Stocks Higher, Week Ahead, Buffett, Seagen-Pfizer And Union Pacific - Five Things To Know

Stock futures higher with Treasury yields in focus; Week Ahead: retail earnings, ISM data, Fed speakers on deck; Warren Buffett bullish on America after record annual profits; Seagen shares surge on reports of early takeover talks with Pfizer and Union Pacific shares leap as CEO Lance Fritz plans departure.

Five things you need to know before the market opens on Monday February 27:

1. -- Stock Futures Higher With Treasury Yields In Focus

U.S. equity futures bumped higher Monday, following on from the worst week of the year for domestic stocks, as investors continue to re-set Fed rate forecasts amid a surprisingly resilient economy and faster-than-expected inflation readings. 

The S&P 500 fell 3.2% last week, wiping our nearly half of its 2023 gains, amid a surge in Treasury bond yields and a disappointing set of retail earnings and outlooks from Walmart  (WMT) - Get Free Report and Home Depot  (HD) - Get Free Report. 

Friday's hotter-than-expected PCE price index reading, which showed core pressures rising at the fastest rate since July -- with the biggest surge in consumer spending in two years -- added more downward pressure on stocks and had 10-year Treasury yields trading within a whisker of 4% for most of the session.

Futures traders are now pricing in a peak Fed Funds rate of around 5.42%, implying at least three more rate hikes from current levels, while the CME Group's FedWatch is indicating at least a 26.2% chance that the Fed will lift its benchmark rate by 50 basis points next month in Washington.

Benchmark 10-year notes were marked at around 3.963% in overnight trading while 2-year notes held at 4.847%. The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.1% lower at 105.1141.

Stocks are also having to grapple with rising market volatility just as the fourth quarter earnings season draws to a close -- only 26 S&P 500 companies are set to report this week -- and headline momentum dissipates, with the  CBOE Group's key VIX volatility gauge rising another 2.7% in the overnight session to 21.70 points.

That indicates traders are expecting a daily swing of around 54 points, or 1.36%, for the S&P 500 over the next thirty days.

Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500 were indicating an 18 point opening bell gain ahead of January durable goods orders data at 8:30 am Eastern time and pending homes sales figures at 10:00 am. 

Futures linked to the Dow Jones Industrial Average were indicating a 136 point advance while the tech-heavy Nasdaq is looking at a more modest 60 point bump.

In overseas markets, Europe's Stoxx 600 was marked 1.1% higher in early Frankfurt trading while Britain's FTSE 100 gained 0.82% in London.

Overnight in Asia, the region-wide MSCI ex-Japan index fell 0.82% into the close of trading, following-on from Friday's selloff on Wall Street, while the Nikkei 225 ended 0.11% lower in Tokyo.

2. -- Week Ahead: Retail Earnings, ISM Data, Fed Speakers On Deck

Retail and tech earnings are likely to dominate a light calendar of headline releases this week, with the February employment report scheduled for publication on March 10.

Target  (TGT) - Get Free Report, Lowe's  (LOW) - Get Free Report, Best Buy  (BBY) - Get Free Report and Dollar Tree  (DLTR) - Get Free Report are set to post profits for the three months ending in December this week as the fourth quarter earnings season winds to a close. 

Salesforce  (CRM) - Get Free Report, HP Inc  (HPQ) - Get Free Report, Broadcom  (AVGO) - Get Free Report and Hewlett Packard Enterprises  (HPE) - Get Free Report are also slated to report December and January quarter updates this week. 

With 465 companies reporting, collective S&P 500 profits are forecast to fall by around 3.2% from last year, according to Refinitiv data, to a share-weighted $441.2 billion. For the current quarter, profits are set to slip 4.3% to around $424.5 billion.

With little on the slate for this week in terms of economic releases, focus is once again likely to fall on weekly jobless claims data on Thursday as traders and investors look for further clues on the strength of the job market following faster-than-expected readings for January inflation and the strongest retail sales and consumer spending numbers in two years.

ISM surveys of U.S. economic activity are also slated for Wednesday and Friday, while six Federal Reserve officials are expected to mark public remarks over the next five days. 

3. -- Warren Buffett Bullish On America After Record Annual Profits

Berkshire Hathaway  (BRK.A) - Get Free Report shares were little-changed in pre-market trading after the investment vehicle controlled by billionaire investor Warren Buffett posted record annual profits despite a softer-than-expected fourth quarter.

Berkshire Hathaway, which said around 75% of its fair value investments were concentrated in five stocks -- Apple  (AAPL) - Get Free Report, Bank of America BAC, American Express  (AXP) - Get Free Report, Chevron  (CVX) - Get Free Report and Coca-Cola  (KO) - Get Free Report, posted full-year operating earnings of $30.8 billion and ended the year with around $129 billion in cash after dumping around $16.3 in stocks over the three months ending in December.

Buffett, in his annual letter to shareholders, also struck a bullish tone on the health of the U.S. economy, arguing that ""I have yet to see a time when it made sense to make a long-term bet against America. And I doubt very much that any reader of this letter will have a different experience in the future."

"We count on the American Tailwind and, though it has been becalmed from time to time, its propelling force has always returned," Buffett said. 

Berkshire Hathaway shares closed 0.51% higher in New York Friday at 461,705 each, trimming their year-to-date decline to around 1.7%.

4. -- Seagen Shares Surge On Reports of Early Takeover Talks With Pfizer

Seagen  (SGEN) - Get Free Report shares surged higher in pre-market trading following reports that the cancer drug specialists are in earl-stage merger talks with pharma giant Pfizer  (PFE) - Get Free Report.

The Wall Street Journal reported that Seagen, which saw merger talks with Merck  (MRK) - Get Free Report collapse late last year, could add notable heft to Pfizer's near-term oncology sales and partly offset the loss of around $17 billion in revenues projected from patent expiration between now and 2030.

Seagen, which has developed treatments known as antibody-drug conjugates that target specific cancers, generated around $2 billion in revenues last year and has a market value of around $30 billion. Pfizer generated around $3 billion in oncology-related revenues last year, the bulk of it coming from its Ibrance breast cancer treatment. 

Seagen shares were marked 15.26% higher in pre-market trading to indicate an opening bell price of $186.00 each. Pfizer shares were marked 2% lower at $40.90 each. 

5. -- Union Pacific Shares Leap As CEO Lance Fritz Plans Departure 

Union Pacific  (UNP) - Get Free Report shares leapt higher in pre-market trading after the rail operator said CEO Lance Fritz would step down later this year following pressure from a key shareholder. 

Soroban Capital, which owns around a 1.35% stake in the group,  wrote an open letter to investors on Sunday calling for Fritz to be replaced, arguing that it saw a "heightened risk of permanent damage to the franchise" if new leadership wasn't put in place.

""Unlike typical shareholder engagements which come with numerous demands, Soroban has only one ask - install new leadership who can get the trains to operate safely and on time," said Soroban founder Eric Mandelblatt.

Union Pacific, whose shares have actually outperformed the S&P 500 over the past five years, said it is now looking "to identify a CEO capable of leading the Company for a long-term tenure."

"Union Pacific has been my home for 22 years and I am confident that now is the right time for Union Pacific's next leader to take the helm," said Fritz. 

Union Pacific shares were marked 5.92% higher in pre-market trading to indicate an opening bell price of $205.50 each.