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Briefing.com Summary:
*Alphabet, Amazon, Meta Platforms, and Microsoft report their results after today's close.
*Oil prices are up, along with concerns about an extended closure of the Strait of Hormuz.
*The FOMC decision today is a non-event, but the press conference won't be.
Every quarter there is at least one day when the newsflow is off the charts. This is that day.
Earnings results... an FOMC decision and press conference... multiple economic releases... and geopolitical tumult driving up oil prices—that is a broad overview of what market participants are either digesting or contemplating this morning.
Fittingly, we have an equity futures market with a mixed disposition.
The S&P 500 futures are flat and are trading in-line with fair value, the Nasdaq 100 futures are up 73 points and are trading 0.3% above fair value, and the Dow Jones Industrial Average futures are up 13 points and are trading fractionally above fair value.
The easiest place to start is the Nasdaq 100 futures. They are outperforming thanks to the solid pre-market gains registered by Seagate Technology (STX), Starbucks (SBUX), and T-Mobile (TMUS) following their earnings reports. Nonetheless, buyers are holding back somewhat in general due to rising Treasury yields and the specter of earnings results after the close from Microsoft (MSFT), Amazon.com (AMZN), Meta Platforms (META), and Alphabet (GOOG/GOOGL).
Yields are up in conjunction with oil prices, which are responding to a Wall Street Journal report that President Trump is telling aides to prepare for an extended blockade of the Strait of Hormuz and his added assertion that Iran "better get smart soon" or it will be no more "Mr. Nice Guy."
WTI crude futures are up 4.3% to $104.18/bbl. The 2-yr note yield is up three basis points to 3.87%, and the 10-yr note yield is up two basis points to 4.37%.
A batch of solid economic data has also factored into the bump in Treasury yields.
- Housing starts increased 10.8% month-over-month in March to a seasonally adjusted annual rate of 1.502 million units. Building permits, meanwhile, declined 10.8% month-over-month in March to a seasonally adjusted annual rate of 1.372 million units.
- The key takeaway from the report is that there was broad-based strength in starts by region but also broad-based weakness in permits by region. The latter is the better indicator for the impact of the Iran war and the uncertainty it has created because permits are a leading indicator.
- Durable goods orders increased 0.8% month-over-month in March (Briefing.com consensus: 0.5%) following an upwardly revised 1.2% decline (from -1.4%) in February. Excluding transportation, orders were up 0.9% month-over-month (Briefing.com consensus: 0.6%) following an upwardly revised 1.2% increase (from 0.8%) in February.
- The key takeaway from the report is that there was a big jump (+3.3%) in new orders for nondefense capital goods excluding aircraft. This is a proxy for business spending, and it is believed to reflect in part the pickup in capital expenditures for AI initiatives.
- The Advance Intl. Trade in Goods deficit was $87.9 billion in March versus $83.5 billion in February. Advance Wholesale Inventories were up 1.4% following a 0.9% increase in February. Advance Retail Inventories jumped 0.7% in March following a 0.3% increase in February.
- The key takeaway from the report is that the uptick in inventories should provide a boost to Q1 GDP.
This data will be added to the mix of data under consideration by the FOMC, which is widely expected to leave the target range for the fed funds rate unchanged today at 3.50-3.75%. It also won't be a surprise to hear Fed Chair Powell at his press conference imply that the jump in oil prices is contributing to a prevailing wait-and-see mindset among Fed officials with respect to the next adjustment in the policy rate.
If it weren't for the understanding that this is presumably the last press conference Mr. Powell will hold as Fed chair, today's FOMC shindig might have been a snoozer. There is some intrigue surrounding it, however, as participants are waiting anxiously to hear if Mr. Powell plans to step down from the Board of Governors as well when his term as Fed chair ends in May.
It is just one more piece of news headed the market's way in a busy and demanding day of news.
