US Open: strong retail sales data put pressure on equities 📌

• Wall Street selling pressure continues at the market open
• strong US retail sales data
• Spirit Airlines (SAVE.US) shares continued to decline, falling by 25%
• Verizon Communications (VZ.US) has announced a $5.8 billion write-down

US stock indexes open lower following strong retail sales data, which again reduces the likelihood of a Fed interest rate cut in March. Today, the dollar is again one of the strongest currencies, with EURUSD losing 0.20% to 1.08550, while yields on US bonds gain to 4.10%.

Stock market indices declined, influenced by Federal Reserve comments and reatil sales data. December's retail sales data showed a stronger-than-expected increase, with a 0.6% month-over-month rise to $709.9 billion, surpassing the 0.4% expectation. Core retail sales also exceeded predictions, coming in at 0.4% against the anticipated 0.2%. This lower chances of possible rate cuts as the Fed's approach remains data-dependent.

US500 loses 0.80% at the opening, and quotes are approaching the first support zone around 4700 points, source: xStation 5

Highlights:

• Christine Lagarde stated that the ECB might cut rates by or in the summer, but any decision will depend on economic data. She noted that while inflation is on the right track, overly optimistic expectations of easing are not beneficial.
• Futures dipped and Treasuries sold off as traders reduced their expectations for a rate cut. This led to a rise in the dollar and a retreat in gold prices.
• US-listed Chinese shares dropped in premarket trading due to a nearly 4% plunge in Hong Kong, influenced by disappointing data from mainland China. WTI prices also fell due to the risk-off sentiment.
• Indications of a deepening property crisis and increased deflationary pressures in China emerged. Home prices saw their most significant drop in nearly nine years in December, and retail sales were below consensus.
• Market traders betting on a Fed rate cut in March might be overly reliant on historical patterns. While the Fed usually eases about six months after its final hike.

Company News:

Verizon Communications (VZ.US) has announced a $5.8 billion write-down in its business services division, indicating a downturn in its enterprise operations.

Charles Schwab (SCHW.US) experienced a decrease in net new assets during the fourth quarter, amidst a challenging year marked by interest rate increases that impacted the company's financials.

Morgan Stanley's (MS.US) rating was lowered from overweight to neutral by analysts at JPMorgan Chase & Co., who believe that the US bank's current valuation is appropriate and lacks immediate factors to significantly boost its stock value.

Prologis (PLD.US) stock fell 1.8% in Wednesday morning trading following its Q4 earnings, which didn't surpass analyst expectations. The industrial REIT's forecast for 2024 suggests potential earnings below Wall Street's consensus, with core FFO per share estimated between $5.42 and $5.56, slightly below the average analyst prediction of $5.52. The company anticipates an 8.00%-9.00% year-over-year increase in cash same-store net operating income (NOI), compared to 8.5% in Q4 2023.

Spirit Airlines (SAVE.US) shares continued to decline, falling by 25% on Wednesday, adding to a substantial 47% drop from Tuesday's close. This steep decline was triggered by a federal judge blocking the airline's planned $3.8 billion sale to JetBlue Airways (JBLU.US) due to antitrust concerns. A TD Cowen analyst suggested that Spirit might seek another buyer or potentially file for Chapter 11 bankruptcy following the court's decision. Spirit Airlines expressed its disagreement with the ruling, stating they are considering their next legal steps.