North American Morning Briefing: Stocks Edge Higher But Investor Caution Caps Gains OPENING CALL Stock futures gained and bond yields were little changed on Wednesday, with traders again wary of taking bold positions ahead of this week’s inflation data. Deutsche Bank noted that there were elements in an otherwise softer March consumer confidence report that may give the Federal Reserve pause in looking to trim borrowing costs soon. “[T]he details of the print saw a rise in the jobs component, as the share of respondents saying jobs are plentiful rose to 43.1% [vs 42.8% prior], the highest level since July. This highlights a still tight labor market for now, which if maintained may weigh on the Fed’s decision to cut rates later this year.” Premarket Movers Carnival is expected by Wall Street on Wednesday to report a fiscal first-quarter adjusted loss of 18 cents per share, compared with a loss of 22 cents forecast by the company itself. Carnival shares rose 1.5%. Direct Digital Holdings dropped 42% after it reported a fourth-quarter loss of 8 cents a share while analysts were expecting a profit of 26 cents. GameStop reported fiscal fourth-quarter revenue that missed estimates and it shares were down 15%. Merck was up 4.8% after Winrevair, the company’s treatment for pulmonary arterial hypertension, was approved by the Food and Drug Administration. Shares of nCino rose 14% after the it reported fiscal fourth-quarter earnings of 1 cent a share versus analysts’ expectations that called for a loss of 12 cents. Shockwave Medical was up 1% after The Wall Street Journal reported Johnson & Johnson was in talks to acquire the medical-device maker. Trump Media & Technology Group was up 10% after closing with a gain of 16% on Tuesday in its first day of trading. Post-Close Movers Bowman Consulting said it was launching a $50 million public offering of stock, about 10% of which will come directly from executives. Shares fell 9.3%. Watch For: EIA Weekly Petroleum Status Report; Economic Club of New York event with Christopher Waller Today’s Headlines/Must Reads: – Apple Turns to Longtime Steve Jobs Disciple to Defend Its ‘Walled Garden’ – The Crypto Reboot That Wasn’t: Why ‘FTX 2.0’ Floundered – Is VP Contender Kristi Noem Ready for Primetime? MARKET WRAPS Forex: The dollar has been edging higher recently, helped by prospects of the Fed keeping interest rates high for longer than previously expected, renewed focus on tariffs and other central banks coming closer to cutting rates, J.P. Morgan said. It expect the currency to strengthen, maintaining a medium-term ‘bullish bias’, but it has reduced exposure for now due to improving growth in China and Europe. It also points to ongoing weakness in the yen despite the Bank of Japan’s first interest-rate hike in 17 years. The yen hit its weakest level against the dollar in 34 years on waning expectations the Bank of Japan would raise interest rates further after it dropped its negative interest rate policy last week. Traders are looking at the psychologically-important Y152.00 level against the dollar, RBC Capital Markets. said. It added that concerns about potential intervention by Japanese authorities “have not seen the [dollar/yen] pair pullback much at all, merely capping it for now.” Bonds: Lombard Odier said it may be time to lock in higher bond yields with rate cycles peaking in developed markets, remaining overweight on fixed income. “Yield curves are increasingly reflecting this new reality, as short-term rates fall faster than longer term ones.” Its earlier focus on Treasurys now extends to euro and U.K. sovereign bonds, and it retains a bias to add duration as rate cuts unfold. Lombard Odier’s portfolios now have more exposure to core assets, including fixed income and private assets, to reflect the environment of higher “neutral” interest rates and asset class returns. Energy: Crude futures traded lower following reports that U.S. stockpiles rose by 9.3 million barrels in the week ended March 22, according to figures from the API. Official inventory data is set to be released later on Wednesday by the EIA. Oil was also pressured by a stronger dollar ahead of U.S. PCE inflation data this week, as the market awaits for more cues on the interest-rate outlook. Metals: Base metals were lower, with gold trading in a narrow band, as the dollar firmed slightly on increasing nervousness before Friday’s U.S. core personal consumption expenditure print. Traders are preparing for a potential bad surprise in advance, Swissquote Bank said. Expectations for three Federal Reserve interest rate cuts are still intact, but only if the first cut happens by the summer, Swissquote Bank said. If the base case scenario of three cuts plays out, investor interest should broaden from major stocks to gold and copper, among other commodities, it added. Iron Ore Iron ore prices would likely struggle to stick at levels below $100/ton for long even if the market continues to weaken, Commonwealth Bank of Australia said. Prices fell under $105/ton this week on concerns around Chinese steel demand, given ongoing weakness in the country’s property sector. CBA expects China’s steel demand will track sideways this year, as spending on infrastructure offsets slack demand from property. CBA said a second support for prices is tied to how seaborne iron ore costs have evolved over the past few years. After the deadly Brumadinho dam spill in Brazil in early 2019, the market replaced the lost iron ore exports with higher-cost supply that BHP estimates to be in the $80–100/ton range. TODAY’S TOP HEADLINES Can Apple and A.I. Make Baidu Cool Again? Apple has long been the epitome of tech-sector cool: sleek design, usability, and legions of devotees. Baidu, China’s answer to Google, not so much-it has been a growth laggard for years. But the artificial intelligence boom might change that. The company has held exploratory talks with Apple over using its chatbot technology in China, on top of an existing cooperation with Samsung. And A.I. cloud revenue is starting to pad its top line. Musk’s xAI to Make Grok Chatbot Available to All Premium X Users Elon Musk’s artificial-intelligence company will make its Grok chatbot available to all premium subscribers of social-media platform X, extending a rollout from the intertwined businesses that began late last year. Musk said Tuesday in a post on X, formerly known as Twitter, that the technology would be enabled for all premium subscribers of the platform later this week. How Clean-Energy Investors Tame Emerging-Market Risks Concerns about the risks tied to developing regions prevent many clean-energy investors from putting proportionally more money into those markets, but amplify potential returns for those who do, several investment firm executives said Tuesday. “About two-thirds of the capital raised in the power sector is going to [investment] strategies in the U.S. and Europe and one-third goes to the rest of the world,” said Torbjorn Caesar, chairman and senior partner at infrastructure-focused Actis. But most of the opportunities for investors are in the developing regions, he added. The Stock Market Rally Has Wall Street Bullish on 2024. The Second Half Could Change That. The stock market rally this year has defied predictions. The second half of the year can either validate the market’s optimism-or ruin it. The S&P 500 is up 29% from a recent low point in October, in a rally that has included more than just a few Big Tech stocks. The narrative is that corporate earnings can increase and that the Federal Reserve won’t damage the economy, which continues to grow amid expectations for interest rate cuts this year. IPOs Are Back. What They Say About a Stock Market Bubble. Initial public offerings are hot, but are they a sign of a bubble? Not likely. Instead, their return is just one more sign that capital markets are starting to work properly after a long fallow period. Sure, it’s hard to look at the recent IPOs from social media site Reddit, which soared nearly 50% on its first day of trading, and chip firm Astera Labs, which jumped more than 70% during its debut, without a tinge of worry. One of the hallmarks of the dot-com frenzy of the late 1990s was how quickly investors embraced new tech names that went public, no matter how questionable their strategies or potential profitability. For those inclined to see bubbles, the big moves were further evidence that one is afoot. Grant’s Take: The Housing Market Is Great-If You Don’t Need to Move How strong is the U.S. housing market? It depends whom you ask. Things are going swimmingly for existing homeowners with no plans to move out, according to fresh data released Tuesday. The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index rose 6% from a year earlier in January, the fastest rate since November 2022, compared with a 5.6% annual increase in December. Sizing Up the Economic Impact of the Baltimore Bridge Collapse The containership crash that downed a Baltimore bridge Tuesday stands to snarl shipping along the East Coast for months. Officials say the bridge collapse could affect port operations for a long time, forcing other ports in the region to take on extra shipments. Companies that transport cars and coal, two of the important categories of cargo that run through Baltimore, already are looking for alternative destinations. Baltimore Bridge Crash Investigators to Examine Whether Dirty Fuel Played Role in Accident A safety probe into a Baltimore bridge collapse will include whether contaminated fuel played a role in a giant cargo ship losing power and crashing into the span, according to people familiar with the investigation. (MORE TO FOLLOW) Dow Jones Newswires March 27, 2024 06:09 ET (10:09 GMT) Copyright (c) 2024 Dow Jones & Company, Inc. 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