Morning in New York: the Fed is on the ropes

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

Today's session will be centered on the results of the two-day Fed meeting. Most likely, the regulator will keep the key rate in the same range (the probability of this, according to CME FedWatch estimates, is 99%), so the most important will be updated macro forecasts and statements of Jerome Powell at the press conference. We assume that the inflation target for 2026 may be raised with a simultaneous slight lowering of the GDP growth target. In this configuration, the main risk for the market is related to Powell's rhetoric. If rising oil prices are cited as a factor limiting the scope for monetary easing, this could stimulate higher yields on debt instruments and increase pressure on growth stocks.

The most important macro publication this Wednesday will be the Producer Price Index (PPI) for February. The consensus expects 0.3% and 0.2% m/m growth in the overall and core indexes after 0.5% and 0.8% in January, respectively. If the actual results turn out to be noticeably higher than forecast, it will signal the sustainability of inflation, which will further complicate the market's reaction to the Fed's comments following the meeting. Also today, industrial orders data for January (consensus: +0.1%, December: -0.7%) will be released. This release is of secondary importance, but may affect the dynamics of cyclical industries.

The situation in the Middle East remains a factor of high uncertainty. Israel announced the death of Ali Larijani, Secretary of Iran's Supreme National Security Council. At the same time, attacks on U.S. facilities in the region continue: in particular, the U.S. Embassy in Baghdad was hit. Against this background, oil quotations are holding above $100 per barrel, as the risks to shipping through the Strait of Hormuz remain significant. The Trump administration is considering easing sanctions against Venezuela to increase oil supply and limit price pressure.

General Mills (GIS), Williams-Sonoma (WSM), Macy's (M), Jabil (JBL ) will report quarterly results before the main session opens. Micron Technology (MU), Five Below (FIVE ) and Red Cat Holdings (RCAT) will report at the post-market.

Futures on the S&P 500 demonstrate a pronounced positive dynamics. The impact on quotes of such a combination of factors as the Fed meeting, PPI data publication and tension in the oil market increases the likelihood of sharp intraday movements. We assess the balance of risks for the upcoming session as neutral with increased volatility. Technically, the key resistance level for the broad market index remains at 6780 points. A consolidation above it will signal a positive revision of the trend.

- DocuSign (DOCU) shares are up about 2% on the premarket after reporting that revenue increased 8% YoY to $3.2 billion, billing volume grew 10%, and annualized recurring revenue (ARR) reached $3.27 billion. Additional support for the stock was provided by the expansion of IAM products to 10.8%, indicating improved revenue quality.

- Quotes of Rocket Lab (RKLB) before the opening fell more than 3% after the announcement of a possible sale of shares for up to $1 billion. The funds are planned to be used for development and M&A deals, but investors focused on the risk of dilution of shares.

- Shares of Ormat Technologies (ORA) lost more than 3% on news of a $750 million convertible bond offering. Despite partially utilizing the raised funds for refinancing and buyback, stock players took a negative view of the increased capital offering.

- HealthEquity (HQY) stock reacted with a more than 1% increase on the release of the report. The company's revenue rose 9% to $1.31 billion, net income more than doubled to $215 million, and EBITDA climbed 20%. Additional support was provided by a 14% increase in HSA's assets and the return of $301.7m to shareholders through a buyback.

- Shares of Lululemon Athletica (LULU) were down more than 1.5% before the open of trading. Strong quarterly reporting has sidelined investors as the company's FY 2026 guidance was weaker than their average expectations, adding to concerns about slowing business growth. The company forecast EPS in the range of $12.1-12.3 with revenue in the range of $11.35-11.5 billion.

March 17 trading on the U.S. stock exchanges ended on a positive territory. S&P 500 grew by 0.25%, Nasdaq 100 rose by 0.51%, Dow Jones added 0.1%, Russell 2000 - 0.67%. The S&P 500 closed in the plus territory for the second consecutive session amid stabilization after volatility spikes caused by events in the Middle East, as well as a decline in UST yields.

Within the "Magnificent Seven" the dynamics was mixed. Shares of Amazon (AMZN:+1.63%) and Alphabet (GOOGL:+1.75%) were in the highest demand among buyers. The energy sector (XLE:+1.05%) emerged as the leader of growth in the broad market with the support of oil prices. The healthcare industry (XLV:-0.91%) came under pressure due to sales in the securities of pharmaceutical companies and operators of medical centers.

Macrostatistics was moderately positive. The index of pending sales in the housing market in February increased by 1.8% m/m, while it was forecasted to decrease by 0.6%. This indicates signs of stabilization in the sector. Additional support for the market was provided by strong demand at the placement of 20-year Treasury bonds, thanks to which their yields were lower than expected. Against this background, yields on the long end of the curve fell by about 2 bps, which contributed to risk appetite.

Iran continued attacks on energy infrastructure in the region. Israel intensified strikes on Iranian facilities. Nevertheless, the market demonstrated stability, which was facilitated by partial restoration of transit through the Strait of Hormuz and expectations of release of strategic oil reserves.

- Delta Air Lines (DAL: +6.6%) raised its revenue growth guidance for the current quarter from 5-7% to high single digits on the back of stronger demand growth recorded in March. Its sustainability is signaled by the maintenance of its earnings guidance.

- Uber Technologies (UBER: +4.2%) announced a partnership with NVIDIA (NVDA) to launch robotaxis starting in 2027 in a number of major U.S. cities. The market sees this as a step towards monetizing autonomous transportation without increasing capital risks.

- Qualcomm (QCOM: +1.7%) announced a $20 billion buyback program and a dividend hike, signaling management confidence despite pressure on the smartphone segment.

- Potential strategic upside is embedded in the performance of Six Flags Entertainment (FUN: +7.6%). Activist Jana Partners calls for consideration of a sale of the business and a change of chairman, raising the possibility of an M&A deal.

- Academy Sports & Outdoors (ASO: -11.7%) reported weaker-than-market-forecast quarterly results and guidance for the current fiscal year. Management pointed to continued pressure on consumption.

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