MARKET WRAPS
Watch For:
Monthly House Price Index for February; Johnson Redbook Retail Sales Index; S&P CoreLogic Case-Shiller Home Price Index for February; New Home Sales for March; Richmond Fed Business Activity Survey for April; Conference Board Consumer Confidence for April; Money Stock Measures for March; Annual Shareholder meetings for Coca-Cola, Citigroup, Canada National Railway, Wells Fargo; Earnings from Verizon, General Motor, McDonald's, UPS, Visa, Alphabet, Microsoft, General Electric, Pepsico, Raytheon Technologies, Mondelez
Today's Top Headlines/Must Reads:
- A Recession May Be Coming. Or Not. Buy Stocks Anyway.
- Sliding Diesel Prices Signal Warning for U.S. Economy
- Bitcoin Is Falling. Liquidity Concerns Are Rising.
- The U.S. Wants a Rare-Earths Supply Chain. Here's Why It Won't Come Easily.
- UBS Attracts Customers Ahead of Credit Suisse Integration
- Google Ad Revenue Expected to Drop for Second Straight Quarter
Follow WSJ market coverage here
Opening Call:
Stock futures fell on Tuesday as traders waited for big-tech earnings and warily eyed fresh tremors in regional banking stocks.
"Caution is in the air ahead of the results from big tech rolling in, and the latest snapshot of U.S. consumer confidence," Hargreaves Lansdown said.
Investors were also wary of looming economic data that may color the Federal Reserve's thinking ahead of its interest rate decision in eight days time.
"Investors are assessing the extent to which nervousness about what may lie ahead for economies is holding back marketing budgets and delaying purchases by shoppers," Hargreaves said.
Anxiety about the banking sector continued to lurk after shares of First Republic Bank fell 20% on news of huge deposit flight.
In Europe, the Stoxx 600 index fell 0.5% led by losses for banks. UBS fell around 3% after it reported earnings. Spain's Santander also dropped 4% after posting results.
Asian indexes were mostly lower. The Hang Seng index fell 2% while the Shanghai Composite index edged down 0.3%. Japan's Nikkei 225 index inched 0.1% higher.
Stocks to Watch
Aaron's beat first-quarter earnings estimates and raised its guidance for this year. Shares rose 15% in after-hours trading.
Cadence Design Systems reported a 13% increase in first-quarter revenue, at the top of its guidance range forecast in January. Shares fell 6% in after-hours trading.
Cleveland-Cliffs reported a first-quarter loss of 11 cents, a reversal from year-earlier profit of $1.50. Shares fell 2%.
Tesla shares fell 2% premarket in heavy trading as investors continued to assess the impact of recent price cuts.
Whirlpool reported better-than-expected revenue and adjusted earnings per-share but swung to a loss. Shares 4% in after-hours trading.
Forex:
The dollar edged higher but could turn lower if there is fresh instability in banking stocks after the latest First Republic Bank share slide.
"Dovish" bets on the Fed cutting interest rates later this year may gather momentum if banking stocks falter, ING said.
Despite the dollar's safe-haven status, it could weaken against European currencies backed by central banks with restrictive policies and without excessively high sensitivity to sentiment such as the Swiss franc, euro and sterling, it added.
Read Prospect of Fed Ending Rate Rises Looks Negative For Dollar, UBS GWM Say
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The euro should trade steady against the dollar ahead of the Fed and ECB's interest rate decisions on May 3 and 4 respectively, Commerzbank said.
At present the euro seems to be the market's preferred currency as the ECB is perceived as more restrictive while the Fed may be nearing the end of its rate rise cycle and the debt ceiling along with bank concerns are headwinds for the dollar, Commerzbank added.
"That means quite a lot would have to happen for the market to change its view ahead of the central bank meetings so that it could come to significant adjustments EUR/USD."
Bonds:
Markets keenly await the next inflation releases from the U.S. and Europe to make up their mind about the next policy steps, ING said.
"In this context, the appetite to chase yields above the top of their recent ranges is likely to be limited," it said, adding that the top of recent ranges is around 3.6% for 10-year Treasury yields and 2.5% for 10-year Bund yields.
Inflation releases are more so important because they will be followed by Fed and ECB policy meetings next week, ING said.
"Lack of risk appetite also means a limited capacity to fade sudden market moves, and both Fed and ECB officials have encouraged the recent hawkish repricing higher in yields."
Energy:
Oil prices were directionless in Europe as investors awaited clearer signals on Chinese demand.
Analysts are hoping China's upcoming labor-day holiday could offer clues to the strength of Chinese consumers' demand for travel, which would be key for oil demand.
Holiday bookings for international trips during the period are up 157% so far, according to data from a major Chinese travel firm, cited by Reuters.
Metals:
Base metals were mixed in London trading, with gold slightly higher, as uncertainty about the macroeconomic environment shadowed markets.
"The macro mood has improved after yesterday's U.S. dollar drop and crude oil's mild recovery," Peak Trading Research said.
It added that with this week being light on data, investors will be looking ahead to Thursday's U.S. GDP figures and Friday's personal consumption expenditures inflation indicator.
"A lower PCE inflation print would spark a risk-on rally across the commodity complex ahead of next week's Fed policy decision," Peak said.
TODAY'S TOP HEADLINES
UBS Attracts Customers Ahead of Credit Suisse Integration
UBS Group AG reported strong customer inflows as it prepares to swallow rival Credit Suisse Group AG in the first banking megamerger for years.
Switzerland's largest bank said the world's wealthy flocked to it in the quarter, as many sought shelter from the troubles at Credit Suisse. It said its wealth management arm gained $28 billion in net new money-including $7 billion in the last 10 days of March-after UBS said it would buy Credit Suisse.
Google Ad Revenue Expected to Drop for Second Straight Quarter
Google is expected to report a second straight drop in advertising revenue, extending a rare decline as the company battles economic uncertainty and tries to capitalize on recent advances in artificial intelligence.
Alphabet Inc., Google's parent company, is expected to report $53.7 billion in ad revenue for the first quarter, a drop of 1.8% from the same period last year, according to the consensus estimate from analysts surveyed by FactSet. That would be the third drop in ad sales since Google became a public company in 2004, and the second consecutive quarterly decline following a 3.6% drop in the fourth quarter.
Bed Bath & Beyond Took Out Emergency Loan on Eve of Bankruptcy
Bed Bath & Beyond Inc. faced a much worse financial situation ahead of its bankruptcy filing than is typical for companies facing an imminent chapter 11.The home-goods retailer sought a $54 million emergency loan on Friday from all of its lenders to meet payroll and other expenses, court papers show, before filing for bankruptcy protection on Sunday. It then sought and received approval in bankruptcy court on Monday to borrow an additional $40 million from lender Sixth Street Partners to help meet the costs of the company's planned going-out-of-business sale while it looks for a last-minute buyer.
Bed Bath & Beyond's Demise Creates Fresh Opportunities, Retail Landlords Say
Hundreds of shopping centers across the U.S. are poised to lose their anchor tenant in the coming months after Bed Bath & Beyond Inc. filed for bankruptcy and announced plans to eventually close its remaining stores.
While property owners will have to absorb additional costs to lure replacement tenants, and some might still struggle to fill large vacated spaces, many landlords say they aren't worried.
Amazon's Satellite-Internet Ambitions Move Closer to Reality
Amazon.com Inc.'s satellite-powered internet business is closer to getting off the ground.
The company recently unveiled the antennas that future subscribers of its Project Kuiper internet service would need to communicate with the satellites it plans to start mass producing this year. It isn't clear when the first of those satellites will be blasted into orbit, but Amazon has said it expects to begin delivering broadband connections for some customers by the end of 2024.
For Microsoft, AI is the future, but the present is cloudy
Expect Microsoft Corp. executives to discuss artificial intelligence a lot when they reveal recent financial results Tuesday afternoon, but the more important disclosure will be tucked away.
Microsoft MSFT has received a lot of buzz for incorporating ChatGPT into its products after another big-money investment into the generative AI product's parent company, OpenAI. While the long-term prospects for AI-influenced products has excited investors, Microsoft will likely take months or even years to show the effects of that effort.
Chinese Banks Pressured to Lower Deposit Rates, Report Says
Chinese banks cut deposit interest rates in response to narrowing net interest margins as Beijing continued to pressure down financing costs to help the economy recover, the state-run Security Daily reported Tuesday.
In their annual earnings reports, seven listed Chinese banks reported net interest margins-the difference in lending and borrowing rates-below 1.8%, the level they are supposed to maintain according to the official regulations taking effect this month, said the newspaper.
A Recession May Be Coming. Or Not. Buy Stocks Anyway.
With recession worries mounting, it may be time for investors to load up on stocks. Yes, you read that correctly.
(MORE TO FOLLOW) Dow Jones Newswires
04-25-23 0619ET
