Stock Market Update

The S&P 500 futures are up 22 points and are trading 0.4% above fair value, the Nasdaq 100 futures are up 93 points and are trading 0.4% above fair value, and the Dow Jones Industrial Average futures are up 80 points and are trading 0.2% above fair value.

There's a positive bias in early trading. Pre-open gains in the mega cap stocks, which drove index gains last week, have supported the upside bias. 

Treasuries have experienced early selling, leading the 10-yr yield to move three basis points higher than Friday to 4.51%. The 2-yr yield is up two basis points to 4.28%.

Market participants are reacting to some comments from Fed officials. Fed Governor Bowman (FOMC voter) said "Assuming the economy evolves as I expect, I think that inflation will slow further this year" and Fed Governor Waller (FOMC voter) said he favors holding rates steady, adding that his "baseline view is that any imposition of tariffs will only modestly increase prices and in a non-persistent manner."

In corporate news:

• Broadcom (AVGO 232.82, -0.22, -0.1%): interested in Intel's (INTC) chip design unit
• TSMC (TSM 205.10, +1.20, +0.6%): is interested in Intel (INTC) factories, according to WSJ
• Amazon (AMZN 229.49, +0.81, +0.4%): North Carolina warehouse workers reject union offer, according to CNBC
• Tesla (TSLA 358.06, +2.22, +0.6%): China could delay Tesla's approval for its autonomous driving technology, according to FT
• Constellation Brands (STZ 174.50, +11.56, +7.1%): Berkshire Hathaway (Warren Buffett) discloses updated portfolio positions in 13F filing: New STZ position (5.62 mln shares)

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended Tuesday on a mixed note. Japan's Nikkei: +0.3%, Hong Kong's Hang Seng: +1.6%, China's Shanghai Composite: -0.9%, India's Sensex: UNCH, South Korea's Kospi: +0.6%, Australia's ASX All Ordinaries: -0.6%.
  • In economic data:
    • South Korea's January trade deficit $1.89 bln (last surplus of $400 mln). January Exports -10.2% yr/yr (expected -10.3%; last 6.6%) and Imports -6.4% yr/yr, as expected (last 3.3%)
    • Hong Kong's January Unemployment Rate 3.1% (last 3.1%)
  • In news:
    • China's National Development Reform Commission signaled that policies to support private businesses will be implemented.
    • Continued selling in Japanese debt drove the country's 10-yr yield to its highest level since late 2009.
    • The latest weakness followed Sunday night's release of above-consensus GDP for Q4 (0.7%; expected 0.3%; last 0.4%).
    • The Reserve Bank of Australia lowered its cash rate by 25 basis points to 4.10%, as expected, making for the first rate cut since 2020.
    • Governor Bullock warned that the market is overestimating the likelihood of additional cuts.
• Major European indices trade near their flat lines while Italy's MIB (+0.6%) outperforms with banks contributing to the relative strength. STOXX Europe 600: +0.1%, Germany's DAX: UNCH, U.K.'s FTSE 100: +0.1%, France's CAC 40: +0.1%, Italy's FTSE MIB: +0.6%, Spain's IBEX 35: +0.5%.
  • In economic data:
    • Eurozone's February ZEW Economic Sentiment 24.2 (expected 24.3; last 18.0)
    • Germany's February ZEW Economic Sentiment 26.0 (expected 19.9; last 10.3) and ZEW Current Conditions -88.5 (expected -90.0; last -90.4)
    • U.K.'s December three-month employment change 107,000 (last 35,000) and December Unemployment Rate 4.4% (expected 4.5%; last 4.4%). December Average Earnings Index + Bonus 6.0% yr/yr (expected 5.9%; last 5.5%). Q3 Labour Productivity -2.4% (expected -0.8%; last -0.9%)
    • France's January CPI 0.1% m/m (expected -0.1%; last 0.2%); 1.7% yr/yr (expected 1.4%; last 1.3%)
    • Swiss Q4 Industrial Production 2.3% yr/yr (last 3.1%)
  • In news:
    • The U.K. reported above-consensus earnings growth for December (6.0%; expected 5.9%), limiting hopes for another rate cut from the Bank of England.
    • The European Central Bank, however, is expected to cut rates at the next three meetings.
    • Airbus confirmed that deliveries of its A350 freight craft will be delayed by up to a year due to production issues.