Market Watch:- Dow futures contract lost 95 points or 0.2%, S&P 500 futures dropped 34 points or 0.7%, and Nasdaq 100 futures fell 211 points or 1.2%.
Stock futures retreat amid Meta Platforms results, IBM’s mixed Q1 earnings, and HashiCorp acquisition. US economy slows in early 2024, but remains resilient despite high interest rates and inflation.
Meta Slips
Meta Platforms shares dropped by over 15% in extended hours U.S. trading, erasing billions of dollars from its market value. CEO Mark Zuckerberg outlined AI spending plans, aiming to accelerate its efforts to become the leading AI company. Meta’s projected annual capital expenditures increased to $40 billion from $37 billion last year. This shift is expected to impact Meta’s future growth.
IBM’s HashiCorp Deal
IBM reported mixed first-quarter results and announced an agreement to acquire cloud software provider HashiCorp for $6.4 billion. The company posted EPS of $1.68, beating consensus estimates, but revenue was slightly below expectations. IBM plans to buy HashiCorp for $35 per share in cash.
US economic growth
US economic growth is expected to slow in the first quarter due to a resilient labor market and strong consumer spending. The Commerce Department’s GDP reading is expected to slow to 2.5% in the first three months of the year, indicating the US remains more robust than other advanced economies despite inflation and elevated interest rates. The GDP print will precede the release of the personal consumption expenditures index, which could impact the Fed’s decision to cut rates.
Economic Calendar
- 8:30 GDP
- 8:30 International Trade in Goods (Advance)
- 8:30 Initial Jobless Claims
- 8:30 Retail Inventories (Advance)
- 8:30 Wholesale Inventories (Advance)
- 10:00 Pending Home Sales
- 10:30 EIA Natural Gas Inventory
- 11:00 Kansas City Fed Mfg Survey
- 1:00 PM Results of $44B, 7-Year Note Auction
- 4:30 PM Fed Balance Sheet
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MFitch Ratings has downgraded China’s credit rating outlook to “Negative” from “Stable” due to concerns over growing public debt and slowing growth in the world’s second-largest economy. The agency affirmed China’s rating at A+, citing increasing risks to China’s public finance outlook. Concerns over slowing economic growth have grown in recent months, with Fitch expecting gross domestic product growth to fall to 4.5% in 2024.
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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.