March S&P 500 E-Mini futures (ESH24) are experiencing a minor downturn, dropping by 0.23% this morning as investors gear up for the latest U.S. factory activity data and comments from Federal Reserve officials. This cautious sentiment follows a positive session on Wall Street, where major indexes closed on a higher note.

Yesterday’s market saw notable movements, with Hormel Foods Corporation (HRL) leading the S&P 500 gains by surging over 14% after announcing strong Q1 results. Monster Beverage Corp (MNST) also enjoyed a boost of more than 5% following its impressive Q4 gross margins report. Salesforce Inc (CRM) ascended by approximately 3%, topping the Dow’s gainers after revealing better-than-expected Q4 earnings, initiating its first quarterly dividend, and expanding its share buyback program by $10 billion. Conversely, Snowflake Inc (SNOW) faced a steep decline of over 18% after providing lower-than-expected revenue guidance for Q1 and FY25, coupled with the announcement of CEO Frank Slootman stepping down. HP Inc (HPQ) also recorded a drop of over 1% due to its Q1 revenue falling short of expectations.

Recent data from the U.S. Department of Commerce indicated that the U.S. core PCE price index for January aligned with expectations, showing a month-over-month increase of 0.4% and a year-over-year rise of 2.8%. The U.S. February Chicago PMI unexpectedly dipped to 44.0, below the anticipated 48.1. Additionally, U.S. personal spending for January matched forecasts with a 0.2% month-over-month increase. However, the latest initial jobless claims saw a slight uptick, rising by 13,000 to 215,000, surpassing the expected 209,000.

Chris Larkin, E*Trade from Morgan Stanley’s Managing Director for Trading and Investing, noted that the moderate inflation figures might cool the market after the recent ‘hot’ CPI and PPI readings. He suggested that while rate cuts are improbable until the latter half of the year, the current data could ease some concerns.

Federal Reserve officials have shared varied outlooks, with Atlanta Fed President Raphael Bostic hinting at possible rate cuts in the summer if economic conditions align with expectations. San Francisco Fed President Mary Daly stated the readiness to adjust rates as necessary, though she sees no immediate need for cuts given the economy’s strength. Cleveland Fed President Loretta Mester acknowledged the need for further action to temper inflation but maintained her forecast of three rate cuts this year.

Market participants are closely monitoring U.S. rate futures, which currently indicate a minimal 3.0% likelihood of a 25 basis point rate cut at the Fed’s March meeting and a 25.2% chance for such a cut in May.

Today’s focus is on the U.S. ISM Manufacturing PMI, with economists predicting a slight increase to 49.5 from the previous 49.1. Other key data points include the U.S. S&P Global Manufacturing PMI, expected to rise to 51.5 from 50.7, and the U.S. Michigan Consumer Sentiment Index, anticipated to climb to 79.6 from 79.0. Additionally, U.S. construction spending data for January is forecasted to show a 0.2% month-over-month increase, a decrease from the prior 0.9%.

Investors are also awaiting speeches from Fed officials Logan, Waller, Bostic, and Daly for further insights into the central bank’s perspective and potential policy directions.

In the bond market, U.S. 10-year rates have edged up by 0.24% to 4.262%.

European markets have shown resilience this morning, with Euro Stoxx 50 futures up by 0.16%. This comes as investors digest a slew of regional economic data, including inflation and factory activity figures. Bank and automobile sectors are performing particularly well, with Daimler Truck Holding Ag (DTG.D.DX) making headlines after reporting better-than-expected earnings, increasing its dividend, and announcing a significant share buyback program.

In Asia, stock markets ended the day in positive territory, buoyed by Wall Street’s overnight gains and various domestic factors. China’s Shanghai Composite Index and Japan’s Nikkei 225 both closed higher, driven by economic data releases and corporate news, setting a cautiously optimistic tone for global markets as they navigate through a complex economic landscape.

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