Morning in New York: investors remain cautious

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

Geopolitical agenda remains one of the key factors of uncertainty for the markets. Overnight there were reports of a new wave of missile strikes by Iran on the territory of Israel. This signals a continued escalation of the conflict and reduces the likelihood of its conclusion in the near future. At the same time, the decision of U.S. lawmakers to block the initiative to limit military action against Iran actually leaves the White House with broad powers to continue the operation. Against this background, risks to global energy trade remain, as tensions around the Strait of Hormuz remain high and support a geopolitical premium in commodity prices. Any news on the situation in the Middle East can increase intraday volatility.

This Thursday, as usual, the weekly jobless claims data will be released, providing a quick assessment of the labor market. The consensus for initial claims for the week ending February 28th suggests an increase from 212,000 to 215,000. For repeat applications for the week to February 21, the consensus forecast is for a rate of 1.845 million versus 1.833 million in the prior comparable period. No significant deviations from the current stable dynamics of the labor market are expected, but the statistics can influence the market movements at the beginning of the session. During the day, Fed Vice Chair for Banking Supervision Michelle Bowman is also scheduled to speak at the Navigating What's Next: Perspective on the Economy & Innovation event. Investors will be interested in the speaker's assessment of the state of the economy and financial system.

Ciena (CIEN), Kroger (KR), JD.com (JD), Burlington Stores (BURL), BJ's Wholesale Club (BJ's), Victoria's Secret (VSCO) will report results before the main session opens. Costco Wholesale (COST ), Marvell Technology (MRVL), Petrobras (PBR), Samsara (IOT), Guidewire Software ( GWRE), Gap (GAP), and The Cooper Companies (COO) will report after the close of trading.

Futures on S&P 500 are trading negatively after a volatile previous session. We assess the balance of risks for the upcoming session as neutral with moderate volatility.

- Shares of Broadcom (AVGO) are up more than 6% before the opening of trading. The AI segment's quarterly revenue more than doubled to $8.4 billion and management said AI chip revenues will exceed $100 billion in 2027, reflecting a surge in demand from major technology companies.

- The Trade Desk (TTD) capitalization rose more than 19% in the premarket after the close of the main session amid news of a possible partnership with OpenAI. Investors are counting on exclusive access to ChatGPT's advertising inventory with potential revenue of about $17 billion.

- Veeva Systems (VEEV) shares rose by about 11% after the publication of quarterly reports. The company's revenues rose 16% YoY to $835.9 mln, compared to the consensus of $808.9 mln. The subscription segment remains the main driver: here revenues grew 16.3% to $707.8 mln, while the R&D Solutions business grew more than 20% YoY.

- Quotes of IREN (IREN) are down about 5% amid the announcement of a plan to raise up to $6 billion. The company intends to purchase 50,000 of the latest Nvidia processors. The management forecasts the revenue of AI Cloud segment at the level of $3.7 bln by the end of the current year. At the same time, the risk of significant dilution of current shareholders' stakes remains a key factor of pressure on the stock.

- Graphic Packaging (GPK) shares were supported by the news that the company's CEO purchased 44,300 of its equity securities from personal funds. This insider transaction on the open market is considered by institutional investors as a signal of fundamental undervaluation of the business and management's confidence in the sustainability of the company's future cash flows.

On March 4, the US stock indices ended trading in a strong plus: the S&P 500 rose by 0.78%, the Nasdaq 100 added 1.51%, the Dow Jones rose by 0.49%, and the Russell 2000 rose by 1.06%. The growth was driven by a rebound in the most popular momentum segments of the market, including companies related to the AI ecosystem, amid strong macro statistics and investors' general resilience to the geopolitical backdrop.

In the "Magnificent Seven," Amazon (AMZN: +3.88%) and Tesla (TSLA: +3.44%) were the most sought after securities by buyers.

The technology sector (XLK: +1.7%) and cyclical consumer staples (XLY: +1.78%) led the broad market gains thanks to rallies in the semiconductor and software segments. The outlier was the defensive non-cyclical consumer staples sector (XLP: -0.66%).

One of the positive triggers was the publication of ISM's PMI Services, which unexpectedly rose to 56.1 points in February (consensus: 53.5), reaching its highest level since August 2022. The market reacted positively to the favorable structure of the report: the components of new orders and employment improved, while the index of prices paid declined, easing concerns about inflationary pressures. Additional optimism was provided by ADP data: the number of new jobs in the private sector increased by 63,000 against the forecast of 50,000. This confirmed the continued favorable situation in the labor market.

The bulls were supported by media reports about Iran's proposal to discuss de-escalation terms, although US officials were skeptical of this information.

Member of the Board of Governors of the Fed Stephen Miran noted that the armed conflict in the Middle East has not yet prevented the realization of plans to reduce the key rate several times this year. "The Fed's Beige Book confirmed that economic activity grew at low to moderate rates in most districts.

- Intel (INTC: +5.8%) CFO said that the corporation's production capacity utilization is more than 100%. Its management expects significant expansion of the CPU market in 2026, noting that the deficit of memory chips may persist until the end of 2027.

- CrowdStrike (CRWD: +4.2%) successfully reported for the past quarter and raised its revenue guidance for FY 2027. Market participants praised the company's strengthening competitive advantages in artificial intelligence and the active migration of large corporations to its security platforms.

- Ross Stores (ROST: +8%)'s profit for the most recent reporting period was higher than average forecasts. Management announced a 9.9% dividend increase. Growing operating margins and a strong comparable sales guideline confirmed the resilience of the business in the current demand environment.

- Wix.com's (WIX: +12.7%) fourth-quarter revenue and free cash flow came in worse than expected. However, investors were positive on the company's guidance of double-digit growth in bookings and revenue in 2026, as well as the announcement of a $250 million private placement to accelerate its $2 billion buyback program.

- Dycom Industries (DY: -4.1%) reported a 16% revenue growth for the fourth quarter and recorded an improvement in key financial indicators. However, investors negatively perceived the cautious profitability guidance for January-March due to the impact of weather factors and the dynamics of projects in the energy infrastructure segment.

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