US Stock Market Preview: PCE data is coming in tonight, with futures of the three major stock indices all falling.

• Source: Zhitong App

1. Before the U.S. stock market opened on Thursday, February 29, the futures of the three major U.S. stock indexes all fell. As of the time of publication, the Dow Jones futures fell by 0.34%, the S&P 500 index futures fell by 0.20%, and the Nasdaq futures fell by 0.17%.

2. At the time of publication, the Germany DAX index rose by 0.52%, the UK FTSE 100 index rose by 0.34%, the France CAC 40 index fell by 0.01%, and the European Stoxx 50 index rose by 0.00%.

3. At the time of publication, WTI crude oil fell by 0.31% to $78.30 per barrel. Brent crude oil fell by 0.45% to $81.78 per barrel.

Market News

Alert! PCE Data to Hit Tonight, U.S. Stocks May Face a Storm. At 21:30 Beijing time on Thursday, the U.S. will release the Personal Consumption Expenditures (PCE) Price Index for January, providing more insights into the inflation trend. The market expects the U.S. January PCE Price Index to rise by 2.4% YoY, compared to the previous value of 2.6%; and the core PCE Price Index to rise by 2.8% YoY, compared to the previous value of 2.9%. This data is particularly important for the Federal Reserve and the market, as Fed officials pay more attention to PCE inflation rather than the more widely reported CPI. In a tense trading environment, unexpected fluctuations in PCE data could shake the financial markets. The report shows that the Fed's favored inflation gauge - the PCE Price Index - rose at an annual rate of 1.8% in the fourth quarter, higher than the initial estimate of 1.7%. However, even slight changes in inflation indicators seem sufficient to impact the market as investors try to speculate on when the Fed might cut interest rates.

U.S. Stocks May Retrace by 10%? Analysts: Rebound Not Strong Enough, Technical Pressure Exists. Craig Johnson, Chief Market Technician at Piper Sandler, said that a 10% retracement in the U.S. stock market is imminent due to some technical signals indicating that the market is not yet ready for further gains. Considering the strong rebound of the S&P 500 index since last October, Johnson's forecast contradicts the views of most investors. With the hype around artificial intelligence and expectations of Fed rate cuts continuing to dominate the market, the benchmark U.S. stock indexes have continued to hit historic highs in 2024. However, Johnson points out that a closer look at this rally reveals a more concerning picture. Currently, all three major benchmark stock indices are at the upper end of the price range of the past 18 months, indicating that the stock market may soon fall.

Don't predict the peak of the US stock market! Goldman Sachs' strategy expert: the stock market is losing momentum but there is no selling pressure. Goldman Sachs' strategy expert Scott Rubner stated that it is impossible to predict the peak of this round of the US stock market rally. Rubner wrote in a report on Wednesday that as the economy is neither too hot nor too cold, retail traders are attracted to this rally, prompting analysts to quickly raise their year-end targets. He mentioned that the stock market in March is "more crowded," the rally is "losing momentum," but there is no catalyst for potential selling. Apart from minor fluctuations this week, the US stock market has been rising since the end of last year. This record-breaking rally has been driven by tech stocks, with the big winner being NVIDIA (NVDA.US) in the artificial intelligence boom. Before NVIDIA released its sensational earnings report, Rubner believed that NVIDIA was the "most important stock on earth." However, there are hardly any signs of a significant pullback.

The easing of US housing inflation may be temporary, the battle against inflation remains arduous and lengthy. US housing inflation is a key and long-awaited factor in controlling overall price increases and ensuring a shift to rate cuts, according to Federal Reserve officials who believe this indicator will cool down in the coming months. However, the real challenge of combating this may still be far off, as the supply channels for new apartments may start to dry up, and the existing inventory of single-family homes remains insufficient, which will bring future price pressures to the housing category that accounts for about one-third of the Consumer Price Index (CPI). Although the index used for the Fed's 2% inflation target is less sensitive to housing costs, Fed officials still consider housing and rent dynamics as an important unresolved part of the battle against inflation, which may also highlight one of the inherent contradictions in the current tight credit policy stance.

S&P Global: Chip manufacturers face risks of water shortage, chip prices may be pushed up. S&P Global stated in a report that with advances in processing technology, semiconductor companies such as Taiwanese semiconductor manufacturers face the risk of water shortages, which may push up chip prices. Chip manufacturing is an industry that requires a large amount of water, as factories consume a large amount of water daily for cooling machines and ensuring that wafers are free of dust or debris. S&P Global analyst Hins Li stated: "There is a direct link between water usage and the complexity of chips, as semiconductor fabs use ultrapure water (freshwater treated to extremely high purity) to rinse wafers between each process step. The more advanced the chip, the more process steps, the more water consumed." S&P Global pointed out in the report that driven by capacity expansion and the demand for advanced process technology, the water consumption of the semiconductor industry is growing at a mid to high single-digit rate annually.

Bitcoin ETF sweeping Wall Street, reshaping the cryptocurrency market. With the increasing demand for Bitcoin and attracting over $7 billion in net inflows in less than two months, Bitcoin spot ETFs are shaking up the original cryptocurrency market. The most significant change is that the largest digital asset prices have surged by over 45% this year, reaching around $63,000, approaching the pandemic-era record high of $69,000. The growth of Bitcoin supply is about to decrease, known as the so-called halving, which has also fueled the rise of Bitcoin. ETFs are shifting the focus of Bitcoin trading to the United States and encouraging leveraged bets, thereby raising the cost of bullish bets through perpetual futures to the level of 2021. Coinshares advisor Meltem Demirors: "The supply-demand imbalance here is really serious. Since the beginning of this year, Bitcoin's rise has exceeded that of the stock market, continuing the pattern of 2023.

Stock News

Best Buy (BBY.US) Q4 revenue decreased by 0.6% YoY, adjusted EPS at $2.72. Best Buy's Q4 2023 revenue was $14.65 billion, down 0.6% YoY, exceeding the expected $14.55 billion. Adjusted EPS was $2.72, surpassing the expected $2.61.

Disappointing AI monetization! Salesforce (CRM.US) Q4 performance beats expectations but revenue guidance falls short, announces $10 billion share buyback. Salesforce's Q4 revenue was $9.29 billion, up 11% YoY, better than the market's expected $9.22 billion; adjusted EPS excluding certain items was $2.29, also beating the market's expected $2.27. The adjusted operating margin was 31.4%, in line with market expectations. However, Salesforce's disclosed revenue guidance fell below market expectations, indicating that its new artificial intelligence (AI) features have not yet stimulated growth. Salesforce expects revenue to reach a maximum of $38 billion by the end of the 2025 fiscal year, with a growth of about 9%. Analysts' average estimate is $38.6 billion.

PC still struggling, HP (HPQ.US) Q1 revenue misses expectations. Due to continued weak sales of personal computers, HP Inc. reported quarterly revenue below expectations. The Q1 revenue was $13.2 billion, down 4.6% YoY, lower than analysts' expected $13.9 billion. EPS was $0.81, in line with analysts' expectations. The poor performance came from the company's personal computer business. After two consecutive years of declining revenue in HP's consumer personal computer division, analysts had expected sales to grow this quarter. The company said in a statement on Wednesday that consumer sales fell by 1% to $2.76 billion, while commercial PC revenue dropped by 5% to $6.05 billion; the performance of both divisions fell short of expectations. Overall, personal systems revenue decreased by 4% YoY to $8.8 billion, printing revenue declined by 5% to $4.4 billion, in line with expectations.

C3.ai (AI.US) Q3 performance beats expectations, raises full-year revenue guidance. C3.ai's Q3 revenue increased by 18% YoY to $78.4 million, surpassing the average analyst expectation of $76.1 million. Subscription revenue increased by 23% YoY to $70.4 million, exceeding the average analyst expectation of $66.6 million; professional services revenue decreased by 17% YoY to $8 million, below the average analyst expectation of $9.25 million. Adjusted EPS for Q3 was a loss of $0.13, better than the average analyst expectation of a loss of $0.28 per share. Looking ahead, C3.ai expects Q4 revenue for the 2024 fiscal year to be between $82 million and $86 million, with the average analyst expectation at $83.9 million;

• Snowflake (SNOW.US) Q1 and full-year revenue guidance falls short of expectations. Snowflake's fourth-quarter revenue and earnings per share exceeded expectations, but the guidance for the first quarter and full-year product revenue for the 2025 fiscal year fell short of expectations. The CEO has decided to step down. Snowflake's fourth-quarter revenue was $7.75 billion, a 32% year-on-year increase, surpassing the analysts' consensus of $7.59 billion; Non-GAAP earnings per share were $0.35, higher than the analysts' consensus of $0.18, compared to $0.14 in the same period last year. Looking ahead, Snowflake expects product revenue for the first quarter of the 2025 fiscal year to be between $7.45 billion and $7.50 billion (a 26% to 27% year-on-year increase), falling short of the analysts' consensus of $7.59 billion. The company also forecasts full-year product revenue for the 2025 fiscal year to be $32.5 billion, also below the analysts' consensus of $34.3 billion.

• NetEase (NTES.US) enriches and diversifies its game product line in 2023, with a net profit attributable to shareholders of approximately RMB 29.417 billion, a 44.64% year-on-year increase. In the fourth quarter, NetEase's net revenue was RMB 27.1 billion, a 7.0% year-on-year increase. Gross profit was RMB 16.8 billion, up 27.0% year-on-year. Net profit attributable to company shareholders was RMB 6.582 billion, with basic earnings per share of $0.29, and a dividend of $0.21597 per share in the fourth quarter. In 2023, net revenue is approximately RMB 103.468 billion, a 7.23% year-on-year increase; gross profit is about RMB 63.063 billion, up 19.51% year-on-year; net profit attributable to company shareholders is around RMB 29.417 billion, a 44.64% year-on-year increase; earnings per share is RMB 9.15. As of December 31, 2023, the company's net cash balance is RMB 110.9 billion, compared to RMB 95.6 billion as of December 31, 2022.

• The first batch of educational large models approved by the state after filing, DaoDao (DAO.US) presents impressive financial results, with record profits in the fourth quarter. In the fourth quarter, DaoDao's net revenue reached RMB 1.48 billion, continuing to grow year-on-year; operating profit and operating cash flow both hit historic highs. Operating profit reached RMB 80 million for the quarter, a 209.2% year-on-year increase, and operating cash flow net inflow was RMB 160 million, up 91.0% year-on-year. In the fourth quarter, under non-US GAAP, net profit attributable to ordinary shareholders of DaoDao was RMB 69.3 million, compared to RMB 31.1 million in the same period last year. The key financial indicators for 2023 improved year-on-year, with DaoDao achieving net revenue of RMB 5.39 billion, a 7.5% increase; operating losses narrowed by 39.8% year-on-year. Apple (AAPL.US) CEO Tim Cook: The company is heavily investing in Generative AI. Tim Cook, the CEO of Apple, stated on Wednesday that the company is investing a significant amount of money into the field of artificial intelligence. This is one of the strongest signals to date that the iPhone maker is embracing the wave of Generative AI sweeping through the tech industry. Cook mentioned at Apple's annual shareholder meeting that the company believes "Generative AI has incredible breakthrough potential, which is why we are investing heavily in this area." Cook said, "We believe it will bring transformative opportunities for our users in productivity, problem-solving, and more." While Apple has not yet released products competing with large models like OpenAI's ChatGPT or Google's Gemini, Cook revealed that a major announcement will be made this year.

Important Economic Data and Events Preview

21:30 Beijing Time: US Personal Spending MoM for January (%), US PCE Price Index YoY for January (%), US Initial Jobless Claims for the week ending February 24th (in thousands).

22:00 Beijing Time: US Dallas Fed PCE Index for January (%).

22:45 Beijing Time: US Chicago PMI for February.

23:00 Beijing Time: US Pending Home Sales MoM for January (%).

23:50 Beijing Time: 2024 FOMC Voter and Atlanta Fed President Bostic will deliver a speech.

00:00 the next day Beijing Time: 2025 FOMC Voter and Chicago Fed President Evans will speak on monetary policy.

02:15 the next day Beijing Time: 2024 FOMC Voter and Cleveland Fed President Mester will speak on financial stability and regulation.

02:30 the next day Beijing Time: The US House of Representatives will vote on a temporary funding bill.

04:30 the next day Beijing Time: 2024 FOMC Voter and Cleveland Fed President Mester will be interviewed by Yahoo Finance.

04:30 the next day Beijing Time: US President Biden will deliver a speech in Brownsville, Texas.

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