The market the day before
The session on February 28, the main American stock exchanges ended in different directions. The S&P 500 dropped 0.24% to 4,374 points, the Dow Jones dropped 0.49%, and the Nasdaq rose 0.41%. The largest growth was recorded in the shares of energy companies (+2.57%). The real estate sector showed the worst dynamics (-1.77%).
Company news
- Chevron buys Renewable Energy Group (REGI: +40.4%) for $61.5 per share. The $3.15 billion deal will be paid in cash.
- Toronto-Dominion Bank acquires First Horizon National (FHN: +28.7%) for $25 per share in cash. The size of the transaction is $13.4 billion.
- Teladoc Health (TDOC: +7.3%) has announced the launch of a voice virtual general medical care service on Amazon devices (Echo, Echo Dot and Echo Show).
Expectations
On February 28, the Chicago PMI business activity index was published: in February, the indicator fell by 8.9 points mom, to 56.3 - the lowest level since August 20. All five components of the report showed negative dynamics, the worst results were demonstrated by new orders and deliveries. The employment indicator dropped to the lowest since October 20, but the price index fell by 2.5 points to an 11-month low of 86.5.
Several more important macro indicators will be published this week. On March 1, the February ISM manufacturing indices, Markit Manufacturing PMI, as well as January data on construction costs will be released. On March 4, the February labor market report will be released: according to consensus, the number of people employed outside agriculture will increase by 400 thousand after an increase of 467 thousand in January. According to expectations, unemployment will decrease by 0.1 percentage points, to 3.9%, and the average hourly wage will increase by 0.5% mom and 5.8% YoY. An important event of the week will also be the speech of the Fed Chairman to Congress with the semi-annual report on the PREP on March 2-3. Market participants are interested in whether Powell will confirm the current consensus on raising the key rate by 25 bps in March, what are the timing and parameters of the Fed's balance sheet reduction, as well as how much geopolitical tensions will affect the PREP.
- The trading platforms of the Asia-Pacific region demonstrated multidirectional dynamics. China's CSI 300 rose by 0.83%, the Hang Seng increased by 0.54%, and Japan's Nikkei 225 fell by 0.29%. EuroStoxx 50 has been declining by 0.12% since the opening of the session.
- Brent crude futures are quoted at about $100 per barrel. Gold is rising to $1,913 per troy ounce.
In our opinion, the S&P 500 will hold the upcoming session in the range of 4290-4460 points.
Macrostatistics
The following economic indicators will be published today:
- Markit Purchasing Managers' Index for February (forecast: 57.5, previous value: 57.5);
- ISM manufacturing business activity index for February (forecast: 58, previous value: 57.6);
- dynamics of construction costs: +0.2% in January (corresponds to the results of December).
Sentiment Index
The sentiment index dropped to 42 points amid increased geopolitical instability.
Technical picture
The S&P 500 is showing a rebound. The RSI indicator rises to a neutral level, and the MACD, indicating the fading of the short-term bearish trend, does not show a signal for a reversal. Technically, the S&P 500 chart shows a trend change to a downward one, which is supported by increased market risks. The nearest resistance level is at the level of 4460 points, where the 200-day moving average and the upper limit of the descending channel meet. Overcoming this mark may indicate a reversal of the downtrend. If this does not happen, the benchmark will continue to move within the boundaries of the descending channel.
Reports
Today, the report for the fourth quarter of 2021 will present Salesforce.com (CRM) is one of the market leaders in applied cloud software. Factset's consensus forecast assumes a 24.6% increase in the company's revenue for October-December, to $7.24 billion, with a 27% decrease in non-GAAP EPS, to $0.75. From the indicators of the latest reports of cloud providers (Microsoft, ServiceNow, Oracle), we can conclude that there is a strong demand for SaaS solutions. By the end of 2022, Gartner expects PaaS and SaaS markets to grow by 25% and 18%, respectively. We believe that in the next few quarters, the Salesforce business will be supported by the cross-selling effect as a result of the purchase of Slack. We believe that Slack will also continue to demonstrate an active improvement in performance against the background of the development of functionality and close integrations with the main Salesforce solutions. We expect that the focus of investors' attention will be on the results of the "data" segment (includes MuleSoft and Tableau), since MuleSoft faced certain difficulties in the last quarter. In addition, the investment community will be very interested in marginality data, which were strong in the third quarter. Management's forecast for the whole of 2022 may also have a significant impact on investor sentiment.