Five things you need to know before the market opens on Thursday April 13:
1. -- Stock Futures Nudge Higher With Earnings In Focus
U.S. equity futures traded modestly higher Thursday, while the dollar tested a two-month low against its global peers and Treasury yields steadied, as investors prepared to tackle the start of the first quarter earnings season.
Stocks are looking for direction, however, following yesterday's choppy session that tailed a mixed March inflation report and minutes from the Federal Reserve's March policy meeting, both of which provided fuel for bets on near-term rate easing yet without enough conviction for investors to fully embrace.
Inflation eased to its weakest pace in nearly two years last month, data from the Commerce Department indicated, but stubbornly higher core consumer prices failed to nudge market expectations of a 25 basis point rate hike next month in Washington. Minutes of the Fed's March meeting, meanwhile, noted near-term recession risks and spillover effects from the banking crisis even as policymakers appeared keen to press ahead with more rate hikes.
Traders will navigate another inflation reading this morning, with the Commerce Department's March report on factory gate prices at 8:30 am Eastern time, before moving into the unofficial start of the first quarter earnings season to close out the week.
JPMorgan (JPM), Citigroup (C) and Wells Fargo (WFC) will form a trio of banks reporting first quarter profits before the market opens on Friday, with Dow component UnitedHealth (UNH) kicking things off that say day with its March quarter update at 6:00 am Eastern time.
Collective S&P 500 profits are expected to fall 5.2% from last year to a share-weighted $419.1 billion, with the second quarter tally expected to show a year-on-year decline of around 4%.
Heading into the start of trading on Wall Street, futures contracts tied to the S&P 500 are priced for a modest 8 point bump while those linked to the Dow Jones Industrial Average are indicating a 30 point gain. The tech-focused Nasdaq is priced for a 28 point advance.
Benchmark 10-year Treasury note yields were marked at 3.419% in overnight trading while 2-year note yields were last seen trading at 3.995%.
The U.S. dollar index, which tracks the greenback against a basket of six global currency peers, was marked 0.15% lower at 101.344, near the lowest since early February.
Overnight in Europe, dovish comments on rate hikes from European Central Bank’s Governing Council member Francois Villeroy de Galhau helped the region-wide Stoxx 600 rising 0.18% in early Frankfurt trading, with France's CAC-40 hitting a fresh all-time high of 7,481.76 points in Paris.
Overnight in Asia, the MSCI ex-Japan index was marked 0.14% higher into the close of trading while the Nikkei 225 added 0.26% for its fifth consecutive session gain in Tokyo.
2. -- Fed Minutes Note Recession Risk, 'Highly Uncertain' Bank Crisis Impact
Federal Reserve staff raised the risk of a near-term recession in preparing members for last month's policy meeting, minutes of the debate showed Wednesday, but voting for a ninth consecutive rate hike was ultimately swayed by lingering inflation risks.
In a nod to the banking crisis, which was fresh in the minds of policymakers following the collapse of Silicon Valley Bank and the subsequent closure of Signature Bank less than two weeks earlier, Fed officials debated a pause in rate hikes in order to assess its ultimate impact, but noted that firm wage growth left "upside risks to the inflation outlook" that were the "key factor shaping the policy outlook".
Banking sector risks, the minutes indicated, "were likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring and inflation", but the overall impact was deemed "highly uncertain".
"The main takeaway is that the central bank anticipates a mild recession in late 2023 and that the soft landing window seems to be closing quickly," said Nancy Davis, founder of Quadratic Capital Management. "Fed officials discussed a pause in the rate hike cycle in March, and while that didn't occur as the Fed ended up raising rates in March, there is a chance that the Fed pauses at the next meeting given the larger-than-expected deceleration in CPI data and the recent banking stress."
3. -- Delta Earnings On Deck As Carriers Warn on Surging Costs
Delta Air Lines (DAL) shares edged higher in pre-market trading ahead of the carrier's first quarter after the closing bell.
Analysts expect Delta to post an adjusted bottom line of 30 cents per share, a big profit swing from the $1.23 loss posted last year and largely within the carrier's own forecast of between 15 and 20 cents per share. Group revenues are likely to rise 28% from last year to just under $12 billion.
Margin pressures, however, remain significant as jet fuel prices rise alongside the recent run-up in crude and new pilot an staffing costs eat into the industry's bottom line. Rival American Airlines (AAL) cautioned Wednesday that first quarter profits would come in lower than forecast, a view echoed earlier this month by United Airlines (UAL).
Delta Air Lines shares were marked 0.77% higher in pre-market trading to indicate an opening bell price of $34.00 each.
4. -- Harley Davidson Shares Slide As CFO Goetter Leaves To Join Hasbro
Harley-Davidson (HOG) shares slumped lower in pre-market trading after the iconic motorcycle maker said CFO Gina Goetter will leave the group to take a similar role at Hasbro (HAS).
Goetter joined Harley Davidson in 2020, following a stint at Tyson Foods (TSN) and a long career at General Mills (GIS). CEO Jochen Zeitz said the group would launch a formal search for her replacement, adding that treasurer David Viney would act as interim CFO during that process.
"I am confident that (Goetter's) skills and qualifications will complement Hasbro’s existing leadership team as we execute against our Blueprint 2.0 strategy, which is focused on bringing our brands to life for consumers of all ages, maximizing the value of our IP, and creating long-term shareholder value,” said Hasbro CEO Chris Cocks.
Harley-Davidson posted better-than-expected fourth quarter earnings of 28 cents per share in early February, with sales rising 9% to $4.89 billion for the full 2022 year.
Harley Davidson shares were marked 4% lower in pre-market trading to indicate an opening bell price of $35.87 each. Hasbro shares rose 1.75% to $52.20 each.
5. -- SoftBank Reportedly Preparing To Dump Major Stake in Alibaba
Alibaba Group Holding (BABAF) shares moved firmly lower following a report that Japan's SoftBank is preparing to sell most of its stake in the China-based e-commerce giant.
The Financial Times of London reported that SoftBank, which has already shifted around $7.2 billion in Alibaba shares through derivative contracts, is looking to reduce its stake from 15% to around 3.8%. SoftBank slashed its stake in Alibaba last year, as well, as it raised cash to cover a $60 billion loss in its tech-focused Vision Fund.
Late last month, Alibaba unveiled plans to split into six separate companies, focused on e-commerce, cloud computing and media, with each division possibly pursuing individual IPOs or funding "when they are ready," according to group Chief Executive Daniel Zhang.
Zhang is expected to lead the cloud division, Alibaba's fastest-growing business, while maintaining control of the broader holding company.
Alibaba's Hong Kong listed shares fell 5.9% to $93.84 each on Wednesday, while its U.S.-listed shares were marked 1.6% higher in pre-market trading to indicate an opening bell price of $93.94 each.
