Market Direction and Stock Trends

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Powell Comments Spark Premarket Selling
By: Schaeffer's Investment Research | March 25, 2021

• Fed Chair Jerome Powell hinted at an eventual slowdown of government stimulus

Stock futures are extending Wednesday's losses, after Federal Reserve Chair Jerome Powell made comments indicating a potential end to emergency stimulus, adding that congress will "gradually roll back on the amount of Treasurys and mortgage-back securities we've bought." Futures on the Dow Jones Industrial Average (DJI) are pointed 63 points lower before the open, while S&P 500 Index (SPX) and Nasdaq-100 Index (NDX)futures are sitting firmly below fair value. Positive weekly jobless data is doing little to help markets. Weekly jobless claims dropped to 684,000 last week, marking their lowest level in over a year, and besting the 735,000 expected by economists.

Continue reading for more on today's market, including:

• Checking in with Momo stock ahead of earnings.
• Why McCormick stock could be a smart pre-earnings options play.
• Plus, II-VI wins Coherent takeover; DRI surges after earnings beat; and RAD's disappointing full-year forecast.



5 Things You Need to Know Today

1. The Cboe Options Exchange (CBOE) saw more than 1.71 million call contracts traded on Wednesday, and 986,880 put contracts. The single-session equity put/call ratio rose to 0.57 and the 21-day moving average rose to 0.47.
2. The bidding war between II-VI (IIVI) and Lumentum (LITE) for the takeover of Coherent, Inc. (NASDAQ:COHR) is over, with II-VI winning with a bid of $220 per share in cash, 0.91 II-VI shares per every shares of Coherent, as well as a $217.6 million fee to Lumentum. It looks like II-VI stock is tumbling ahead of the bell, while COHR is also lower, down 0.6%, at last check.
3. The shares of Darden Restaurants, Inc. (NYSE:DRI) are up 5.2% ahead of the bell, after the Olive Garden parent posted fiscal third-quarter earnings and revenue that greatly exceeded analysts' expectations. The company's same-restaurant sales did drop, however, though the drop was smaller-than-expected.
4. Rite Aid Corporation (NYSE:RAD) is plummeting in premarket trading, down 12.6% so far, after the pharmacy name said it expected a loss for its fiscal year 2021, falling well below analysts' outlook of $125 million. A sizable drop in cold and cough medicines last winter is partially to blame, as lockdowns and social distancing minimized these common illnesses.
5. Today's economic calendar will bring the latest gross domestic product (GDP) reading.



VACCINE WORRIES SEND EUROPEAN MARKETS LOWER

Stocks in Asia were mixed on Thursday amid a tech sector decline. Japan’s Nikkei and South Korea’s Kospi rose 1.1% and 0.4%, respectively. Mainland stocks came under pressure after the U.S. Securities and Exchange Commission (SEC) announced measures that would remove foreign companies from American stock exchanges if they refuse to cooperate with U.S. auditing standards. As a result, Hong Kong’s Hang Seng lost 0.07%, and China’s Shanghai Composite fell 0.1%, while the former was also dragged down by a plunge from smartphone maker Xiaomi.

European stocks are also retreating this afternoon, as investors react to the surge in Covid-19 cases and European Union (EU) leaders meet virtually to discuss possible curbs on vaccine exports. In addition, AstraZeneca (AZN) is under heavy scrutiny, after its vaccine was revealed to have a lower efficacy rate than previously reported. At last check, London’s FTSE was down 1%, the German DAX was off 0.9%, and France’s CAC 40 has shed 0.7%.

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