New York morning: focus on AI threat, consumer confidence and macro statistics

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

Today, the Conference Board Consumer Confidence Index for February (consensus: 87 points, January: 84.5 points) will be released. Freedom Broker's forecast puts the index in the range of 87-92 points. Although historically this is a relatively low level, positive dynamics will indicate a recovery in consumer activity. At the same time, given the specifics of recent months, when initial estimates were then revised upward, we do not rule out a short-term excessively negative market reaction to the release of the mentioned data.

Also of interest for the participants of the forthcoming trades is a block of regional macrostatistics. It will include the index of non-manufacturing activity from FRB Philadelphia (consensus: -6.8 points), index of business activity in industry from FRB Richmond (consensus: -5 points) and index of business activity in the services sector from FRB Dallas (January: 2.7 points). In addition, wholesale inventories will be released (consensus: 0.2% m/m).

These releases will provide a more accurate assessment of the current phase of the business cycle amid recent weak signals from the industrial sector and will help determine whether a base for stabilization is forming or whether signs of slowing domestic demand are intensifying.

Fed officials Austan Goolsbee, Susan Collins, Raphael Bostic and Lisa Cook will make comments on the current situation in the economy. Their statements may adjust expectations for a rate decision at the March FOMC meeting. In the evening, President Donald Trump will deliver his annual address to the nation, in which the investment community will be looking for signals of tax and tariff policy changes that could affect sector dynamics.

Home Depot (HD), American Tower (AMT), Cipher Mining (CIFR), Ferguson Enterprises (FERG), NRG Energy (NRG), Keurig Dr Pepper (KDP) and DigitalOcean (DOCN) will report before the main session opens. MercadoLibre (MELI), Workday (WDAY), EOG Resources (EOG), First Solar (FSLR), Realty Income (O), HP (HPQ) and Tempus AI (TEM) will report quarterly results after the close of trading.

Futures on US stock indices demonstrate restrained positive dynamics. We assess the balance of risks for the upcoming trading session as neutral with moderate volatility. From the technical point of view, the S&P 500 is consolidating near the current levels: the key support is located near 6700 points, while the resistance is at 7000 points.

- Whirlpool (WHR) is losing about 7% on the premarket after announcing a concurrent offering of common stock and depositary receipts totaling about $800 million. The funds are planned to be used to strengthen the balance sheet, but investors are taking into account the risk of capital dilution, which is putting short-term pressure on the stock.

- Vir Biotechnology (VIR) quotes soared more than 50% before the start of the main trading on the back of the announcement of a strategic partnership with Japan's Astellas to develop VIR-5500 drug for the treatment of prostate cancer. The structure of the deal with an upfront payment of about $335 mln and subsequent payments significantly reduces the company's need for additional financing.

- The publication of strong reports and optimistic outlook supported demand for Keysight Technologies (KEYS) shares, which are growing by 15% before the start of the main session. The management pointed to the steady demand from AI projects and network infrastructure modernization, which the market interpreted as a signal to the recovery of order growth.

- Tandem Diabetes Care (TNDM) securities fell about 5% after announcing a $200 million convertible bond offering. Despite plans to use the raised funds to develop its product line and expand its commercial presence, investors have traditionally pledged the risk of potential share dilution.

Trading on February 23 on American stock exchanges ended with a decline to intraday lows. S&P 500 fell by 1.04%, NASDAQ 100 lost 1.21%, Dow Jones fell by 1.66%, Russell 2000 corrected by 1.61%. The sell-off was triggered by growing fears around the large-scale transformation of business models under the influence of artificial intelligence technologies, which provoked a collapse in the software industry and capital flow into protective assets.

Additional pressure on the market against this background was exerted by the shares of the "Magnificent Seven". The most pronounced correction was in the securities of Microsoft (MSFT: -3.21%), Amazon (AMZN: -2.3%), Meta Platforms (META: -2.81%) and Tesla (TSLA: -2.91%).

Consumer staples (XLP: +1.23%), which has a defensive asset status, led the growth list. The list of outsiders was headed by the financial sector (XLF: -3.35%), which suffered from a decline in government bond yields and spreading concerns about the impact of AI on the private credit, banking and payments industry.

Macroeconomic statistics indicated a local cooling of the manufacturing sector. The volume of industrial orders for December, as forecasts suggested, decreased. February manufacturing activity index from FRB Dallas amounted to -0.5 points with a consensus of 0.2. Output and new orders were almost unchanged from the previous month, although price pressures eased slightly.

Against the background of general risk aversion, investors switched to treasury bonds. As a result, yields in the middle part of the curve fell by 5-6 bps. At the same time, the rally in precious metals resumed: gold added 2.8% and silver jumped 5.1%.

Christopher Waller, a member of the Fed's Board of Governors, said the likelihood of a rate cut or a rate hike at the March meeting is similar to the likelihood of a coin falling in reverse or reversing upward. The regulator's decision, according to the official, will depend on the February employment report, as the stability of the labor market may have improved.

Investors' caution was also explained by increasing foreign policy uncertainty ahead of the US-Iran negotiations amid discussions about the risks of escalation of the conflict between the countries. Additional negativity remains the problems of US trade policy after the recent Supreme Court decision to cancel "extraordinary" import tariffs.

- Gilead Sciences (GILD: -1%) announced the acquisition of cell therapy developer Arcellx (ACLX: +77.4%) for $115 per share in cash with an additional $5 payment if sales targets are met. The premium to market value amounted to about 80%. The deal strengthens Gilead's position in the oncology segment and reflects a bet on the promising CAR-T drug anito-cel.

- Novo Nordisk (NVO: -16.4%) reported that its experimental therapy CagriSema showed weaker effects compared to Eli Lilly's (LLY: 4.9%) tirzepatide. The sharp decline in NVO's share price reflects concerns about Novo Nordisk losing its leadership in one of the fastest-growing segments of pharmaceuticals.

- PayPal (PYPL: +5.8%), according to media reports, attracted attention of potential buyers after a long fall in capitalization. Although there are no official confirmations of the forthcoming deal, investors consider rumors about it as a factor able to limit further decrease of quotations.

- Domino's Pizza (DPZ: +4.1%) beat expectations on comparable sales in the US and announced a dividend hike despite a less-than-impressive EPS. Growing order volume and active marketing programs supported investor confidence in the prospects for market share gains.

-Door Dash (DASH: -6.6%) came under pressure after Citrini Research published a research note noting the risks of increased competition from new digital platforms and the possible impact of AI tools on barriers to entry in the industry.

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