to a 2015 high of 0.88%.
Inflation pressures, which are likely to have surged to the highest levels since 1981 last month, have dictated trading on Wall Street for much of the past week, hammering tech and growth stocks and pulling the broadest measure of global stocks, the MSCI World Index, to the lowest level in a month.
Little relief appears in sight: the CME Group's FedWatch tool pegs an 85.4% chance of a 50 basis point rate hike from the Fed in May, followed by a 54.1% chance of a follow-on move in May and 48.9% chance of a third 50 basis point hike in July.
On Wall Street, futures contacts tied to the Dow Jones Industrial Average indicating a modest 20 point opening bell decline while those linked the S&P 500, which is down 7.4% for the year, are priced for a 2 point gain. Futures linked to the tech-focused Nasdaq are looking at a modest 32 point opening bell bump.
2. -- White House Braced for 'Extraordinarily Elevated' March Inflation Reading
Americans should be ready for an "extraordinarily elevated" level of inflation from last month's reading, the White House cautioned late Monday, thanks in part to the impact on food and energy prices from Russia's war on Ukraine.
U.S. crude futures hit a ten-year high of $123.70 per barrel last month in the immediate wake of Moscow's invasion and the threat of sanctions on energy exports, while wheat and other food prices leaped on reports of damaged crops and grain embargoes linked to the conflict.
And with rents, used car prices and healthcare costs -- which make up a massive portion of the underlying core CPE reading -- continuing to rise, analysts are looking for a year-on-year inflation rate of 8.4% when the Commerce Department publishes its formal estimate at 8:30 am Eastern time, the highest since at least 1981.
“We expect a large difference between core and headline inflation ... reflecting the global disruptions in energy and food markets,” White House Press Secretary Jen Psaki said Monday. “
3. -- Veru Shares Surge After Impressive Covid Treatment Data
Veru Inc. (VERU) shares extended their Monday rally in pre-market trading following the drugmaker's plans to seek Emergency Use Authorization from the U.S. Food & Drug Administration for its newly-developed Covid treatment.
Miami-based Veru said data from a late-stage study showed its new oral treatment, known as sabizabulin, provided a 55% reduction in deaths, when compared to a placebo, in hospitalized patients suffering from moderate-to-severe forms of Covid -- irrespective of variant type.
"We strongly believe that sabizabulin, with its dual anti-viral and anti-inflammatory properties which demonstrated positive efficacy and safety results in the Phase 3 COVID-19 study, can be that greatly needed oral therapy for hospitalized moderate to severe COVID-19 patients," said CEO Mitchell Steiner.
Veru shares were marked 5.13% higher in pre-market trading to indicate an opening bell price of $12.79 each, a move that would value the group at just over $1.03 billion.
4. -- Cisco Shares Slide On Morgan Stanley, Citigroup Downgrades
Cisco Systems (CSCO) shares moved lower in pre-market trading after analysts at Citigroup cut their rating on the network equipment maker to 'sell' while slashing their price target by more than 30%.
Citi analyst Jim Suva loped $20 from his Cisco price target, which now sits at $45 per share, while Morgan Stanley cut their price target on the group to $59 per share in a pair of analysts notes published early Tuesday.
Cisco shares have performed poorly since boosting their full-year profit forecast to between $3.41 and $3.46 per share on February 16, but have fallen less (2%) than the broader Nasdaq Composite benchmark (5%) over the past two months.
Cicso shares were marked 2% lower in pre-market trading to indicate an opening bell price of $51.85 each.
5. -- Starbucks Shares Slip After Citigroup Downgrade
Starbucks (SBUX) shares edged lower in pre-market trading following a downgrade to 'neutral' from Citigroup analyst Wendy Nicholson, who also slashed her price target by $29 to $91 per share.
Starbucks shares have fallen more than 11% since interim CEO Howard Schultz moved to suspend share buybacks at the world's biggest coffee chain, a decision several analysts have said could investment and capital allocation changes that could trim near-term earnings growth.
Schultz said last Sunday that cash spent on buybacks would be better directed towards "investing more into our people and our stores", adding it is the "only way to create long-term value for all stakeholders."
Earlier this year, Starbucks lowered its 2022 profit guidance last month, and said it would begin hiking prices across its food and beverage menu, amid the ongoing hit to input costs from supply chain disruptions and slowing sales in China.
Starbucks shares were marked 0.8% lower in pre-market trading to indicate an opening bell price of $80.04 each.
