Wall Street Eyes Strong Start Ahead Of More Inflation Data, Gold & Bitcoin Dip: Why This Analyst Looks Beyond AI For Growth

As traders harbor hopes that the Federal Reserve will take down interest rates in the first half of the year, the broader trend is to the upside amid occasional minor corrections. Stock futures are pointing up on Thursday. The February producer price inflation and retail sales data could direct traders’ sentiment for the day, and if these pan out in line with expectations, the broader market could resume their climb. Bond yields, however, tell a different story, and have been on an uptrend in recent sessions.

Cues From Previous Session:

The lack of any major catalyst kept sentiment subdued on Wednesday, with tech stocks serving as drags. The major averages opened on a mixed note, with the Nasdaq Composite and the S&P 500 Index declining, while the Dow Jones Industrial Average was higher at the open.

The former two indices languished mostly below the unchanged line before ending lower, while the Dow held above the unchanged line for a majority of the session before ending modestly higher. The 30-stock blue-chip average received support from a strong rally in 3M Co. MMM after the company announced a new CEO.

IT, real estate, healthcare, and consumer discretionary stocks experienced weakness, while energy and material stocks were among the biggest gainers.

Delving into the reasons behind the market’s optimism since the October 2023 lows, Morgan Stanley’s Lisa Shalett said easy financial conditions and excitement about AI are driving the surge, despite persistently high rates and negative earnings revisions.

The analyst, however, cautioned against investors pinning much hope on these going forward. Liquidity infusion into the financial system from banks, money markets, and government stimulus programs that more than offset Fed tightening may finally be drying up and excess savings cushions are nearing exhaustion, she said.

Shalett viewed that the potential gains from AI may already be priced into stocks' valuations. The current consensus estimates of $277 per share for S&P 500 earnings for 2025 marks a 26% increase from current levels, she said. She also sees negative impacts from a stronger U.S. dollar, higher costs from interest rates, and input inflation.

“Consider seeking out value in U.S. equities, balancing any passive exposure to major market-cap-weighted indices with exposure to quality growth names in energy, utilities, materials, financials, and health care,” Shalett said. “These areas may present opportunities to hedge against excessive market optimism while providing exposure to growth themes beyond the companies that are enabling AI.”

Futures Today

Futures Performance On Thursday ( as of 6: 45 a.m. EDT)

In premarket trading on Thursday, the SPDR S&P 500 ETF Trust SPY rose 0.38% to $517.91 and the Invesco QQQ ETF QQQ rose 0.47% to $442.30, according to Benzinga Pro data.

Upcoming Economic Data:

The Commerce Department is scheduled to release the retail sales report for February at 8:30 a.m. EDT. Economists, on average, expect a 0.8% month-over-month increase in retail sales following a decline of a similar magnitude in January. Excluding autos, retail sales may have climbed 0.4%, reversing part of January’s 0.6% drop.

The Bureau of Labor Statistics will release the producer price inflation report for February at 8:30 a.m. EDT. The month-over-month rates of the headline and core producer price indices are expected at 0.3% and 0.2%, respectively. These compare to January readings of 0.3% and 0.5%, respectively. On a year-over-year basis, producer price growth may have accelerated from 0.9% to 1.1%. The annual rate of core producer price index, however, may have slowed from 2% to 1.9%.

The Labor Department is due to release the weekly jobless claims data at 8:30 a.m. EDT. The number of individuals claiming unemployment benefits may have increased from 217,000 in the week ended March 2nd to 218,000 in the week ended March 9th.

The Commerce Department’s business inventories report for January, due at 10 a.m. EDT, is expected to show a 0.2% month-over-month increase, slower than the 0.4% growth in the previous month.

The Treasury will auction four- and eight-week Treasury notes at 11:30 a.m. EDT.

See also: Best Futures Trading Software

Stocks In Focus:

• SentinelOne, Inc. S fell about 11% in premarket trading following its earnings announcement.
• Robinhood Markets, Inc. HOOD spiked over 12% in reaction to the trading app’s February financial metrics.
• Fisker Inc. FSR slumped about 39% on reports of its bankruptcy filing.
• DICK’S Sporting Goods, Inc. DKS, Dollar General Corporation DG, G-III Apparel Group, Ltd. GIII, Weibo Corporation WB are among the companies due to release their quarterly results before the market open.
• Those reporting after the close include Adobe Inc. ADBE, Blink Charging Co. BLNK, Smartsheet Inc. SMAR, PagerDuty, Inc. PD, Cardlytics, Inc. CDLX, Ulta Beauty, Inc. ULTA and Zumiez Inc. ZUMZ.

Commodities, Bonds, Other Global Equity Markets:

Crude oil futures rose 0.83% to $80.38 in premarket trading, adding on to their nearly 2.8% advance on Wednesday, and gold futures reversed course after Wednesday’s rebound.

The yield on the 10-year Treasury bond rose modestly to 4.194%. Bitcoin BTC/USD edged down below the $73,000 level.

Most major Asian markets advanced, although the Chinese, Hong Kong and Australian markets settled lower. European stocks pushed higher despite a European Central Bank official pouring cold water on imminent rate cuts. ECB’s Chief Economist  Philip Lane reportedly told CNBC, “A lot of evidence is accumulating, but what's also fair to say is that the transition from this holding phase…. we do have to take our time to get that right, from holding to dialing back restrictions.”

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