Stock Market Update

The S&P 500 futures are down seven points and are trading 0.2% below fair value, the Nasdaq 100 futures are down 38 points and are trading 0.2% below fair value, and the Dow Jones Industrial Average futures are down 117 points and are trading 0.4% below fair value.

Stock futures are slightly lower after yesterday's gains left the S&P 500 at a new all-time high. The tone may shift, though, after the release of the February employment report at 8:30 ET. Treasury yields are lower in front of the report. The 2-yr note yield is down two basis points to 4.49% and the 10-yr note yield is down two basis points to 4.07%.

Market participants are digesting a batch of earnings news that received mostly negative responses. Broadcom (AVGO), Costco (COST), Marvell (MRVL), and MongoDB (MDB) are all lower ahead of the open after reporting quarterly results. 

Separately, WTI crude oil futures are down 0.6% to $78.44/bbl.

In corporate news:

• Broadcom (AVGO 1383.98, -23.03, -1.6%): beats by $0.62, beats on revs; reaffirms FY24 revs guidance
• Costco (COST 753.00, -32.59, -4.2%): beats by $0.09, misses on revs, adjusted comparable sales of +5.8%; says it expects FY24 CapEx of $4.4-4.6 bln
• Marvell (MRVL 80.44, -4.70, -5.5%): reports EPS in-line, revs in-line; guides Q1 EPS below consensus, revs below consensus; announces $3 billion stock repurchase authorization
• Gap (GPS 20.86, +1.53, +7.9%): beats by $0.26, beats on revs; guides Q1 revs above consensus; guides FY25 revs in-line
• DocuSign (DOCU 58.49, +4.93, +9.2%): beats by $0.11, beats on revs; guides Q1 revs above consensus; guides FY25 revs above consensus
• MongoDB (MDB 376.35, -35.66, -8.7%): beats by $0.40, beats on revs; guides Q1 EPS below consensus, revs below consensus; guides FY25 EPS below consensus, revs below consensus
• Victoria's Secret (VSCO 17.64, -0.37, -2.1%): downgraded to Underperform from Buy at Bank of America
• Carvana (CVNA 84.10, +4.63, +5.8%): upgraded to Sector Perform from Underperform at RBC Capital Mkts
• UBS (UBS 31.05, +1.24, +4.2%): upgraded to Overweight from Equal Weight at Morgan Stanley
• Eli Lilly (LLY 776.50, -3.66, -0.5%): FDA to convene Advisory Committee Meeting to discuss the TRAILBLAZER-ALZ 2 study of donanemab; this action does not result in a change to Lilly's 2024 financial guidance

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended the week on a mostly higher note while markets in India were closed for a holiday. Japan's Nikkei: +0.2% (-0.6% for the week), Hong Kong's Hang Seng: +0.8% (-1.4% for the week), China's Shanghai Composite: +0.6% (+0.6% for the week), India's Sensex: HOLIDAY (+0.4% for the week), South Korea's Kospi: +1.2% (+1.4% for the week), Australia's ASX All Ordinaries: +1.0% (+1.3% for the week).
  • In economic data:
    • Japan's January Household Spending -2.1% m/m (expected 0.4%; last -0.9%); -6.3% yr/yr (expected -4.1%; last -2.5%). January adjusted Current Account surplus JPY2.73 trln (expected surplus of JPY2.07 trln; last surplus of JPY1.81 trln). February Bank Lending 3.0% yr/yr (expected 3.2%; last 3.1%). December Economy Watchers Current Index 51.3 (expected 50.3; last 49.5). January Leading Index 109.9 (expected 109.7; last 110.5) and Coincident Indicator -5.8% m/m (last 1.3%)
    • South Korea's January Current Account surplus $3.05 bln (last surplus of $7.41 bln)
  • In news:
    • There were growing expectations that the Bank of Japan will announce a rate hike at the conclusion of its two-day policy meeting on March 19 while BoJ Governor Ueda said that the chance of reaching the target is growing little by little.
    • Passenger vehicle sales in China were down 46% m/m in February, though a rebound is expected since new models are being launched after the Lunar New Year.
• Major European indices are on track for a subdued finish to the week. STOXX Europe 600: +0.1% (+1.2% week-to-date), Germany's DAX: -0.3% (+0.5% week-to-date), U.K.'s FTSE 100: -0.5% (-0.3% week-to-date), France's CAC 40: +0.1% (+1.2% week-to-date), Italy's FTSE MIB: UNCH (+1.5% week-to-date), Spain's IBEX 35: -0.1% (+2.4% week-to-date).
  • In economic data:
    • Eurozone's Q4 GDP 0.0% qtr/qtr, as expected (last -0.1%); 0.1% yr/yr, as expected (last 0.1%). Q4 Employment Change 0.3% qtr/qtr, as expected (last 0.2%); 1.2% yr/yr (expected 1.3%; last 1.3%)
    • Germany's January Industrial Production 1.0% m/m (expected 0.5%; last -2.0%); -5.4% yr/yr (last -3.5%). January PPI 0.2% m/m (expected 0.1%; last -0.8%); -4.4% yr/yr (expected -6.6%; last -5.1%)
    • France's January trade deficit EUR7.4 bln (expected deficit of EUR6.5 bln; last deficit of EUR6.4 bln). January Current Account deficit EUR1.00 bln (last deficit of EUR200 mln)
    • Italy's January PPI -2.5% m/m (last -1.0%); -14.0% yr/yr (last -16.0%)
    • Spain's January Industrial Production -0.6% yr/yr (last -1.4%)
  • In news:
    • The market continues expecting that the European Central Bank will begin cutting rates sometime between April and June. To that end, policymaker Nagel said that a rate cut could come before the summer break, but it would be dependent on data.
    • Other ECB policymakers have made similar comments after yesterday's decision to hold the interest corridor steady.