Morning in New York: seeking balance between macro data 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 today's trading will be the February CPI. The consensus expects a 0.3% m/m rise in total and core CPI after the January increase of 0.2% and 0.3%, respectively. Close to forecast actual results are likely to be taken by the investment community as confirmation that inflation remains elevated, but with no clear signs of acceleration. If consumer price growth, especially in the core index, is higher than expected, it could reignite fears that the room for a Fed rate cut remains limited.

An additional macro factor will be the publication of the US federal budget deficit statistics for February (consensus: -$317 bln, January: -$94.6 bln). The release itself is unlikely to determine the dynamics of trading, but in combination with CPI data it may affect the perception of the fiscal background and UST yields, especially after the weak placement of three-year securities the day before.

The main external source of uncertainty remains the situation in the Middle East. On Wednesday morning, oil was declining after reports of the International Energy Agency (IEA) discussing the largest release of strategic reserves in its history in order to curb price increases caused by the US and Israeli military operation against Iran. If approved, more than 182 million barrels could be delivered to the market, which could partially mitigate inflation risks in the short term. Despite the ongoing conflict, Tehran continues to actively supply oil to China via the Strait of Hormuz. Over the last couple of weeks, 11.7 million barrels were transported in this way, with a significant part of tankers turning off their transponders. However, this does not completely relieve tension in the market: investors continue to take into account the risks of disruptions in supplies through the Strait of Hormuz. According to media reports, Iran has started to install anti-ship mines here. This increases fears for the safety of the route and keeps prices for energy and other commodities supplied through this route highly sensitive to any news related to the development of the conflict.

Campbell's, Serve Robotics will present quarterly results before the start of the main trading session. UiPath and Descartes Systems will report after the close.

Futures on S&P 500 are consolidating near the closing levels of the previous session. We assess the balance of risks for the upcoming session as neutral with increased volatility. The market will get a chance for a local respite if inflation data will be close to average expectations. At the same time, foreign policy news and the situation with energy prices are still capable of sharply changing the mood of traders.

- Shares of Oracle are up about 10% before the opening of the main session after the publication of the reports. The company reported revenue of $17.19 billion and adjusted EPS came in at $1.79 with consensus of $16.91 billion and $1.7, respectively. Management raised its revenue forecast for fiscal 2027 to $90 billion, citing strong demand for cloud infrastructure and AI workloads.

- AeroVironment shares are down about 9% on the premarket on the back of reported quarterly results. Its EPS of $0.64 per share and revenue of $408 million were below average market guidance, and its EBITDA guidance for the year was lowered to $265-285 million.

- Quotes of Upstart Holdings before the start of trading grow within 2%. The positive reaction of investors was caused by the company's announcement of its intention to apply for a national banking license, which may simplify the business structure and expand lending opportunities.

- Shares of Diamondback Energy lose about 3% after the announcement of the secondary offering. One of the majority shareholders offered for sale about 11 million equity securities, increasing investors' concerns about the appearance of additional supply on the market.

- Groupon 's securities are down 10% on the premarket as its revenue for its most recently reported quarter was only $132.7 million versus expectations of $136.6 million, and its own forecast for 2026 was below consensus.

March 10 trading on the U.S. stock exchanges ended in a slight negative. S&P 500 fell by 0.21%, NASDAQ 100 lost symbolic 0.04%, Dow Jones decreased by insignificant 0.07%, Russell 2000 corrected by 0.22%.

Volatility was high. Positive dynamics prevailed in the first half of the day, but by the close of the day the growth momentum faded amid new reports on the risks of escalation of the situation with cargo transportation through the Strait of Hormuz.

Some representatives of the "Magnificent Seven" and large technology companies in general, as well as semiconductor, memory chip and AI infrastructure manufacturers looked stronger than the market as a whole. Nevertheless, the technology sector as a whole (XLK) closed at zero, while the list of outsiders was led by the energy sector (XLE: -1.28%) amid an 11.9% drop in WTI quotations.

Macrostatistics was mixed, but it did not have a dramatic impact on the course of trading. The NFIB Small Business Optimism Index in February declined from January's 99.3 points to 98.8, indicating continued pressure on small businesses. Secondary market home sales exceeded the average expectations of the investment community. Evidence of the economy's resilience came in the form of private sector employment trends. The four-week ADP average hit its highest level since mid-December. Over the last week, the number of jobs increased by 15.5 thousand after 12.75 thousand in the previous similar period.

The bond market remained under pressure: yields at the long end of the curve added 6-7 bps, while the auction of three-year USTs was not very successful, which limited risk appetite.

The optimism of the beginning of the session, supported by hopes for a resolution of the situation in the Middle East, was replaced by more cautious sentiment after reports of possible Iranian mines in the Strait of Hormuz and tough statements from both sides of the conflict. Against this backdrop, the market continues to balance between fundamental supports in the form of continued resilience of the US economy and a strong reporting season and the risk of escalation of tensions around Iran.

- UWM Holdings (UWMC: +3.9%) raised its revenue guidance for the first quarter and full year 2026. The average quarterly guidance was markedly above Wall Street expectations, which investors took as a signal of faster improvement in operating performance.

- Casey's General Stores (CASY: +3.8%) reported above consensus earnings for the quarter. Its comparable fuel and grocery sales were also stronger than forecasts. The market responded positively to higher fuel margins and improved guidances on comparable sales and profitability for the year.

- PROG Holdings (PRG: -6.7%) revised its FY 2026 revenue guidance from $3.02-3.14 billion to $2.95-3.07 billion from $3.02-3.14 billion, taking into account the effect of January's acquisition of Purchasing Power. This raised some investor concerns about the near-term dynamics of the business.

- Wiring defects identified on a portion of Boeing's (BA: -3.2%) 737 MAX airplanes could slow deliveries in the coming months and increase risks to the annual plan.

- West Pharmaceutical Services (WST: -5.7%) CEO Eric Ma. Green has announced his intention to step down after appointing a successor in the second half of 2026, adding to the uncertainty surrounding the management transition.

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