Morning in New York: foreign and trade policies form a negative background

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

This Thursday, March 12, the focus of attention of stock exchange traders will be the U.S. trade balance data for January (consensus: deficit of $66 billion against $70.3 billion a month earlier). The weekly statistics of applications for unemployment benefits will also be released. The forecast for initial claims in the week to March 7 suggests an increase from 213k to 215k, while repeat claims are expected to decline from 1.868m to 1.849m. Of additional interest are the construction industry figures. Housing starts are expected to fall 4.5% in January after rising 6.2% a month earlier. The benchmark for the preliminary estimate of building permits is set for a 3.1% decline after a 4.8% increase in December.

Michelle Bowman, Fed Vice Chairman for Banking Supervision, will comment on the implementation of Basel III rules and bank capital requirements.

The main external sources of uncertainty are the continuation of the conflict in the Middle East and a new round of trade tensions.

The International Energy Agency (IEA) announced the largest ever release of oil from its Strategic Petroleum Reserves in the amount of 400 million barrels. In addition, the US announced the sale of another 172 million barrels from its Strategic Petroleum Reserve. Nevertheless, the oil market is skeptical about the ability of these measures to quickly compensate for supply disruptions through the Strait of Hormuz. Quotes of Brent at the moment on March 12 rose to $100 per barrel, and WTI reached $95.

Additional pressure is created by the fact that the physical arrival of these volumes of hydrocarbons on the market may take from several weeks to two to three months, while the sheer scale of the emergency release of reserves is already perceived as a sign that the conflict may drag on even longer. In parallel, the administration of US President Donald Trump has launched Section 301 trade investigations against China, Mexico, the EU and a number of Asian countries, once again exacerbating tensions on the foreign economic circuit. As a result, the market is facing two negative factors at once: increased inflation risks on the back of rising oil prices and increased threats to global trade and supply chains.

Dollar General (DG), Futu Holdings (FUTU), Dick's Sporting Goods (DKS), Ollie's Bargain Outlet (OLLI), GPGI (GPGI), Full Truck Alliance (YMM) and Li Auto (LI) will report quarterly results before the open. Adobe (ADBE), Wheaton Precious Metals (WPM), Ulta Beauty (ULTA), Lennar (LEN), Rubrik (RBRK), ServiceTitan (TTAN ) and Nektar Therapeutics (NKTR) will report after the main session.

Futures on American stock indices are showing a decline. We assess the balance of risks for the upcoming trading session as negative with increased volatility.

- Quotes of GlobalFoundries (GFS) are down about 4% after the announcement of an additional placement of 20 million shares at a price of $42, which implies a discount to the market value. Pressure on the company's capitalization is only partially offset by its plan to conduct a buyback of $300 million.

- HighPeak Energy (HPK) securities are losing 7% in the premarket as it reported a net loss per share of $0.21 and announced a suspension of dividend payments.

- Shares of Netskope (NTSK) plunged more than 16% in extended trading session. Despite good results, the trigger for the sell-off was the expiration of the sell restriction period for 390 mln of its equity securities.

- UiPath (PATH) corrected 6% after the close of the main session, although its fourth-quarter results were strong. Beating expectations on revenue guidance for fiscal 2027 and achieving operating profitability for the first time in the company's history failed to outweigh market concerns about the impact of artificial intelligence on its business.

- Bumble's (BMBL) capitalization rose 23% after the close of the main session on March 11, thanks to its earnings significantly exceeding expectations.

- Shares of Petco (WOOF) are adding about 11% before the start of trading on March 12 thanks to an increase in its gross margin to 38.7% and a 276% rise in free cash flow.

March 11 trading on the U.S. stock exchanges ended mixed with high intraday volatility. S&P 500 decreased by insignificant 0.08%, NASDAQ 100 added symbolic 0.03%, Dow Jones lost 0.61%, Russell 2000 dropped by 0.2%.

Dynamics during the session was unstable. In the first half of the day, the indices tried to move upwards, but by the close they moved away from intraday highs on the background of new reports on the development of the conflict around Iran and fluctuations in oil prices.

Tesla (TSLA: +2.15% at the close of trading on March 11) was the best performer in the "Magnificent Seven". The energy sector (XLE: +2.48%) emerged as the leader of growth in the broad market, supported by the recovery of WTI quotes by 4.6% after a correction of almost 12% a day earlier. The technology sector (XLK: +0.48%) posted a slight gain thanks to strong reporting from Oracle (ORCL: +9.18%) and strong demand for securities of companies related to artificial intelligence and semiconductors.

The outsiders were producers of essential goods (XLP: -1.32%), the real estate industry (XLRE: -1.19%), as well as the financial sector (XLF: -0.84%): investment banks, exchanges, payment systems and companies specializing in financial data came under pressure. Additional negativity for equities was associated with a 4-7 bps rise in US Treasury yields. At the same time, the placement of ten-year treasuries was weaker than expected.

Macroeconomic statistics was neutral. The overall consumer price index (CPI) rose 0.3% mom in Ma, as the consensus suggested, maintaining the pace of January, with the core adding 0.2% mom. The February inflation statistics did not yet reflect the recent spike in energy prices amid the armed conflict in the Middle East, which reduces its relevance in assessing the overall situation in the economy.

- Papa John's International (PZZA: +19.4% at the close of trading on March 11) has received a takeover offer from investment firm Irth Capital for approximately $47 per share. The potential deal implies a significant premium to the previous closing price and could result in the pizza chain coming under the control of a private investor.

- Nebius Group (NBIS: +16.2%) announced a partnership to scale its cloud-based AI platform. NVIDIA (NVDA) intends to invest $2 bln in the company, which investors perceived as a confirmation of the prospects of its infrastructure in the segment of cloud solutions for AI.

-UniFirst (UNF: +6.6%) will be acquired by Cintas (CTAS: +1.05%) for $310 per share, which implies a premium of about 20% to the closing price on March 11. The total transaction is valued at approximately $5.5 billion and is expected to close in the second half of the year.

-Sprinklr (CXM: +6.1%) reported above-forecast earnings and revenue for the quarter. Despite weaker deferred revenue, billings outperformed average market guidance. The company also announced a $200 mln share buyback program, including a $125 mln accelerated buyback.

- Campbell's Company (CPB: -7.1%) reported earnings, revenue and profitability below consensus estimates, with organic sales declines more pronounced than analysts had anticipated. Management noted delays in shipments due to storms and the associated additional logistics costs, as well as weak Snacks segment results. The own guideline for fiscal year 2026 was downgraded.

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