Market Watch:- Dow futures jumped 180 points, S&P 500 futures 24 points, and Nasdaq 100 futures 90 points, all 0.5% higher.
Wall Street is expected to see a positive month and quarter, but GameStop experienced a slump due to weak holiday quarter earnings, the Japanese yen reached its lowest level since 1990, and the crude market weakened.
GameStop’s weak earnings
GameStop’s stock fell 15% premarket after the video game retailer reported disappointing fourth-quarter earnings amid weak holiday sales. Net sales fell by about 24% in Q4 from the previous year, driven by a nearly 30% slump in its software business. The company responded by cutting an unspecified number of jobs to reduce costs. Wedbush Securities analyst Michael Pachter said that an increasing mix of digital downloads is hurting physical retail, and revenues are highly unlikely to rebound unless management finds a way to drive store traffic. The company’s stock fell 15% premarket, adding to the near 12% losses year-to-date.
Yen slips to 1990’s levels
The Bank of Japan raised interest rates for the first time since 2007, but it has not significantly supported the yen, which has fallen to its weakest level against the U.S. dollar since 1990. The yen is the lowest-yielding G10 currency, making it ideal for carry trades. Investors who had trimmed such trades before the BOJ meeting have been rebuilding their positions. As the BOJ is unlikely to hike again soon, officials have resorted to intervention threats to try and stem the yen’s fall. Japan’s finance minister warned of “decisive steps” to tame “disorderly” moves, echoing his comments before the central bank intervened in late 2022 to prop up the yen.
crypto-related stocks short seller faces heavy losses
Bitcoin has experienced a significant recovery from its 2022 lows, resulting in significant losses for short sellers of crypto-related stocks, according to data from S3 Partners. The cryptocurrency has seen a nearly five-fold recovery, gaining over 60% this year and recently reaching record highs of over $73,000.
The gains were largely driven by the U.S. approval of exchange-traded funds that track the token’s price. However, this recovery has led to nearly $1.9 billion in mark-to-market losses for short sellers. The total short interest in crypto-related stocks is $10.7 billion, with MicroStrategy and Coinbase Global accounting for 84% of this. Despite Bitcoin’s bullish run, the total short interest in the sector has increased by $3.67 billion to $10.71 billion in 2024, indicating continued skepticism or strategic hedging by short sellers.
Economic Calendar
7:00 MBA Mortgage Applications
10:30 EIA Petroleum Inventories
11:00 Survey of Business Uncertainty
11:30 Results of $28B, 2-Year FRN Auction
1:00 PM Results of $43B, 7-Year Note Auction
6:00 PM Fed’s Waller Speech
Other Key Events:
- Enterprise Connect Conference 2024, 3/25-3/28, in Orlando FL
- Optical Fiber Communication Conference, 3/24-3/26, in San Diego, CA
- JP Morgan 13th Annual NAPA Valley Biotech Forum, 3/26-3/28, in San Francisco, CA
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U.S. inflation data for February is expected to provide insights into the future direction of Federal Reserve monetary policy. The overall consumer price index (CPI) is expected to match the previous month’s pace of 3.1% annually, with the core CPI expected to slow to 3.7% from 3.9% in January. However, the month-on-month gauge is expected to shed light on price gains momentum.
Fed officials have made cooling inflation the main objective of interest rate hikes, which have brought borrowing costs to over two-decade highs. They suggest cuts may be coming later this year, but need more evidence that price growth is sustainablely easing back down to their 2% annualized target. Analysts at ING believe inflation is likely too hot for comfort.
U.S. inflation data for February is expected to provide insights into the future direction of Federal Reserve monetary policy. The overall consumer price index (CPI) is expected to match the previous month’s pace of 3.1% annually, with the core CPI expected to slow to 3.7% from 3.9% in January. However, the month-on-month gauge is expected to shed light on price gains momentum.
Fed officials have made cooling inflation the main objective of interest rate hikes, which have brought borrowing costs to over two-decade highs. They suggest cuts may be coming later this year, but need more evidence that price growth is sustainablely easing back down to their 2% annualized target. Analysts at ING believe inflation is likely too hot for comfort.