Morning in New York: uncertainty persists

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

The situation in the Middle East continues to determine the movement of stock exchange quotations. Despite the statements of President Donald Trump about the progress in the settlement of the Middle East conflict, Tehran continues to deny the fact of negotiations. This maintains a high level of uncertainty and increases the market's sensitivity to the news background. At the same time, there are reports of unofficial contacts between the US and Iran through intermediaries, including Pakistan and the Gulf States. This gives hope for de-escalation, but the lack of confirmation from Iran limits the sustainability of the positive reaction.

Also important for investors were the reports that Saudi Arabia and the UAE are considering more active involvement in the military operation in the region. The realization of such a scenario may lead to the expansion of the conflict and increased pressure on global markets.

In the macroeconomic calendar, the most significant event will be the publication of preliminary business activity indices (PMI) from S&P Global for March, which will reflect the first reaction of businesses to the current external shocks. Freedom Broker analysts forecast the industrial PMI to stabilize at 51.6 points (consensus: 51.5) with the services reading at 52 points, which is in line with the market's average guidance. Stronger data could support buyers as it would confirm the stability of business activity, while a downward deviation would reinforce concerns about a slowdown in the economy.

Futures on American stock indices demonstrate about zero dynamics. We assess the balance of risks for the upcoming trades as neutral with increased volatility.

- Apollo Global Management (APO) quotations are down by about 2.8% after the announcement of the restriction of quarterly redemptions at 5% by the private credit fund of Apollo Debt Solutions (ADS) due to an increase in withdrawal requests to more than 11%. The measure heightened investor concerns about the liquidity situation in the private credit segment.

- NETGEAR (NTGR) shares are growing by more than 15% on the news that the U.S. Federal Communications Commission has banned imports of consumer routers, primarily from the People's Republic of China. The market interpreted it as improvement of competitive positions of American companies.

- Outlook Therapeutics (OTLK) shares collapsed within 27% following the announcement of a common stock and warrants offering. Despite the lack of details on the size of the deal, investors are putting the risk of share dilution in their forecasts.

- Quotes of Battalion Oil (BATL) are down more than 6% amid the publication of reports, according to which the company's production fell to 11.2 thousand barrels of oil equivalent per day against 12.8 thousand a year earlier, and revenue fell from last year's $49.7 million to $32.3 million. The negative dynamics of indicators was due to a decline in production and sales prices. Against this background the issuer recorded net loss of $12.5 mln.

- Core Laboratories (CLB) shares are losing about 2% after the company lowered its first quarter revenue and EPS guidance from $124-130 million and $0.11-0.15 to $119-123 million and $0.05-0.07 million, respectively. The company cited project delays and supply chain disruptions related to the conflict in the Middle East.

On March 23, trading on American stock exchanges ended in a steady plus, but the indices retreated from intraday highs on the background of continuing geopolitical uncertainty. The S&P 500 added 1.15%, the Nasdaq 100 rose by 1.22%, the Dow Jones rose by 1.38%, the Russell 2000 rose by 2.29%.

The growth was driven by optimistic expectations caused by Donald Trump's statements about "productive" negotiations with Iran. Against this background, WTI quotes collapsed by 10.4%, and Brent price collapsed by the maximum 12.2% since March 2022.

The technology sector provided additional support to the market. Tesla (TSLA: +3.50%) and Apple (AAPL: +1.41%) attracted the most attention of buyers within the "Magnificent Seven". The shares of the latter went up after the announcement of the WWDC conference with a focus on the development of artificial intelligence.

The consumer sector (XLY: +2.21%) was among the leaders of the broad market growth. Among the outsiders was the healthcare industry (XLV: -0.39%), which was pressured by shares of the insurance segment.

The mentioned retreat of quotations from intraday maximums was caused by the fact that Iran denied the fact of direct contacts with the USA and stated its intention to continue the conflict until the sanctions are lifted.

Macroeconomic statistics indicated a weakening of business activity. Construction expenditures in January decreased by 0.3% m/m against expectations of growth.

The head of FRB Chicago Austan Goolsbee expressed concern about the risks of inflation expectations accelerating amid the rally in energy prices. Consistently "dovish" member of the Fed's Board of Governors Stephen Miran said that there was no broad effect from the oil shock and that there was still room for further rate cuts.

- Delta Air Lines (DAL: +2.7%) saw reason to improve its fuel cost outlook thanks to a sharp decline in oil prices amid expectations of de-escalation of the conflict in the Middle East.

- The US is preparing a bill aimed at banning betting through prediction markets, which for DraftKings (DKNG: +1.2%) and other traditional bookmakers would mean less competition from alternative platforms.

- Estée Lauder (EL: -7.7%) is preparing a merger with Spain's Puig (PUIG: +13.6% in Madrid trading on March 24) that could create a company worth more than $40 billion, but investors have focused on integration risks and uncertainty around demand recovery in key markets.

- The board of directors of Two Harbors Investment (TWO: +6.4%) found CrossCountry Mortgage's $10.70 per share offer more attractive than UWM 's (UWMC: +5.1%) offer. The company received another non-binding offer, which makes it reasonable to expect an increase in the deal price.

- Apogee Therapeutics (APGE: +20%) presented successful results from clinical trials of its atopic dermatitis drug, reporting sustained effects and good tolerability of the product. The transition to late-stage studies is planned for the second half of the year.

- Insmed (INSM: +5.9%) published results from a clinical trial of ARIKAYCE for the treatment of lung disease. Primary and all key secondary objectives were achieved. The company intends to submit an application to the FDA to expand the indication in the second half of this year.

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