Five things you need to know before the market opens on Wednesday March 8:
1. -- Stock Futures Steady After Hawkish Powell Wipeout
U.S. equity futures steadied Wednesday, while the dollar extended gains against its global peers and Treasury yields tested multi-month highs, as investors around the world re-set their forecasts for Federal Reserve rate hikes following a surprisingly hawkish statement from Chairman Jerome Powell.
Speaking to lawmakers on the Senate Banking Committee yesterday, with a follow-up appearance slated for later this morning in front of the House Financial Services Committee, Powell said the need for higher, faster and longer-lasting rate hikes had intensified following a stronger-than-expected series of growth and inflation data over the first two months of the year.
In prepared remarks that ignited the biggest sell-off on Wall Street it two weeks, Powell warned the larger moves might be necessary to tame the stubborn pace of inflation in the world's largest economy, adding that "if the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes," Powell said.
Investors read that as suggesting a greater chance of a 50 basis point move at the Fed's next meeting beginning on March 22, with the odds of that hike surging to around 72%, based on data from the CME Group's FedWatch.
Markets are also pricing in the "higher for longer" aspect of Powell's assessment, with bets on a terminal Fed Funds rate that's north of 5.5% in July rising to around 80% compared to less that 5% at the beginning of February.
The higher rate forecasts lifted 2-year Treasury note yields to a fresh 2007 overnight high of 5.081%, while 10-year notes eased to 3.985%, pegging the difference at around 108.5 basis points - the steepest since August of 1981.
The U.S. dollar index, meanwhile, climbed to a new three-month high of 105.721 against its global peers.
Markets are now focused on the Labor Department's February jobs report, scheduled for Friday at 8:30 am Eastern time, which is expected to show that the economy added around 205,000 new positions last month, with average hourly earnings rising 4.8% on the year -- and 0.3% from January -- with a headline unemployment reading of 3.4%.
Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500, which slumped 1.53% yesterday, were indicating a 7 point opening bell gain while those linked to the Dow Jones Industrial Average, which tumbled 575 points, were indicating a 44 point bump. The tech-focused Nasdaq is looking at a 30 point gain.
In overseas markets, Europe's Stoxx 600 fell 0.17% in early Frankfurt trading while Britain's FTSE 100 was marked 0.27% lower in London.
Overnight in Asia, the region-wide MSCI ex-Japan index fell 1.38% as the dollar surged in last night's Wall Street rout while the Nikkei 225 ended 0.48% higher in Tokyo as the yen softened and export-focused stocks rallied.
2. -- Elon Musk, Professional Defendant
The Federal Trade Commission stepped-up its investigation into Twitter late Tuesday with reports suggesting its plans to depose owner Elon Musk, adding to the growing list of legal entanglements for the world's richest man.
The FTC wants Musk, who purchased the social media group late last year for around $44 billion, to hand over documents related to personnel decisions, journalists' access to company records and the launch of its Twitter Blue subscription service.
Musk called the probe a "a shameful case of weaponization of a government agency for political purposes and suppression of the truth!", while the FTC defended its actions on the basis that it's attempting to ensure Twitter's compliance with a May 2022 Consent Order related to data privacy.
"It should come as no surprise that career staff at the commission are conducting a rigorous investigation into Twitter’s compliance with a consent order that came into effect long before Mr. Musk purchased the company,” FTC spokesperson Douglas Farrar said in a statement to media outlets.
3. -- Boeing Big In Japan?
Boeing BA shares edged higher in pre-market trading following a report from Bloomberg that suggested the planemaker is close to agreeing an order for 737 MAX jets to Japan Airlines.
Bloomberg said the deal would comprise at least 20 of the group's workhorse MAX aircraft, including MAX 8 and MAX 10 versions, adding that Japan Airlines opted for the Boeing planes over a competing offer from European rival Airbus.
Last month, Boeing signed a $34 billion aircraft deal with Air India that would see the region's largest carrier purchase at least 20 787-9 Dreamliners, with an option for 20 more, in what President Joe Biden described as an "historic agreement" that would support more than a million American jobs over 44 states.
Boeing shares were marked 0.52% higher in pre-market trading to indicate an opening bell price of $209.00 each.
4. -- Adidas Sees Red After Going West
Adidas shares slumped lower in German trading Wednesday after the world's second-largest sportwear group nearly halved its 2022 dividend and warned that splitting with rapper and artist Kanye West could result in the company's first annual loss in three decades.
Adidas, severed its relationship with West -- also known as Yeezy or Ye -- late last year following a series of anti-Semitic comments made through his verified social media accounts, said it would recommend a dividend of just €0.70, down from the €3.30 payout in 2021 amid what new CEO Bjorn Gulden called a 'transition year' for the Nike (NKE) rival.
Last month, Adidas said overall sales are likely to decline by a high single digit" percentage rate this year, compared to a consensus forecast of a 4% gain, as key markets in China continue to struggle and consumer spending power fades alongside higher inflation rates in the U.S. and Europe.
Adidas shares were marked 2.1% lower in Frankfurt trading and changing hands at €141.22 each.
5. -- Buffett Bets More On 'Black Gold'
Occidental Petroleum (OXY) shares jumped higher in pre-market trading after billionaire investor Warren Buffett boosted his stake in the group to around 22.2% following a softer-than-expected fourth quarter earnings report.
Securities and Exchange Commission filings show that Buffett's Berkshire Hathaway (BRK.A) investment vehicle added 5.8 million shares of Occidental at cost of around $355 million last week, taking its tally to around 200.2 million shares, or just over a fifth of the Houston-based oil major.
Late last month, the Permian-focused driller said capital spending would rise to around $6.2 billion, a 37.8% increase from last year, with low-carbon project spending possibly rising to as high as $600 million. The group also boosted its annual dividend by 38% and unveiled plans for a $3 billion share buyback
Occidental Petroleum shares were marked 2.7% higher in pre-market trading to indicate an opening bell price of $62.50 each.
