Morning in New York: at the intersection of inflation and geopolitics

Daily review and forecast of events on the U.S. stock market from Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

The focus of investors' attention this Friday will be the March consumer inflation statistics (CPI). It is expected that the data will for the first time reflect the consequences of the U.S.-Iran conflict and the oil crisis provoked by it. This release may have a significant impact on market sentiment and on the Fed Funds rate guidance.

The consensus for the overall CPI suggests 0.9% mom growth after 0.3% in February. At the same time, individual forecasts of Wall Street analysts diverge from +0.7% to +1.5% mom. The wide spread is explained by the expected jump in fuel prices in the range of 10-11% m/m. Freedom Broker's calculation model suggests a 0.94% m/m increase in the overall CPI, which is close to the market median.

The Core CPI consensus expects 0.3% m/m growth after 0.2% in Ma, Freedom Broker's benchmark: +0.27% m/m. These forecasts take into account a 0.8% m/m increase in transportation prices due to expensive gasoline. Other components of inflation continue to show moderate dynamics. The market reaction to the publication of inflation data, if there are no significant surprises in the underlying components of the report, may be moderate.

Also, traders will have to evaluate the preliminary data of the consumer sentiment index from the University of Michigan for April. The publication is important for guidance on further economic growth in the context of high gasoline prices. The consensus and our forecast coincide: 51.5 points vs. 53.3 a month earlier.

The central geopolitical event of the upcoming weekend will be the talks between Washington and Tehran in Islamabad. The U.S. delegation will be led by Vice President J.D. Vance and also includes Donald Trump's special envoy Steve Whitkoff. The situation ahead of the bilateral meeting remains tense. Iran accuses the U.S. of violating the ceasefire agreement, pointing to continued Israeli strikes on Lebanon, the drone incident and the refusal to recognize the right to enrich uranium. A successful start to the dialog will support demand for risky assets, while any signs of a breakdown in negotiations will turn oil to $100 and higher, triggering a correction on stock markets.

Futures on S&P 500 show about zero dynamics. We assess the balance of risks for the upcoming trading session as neutral with increased volatility.

- Shares of Tecnoglass (TGLS) are down 4% on the premarket as the company cuts its own 2026 Adjusted EBITDA guidance by about $50 million due to higher U.S. import duties on aluminum. Operating demand remains resilient, but the tariff factor is perceived by the market as a structural rather than a one-off risk.

- Quotes of Simulations Plus (SLP) soared 13% after the release of its quarterly report. The pharmaceutical software developer's revenue and adjusted earnings per share significantly exceeded Wall Street consensus due to strong demand for AI modeling platforms for drug development.

- Beam Global's (BEEM) securities are down 8% ahead of the main trading session. The electric vehicle charging infrastructure solutions provider's annual revenue nearly halved from last year's result, mainly due to a sharp decline in government contracts following the change in the White House administration. This volume has yet to be offset by the company's commercial and foreign customers.

- Shares of FGI Industries (FGI) are down 5% in pre-market trading as its fourth-quarter revenue fell 14.4% YoY due to weak demand in its regions of operation (U.S., Canada, Europe) and uncertainty over import tariffs.

April 9 trading on the U.S. stock exchanges ended on a positive territory. S&P 500 added 0.62%, recording the seventh consecutive session of growth, NASDAQ 100 rose by 0.72%, Dow Jones rose by 0.58%, and Russell 2000 - by 0.60%.

Buyers were strongly supported by easing fears of a ceasefire breakdown in the Middle East, as well as technical factors in the form of expected large inflows from trend-following strategies of CTA funds.

Within the Magnificent Seven, Amazon (AMZN: +5.6%) was the most active stock, reacting to the CEO's upbeat letter about growing demand for the company's AI computing and chips.

The cyclical consumer staples sector (XLY: +1.73%) was the leader of growth in the broad market, while energy (XLE: -1.24%) was the outsider on the back of continued volatility in commodity quotations.

The Core PCE (Personal Consumption Expenditures) price index for February increased by 0.4% mom, as expected. The consensus personal spending of Americans increased by 0.5% mom, while incomes unexpectedly declined by 0.1% mom. The final estimate of GDP growth for the fourth quarter was revised from 0.7% to 0.5%.

Initial claims for unemployment benefits rose to 219,000 for the week, while repeat claims fell to 1.79 million, the lowest since June 2024.

The government debt market reacted to the statistical data with restraint, while the auction on placement of 30-year Treasury bonds was held with weak demand.

The software segment came under pressure due to the risks of business model disruption caused by the rapid development of Anthropic's Mythos large language models, as well as growing problems in the private credit sector. The volume of corporate debt of software companies provoked an increase in requests for withdrawal of funds from specialized funds, including the flagship Carlyle, which makes market participants more cautious in assessing the prospects of technology companies in general.

- In his annual message to shareholders , Amazon (AMZN: +5.6%) CEO Andy Jassy noted that the AWS cloud division's revenue from the AI segment reached $15 billion, and from the production of its own chips exceeded $20 billion. The CEO outlined the potential for revenue from microelectronics at $50 billion a year. It could be realized if all the chips produced were sold to third-party customers without being used in its own data centers.

- Intel (INTC: +4.7%) announced the expansion of its multi-year partnership with Alphabet (GOOGL) in cloud infrastructure and next-generation AI chips. This will strengthen its position in the competitive computing power race.

- Constellation Brands (STZ: +8.5%) reported revenue and EPS above consensus due to higher beer sales. However, the company's guideline for 2028 was withdrawn due to changing consumer trends and macroeconomic uncertainty.

- Zscaler (ZS: -11.4%) was among the main outsiders in the sector due to market concerns about the replacement of traditional software by AI solutions. Since the beginning of the year, the company's shares lost about 39% and hit a 52-week low. The sales spread to the entire segment of corporate software without taking into account individual business models.

- Simply Good Foods (SMPL: -18.1%) reported revenue below forecasts for the latest quarter. Sales of Atkins brand dietary products declined and the OWYN Mark suffered from quality issues. The company worsened its full-year guidance and gave a conservative guidance for the next quarter. The market took this as a signal of a loss of operational discipline.

This article was AI-translated and verified by a human editor