MARKET WRAPS

Watch For:

Flash Manufacturing, Services PMIs for January; IBM results

Opening Call:

Stocks were poised to regain some lost ground Monday as investors prepared for a meeting of Federal Reserve policy makers and earnings from big technology companies.

The central bank is set to gather for a two-day meeting Tuesday and at its conclusion on Wednesday, Jerome Powell is expected to signal that rates will likely rise as soon as March.

The central bank is concerned fast-rising consumer prices will become self-reinforcing by feeding into expectations of higher inflation, said Lyn Graham-Taylor, senior rates strategist at Rabobank. "It is talking about tightening aggressively to get on top of that."

Mr. Graham-Taylor said he thinks inflation will fall this year and that the Fed won't raise rates as many times as the market expects, pulling down 10-year government-bond yields.

Earnings season continues, with results due from Halliburton, IBM and Steel Dynamics on Monday, followed by General Electric, Microsoft, Apple and Tesla later in the week. About a fifth of companies on the S&P 500 have filed results, and 82% have beaten analysts' expectations for earnings per share, according to FactSet.

International stock markets fell Monday. The Stoxx Europe 600 lost 1.2%, led down by shares of travel, leisure, construction and technology companies.

Asian markets were mixed, as the prospect of higher U.S. interest rates pushed investors to reassess valuations of fast-growing technology companies.

Read: Stock-Market Warning Signal: Here's What Surging Bond Yields Say About S&P 500 Returns in Next 6 Months

Stocks to Watch:

Kohl's shares rose more than 28% in premarket trading following reports the retailer could be fielding takeover offers from two suitors.

The Wall Street Journal reported over the weekend that activist hedge fund Starboard Value was behind a group that made a $9 billion bid for Kohl's.

The bidding group was led by Starboard-backed Acacia Research, which told Kohl's that it was assured by bankers that it could get financing for a bid that values the retailer at $64 a share.

Forex:

The dollar edged higher in Europe, boosted by the prospect of Fed interest rate rises and safe-haven flows on concerns over Russia-Ukraine tensions.

The Fed's January meeting is set to be the last before it starts lifting rates in March as part of four rate rises this year, Deutsche Bank analysts said. However, there is a "tail risk of an even bigger hawkish surprise over the months ahead, with the possibility that the Fed raises rates in March and then goes onto raise rates six or seven times this year."

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Sterling could extend its losses versus the dollar if global equities continue to fall amid widespread risk aversion, MUFG Bank said.

The 30-day correlation between GBP/USD and the MSCI's ACWI index--a global benchmark for equity performance--rose to +0.65 from a recent low of +0.12 on Dec. 10, and compares to an average correlation of +0.5 over the past six months, MUFG currency analyst Lee Hardman said.

"It has been the strongest sustained period of positive correlation between cable and global equity market performance since 2013, and highlights that the pound is vulnerable to further near-term weakness if equity market weakness extends."

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The Russian ruble fell to the lowest level since Nov. 2020 on concerns the country will invade Ukraine and trigger U.S. sanctions. One ruble fetched as low as 0.012774 dollars, down from $0.012888.

Bonds:

In the bond market, the yield on 10-year Treasury notes slipped, falling to 1.728% from 1.747% Friday.

The recent "quick move to bonds on elevated risk has not changed long bond technicals that still have a wide open range. For 10s, that's still 1.74%-1.95% through the first week of February," said Jim Vogel, executive vice president at FHN Financial.

"Bond investors will perhaps be keen to not get too carried away with themselves ahead of [the] FOMC meeting, which may shed greater light on the bank's plans for the coming year," said Matthew Ryan, senior market analyst at Ebury, in emailed comments.

Commodities:

Oil futures were higher as traders focused on tensions in the Middle East and Eastern Europe that threaten to crimp global energy supplies.

The UAE said Monday that it intercepted two missiles over its capital, which it said were launched by Iran-backed Houthi militants. Last week, the militants claimed a drone attack that targeted a state-owned oil facility. The threat of conflict between Ukraine and Russia also remains high.

Oil supplies are already tight, with OPEC+ nations struggling to meet strong demand. Traders are worried that a hit to oil supplies in the Middle East or reduced Russian gas supplies to Europe could tighten markets even further.

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European natural gas rose over 5% as the tensions in Ukraine showed no sign of abating. The New York Times reported that the U.S. was considering deploying troops to the Baltic states and elsewhere in Eastern Europe.

"Should tensions between Russia and the Ukraine escalate, the initial uncertainty around its impact on gas flows would likely lead the market to once again add a significant risk premium to European gas prices," Samantha Dart at Goldman Sachs said.

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Copper prices weakened as global risk assets tumbled, while a stronger dollar also weighed on the red metal. China's Lunar New Year Holiday begins next week, which could also dampen demand for metals in the short term as economic activity slows, ANZ said.

TODAY'S TOP HEADLINES

Activist Investor to Call on Peloton to Fire Its CEO

An activist investor wants Peloton Interactive Inc. to fire its chief executive and explore a sale after the stationary-bike maker's stock plummeted more than 80% from its high, as growth slowed.

Blackwells Capital LLC has a significant stake of less than 5% in Peloton and is preparing to push the company's board to fire CEO John Foley and pursue a sale, according to people familiar with the matter. The firm believes Peloton could be an attractive acquisition target for larger technology or fitness-oriented companies, the people said.

Activist Investor Nelson Peltz Buys Stake in Unilever

LONDON-Trian Fund Management LP, the activist hedge fund run by Nelson Peltz, has acquired a stake in Unilever PLC, according to people familiar with the matter, adding pressure to the packaged food and consumer goods giant in the wake of its failed $68-billion bid for GlaxoSmithKline PLC's consumer-health business.

The size of the stake couldn't be learned. Trian started buying Unilever shares well before its bids for the GSK unit surfaced earlier this month, one of the people said.

Clean Energy Stocks Are Down but Still Have Their Spark

Capital gushed into climate technology and other sustainable investments in 2021. Now the market is selling off, but investors don't see a repeat of the clean tech bust that occurred more than a decade ago.

Driving the surge: a sea change in investors' priorities and increased alarm about climate change amid devastating heat waves, storms and fires. The shift in sentiment helped push Tesla Inc.'s market capitalization above $1 trillion and made Elon Musk the richest person in the world.

China Evergrande Shares Jump After Appointing China Cinda Executive

Shares of China Evergrande Group soared on Monday after it appointed an executive at the state-owned China Cinda Asset Management Co. to its board, a sign that the struggling developer is making some progress toward resolving its liquidity crisis.

The Hong Kong-listed stock gained as much as 13% within a few hours of trading, and was last up 5.6% at HK$1.89. The shares are 88% lower from a year ago.

Kohl's Can't Find Relief From Investor Pressure

Since taking the helm of Kohl's Corp. in May 2018, Chief Executive Michelle Gass has forged partnerships with Amazon.com Inc. and Sephora, brought in new brands and beefed up its loyalty program. Yet, the retailer's stock is worth less today than it was two decades ago.

On Friday, a group backed by activist hedge fund Starboard Value LP offered roughly $9 billion to buy the department store chain, The Wall Street Journal reported, following a renewed push by a different activist to shake up its board and consider a sale.

Software Provider Globalization Partners Gets Vista Equity Backing at $4.2 Billion Valuation

Globalization Partners, a software provider that helps businesses streamline the process of hiring employees internationally, has landed new backing from Vista Equity Partners that values the company at $4.2 billion.

Boston-based Globalization Partners helps businesses outsource tasks associated with hiring people abroad, including tax, legal, accounting and administrative duties, through artificial intelligence-powered software. The company said it experienced a boom in business due partly to the movement of global workforces throughout the Covid-19 pandemic.

Winter Olympics Sponsors Caught Between Beijing, U.S.

With less than two weeks to go before the start of the Winter Games in Beijing, several Olympics sponsors are skipping what is usually an Olympics-themed advertising blitz.

In 2018, Visa Inc. revved up its Olympic marketing campaign months before the Winter Olympics in Pyeongchang, South Korea. It marked the 100-day countdown to the torch lighting on Twitter. It highlighted its Team Visa athletes, and it promoted wearable payment devices used at the event.

Empty Private Jet Flights Hastened Credit Suisse Chairman António Horta-Osório's Downfall

After relocating to Zurich last spring to run Credit Suisse Group AG as chairman, António Horta-Osório flew to London and Lisbon for work meetings and business events, then spent time with his family at homes there.

On multiple occasions, a private plane paid for by Credit Suisse dropped him off on a Thursday and returned empty to Switzerland, according to people familiar with the travel. By Monday, a plane picked Mr. Horta-Osório up for work in Zurich.

Green M&M's Fashion Makeover Is Covid Comfy but Not Everyone Is Happy

The green M&M has a new look. Not everyone is impressed.

The problem? The once-sexy cartoon candy seems to have been stripped of her mojo, some say.

Apple, Microsoft and Tesla Headline Key Earnings Week Amid Nasdaq's Slide

Tech giants including Microsoft Corp., Apple Inc. and Tesla Inc. are among the companies headlining a busy earnings week that comes as investors look for reassurance after the Nasdaq notched a 12% decline to start the year.

Overall, about a fifth of the S&P 500 and nearly half of the Dow Jones Industrial Average are expected to provide their quarterly updates during the week starting Monday, according to FactSet.

Inflation Poses Risks of Faster, Less Predictable Fed Rate Increases

The Federal Reserve is entering an unfamiliar environment at the start of 2022. For the first time in decades, officials are preparing to raise interest rates when inflation is uncomfortably high rather than very low.

The last time the Fed lifted rates from near zero, at the end of 2015, inflation was running below its 2% target and the unemployment rate-a measure of labor slack-was declining gently.

Fed Steps Up Deliberations on Shrinking Its $9 Trillion Asset Portfolio

Federal Reserve officials are set to resume discussions this week over how fast they will shrink their nearly $9 trillion bond portfolio when the time comes, which would serve as a tool for tightening monetary policy as they try to curb high inflation.

Officials are on track at their meeting Tuesday and Wednesday to approve a final tranche of bond purchases, allowing them to end the stimulus program by March-when they are likely to raise interest rates to cool the economy, according to their recent public comments.

Eurozone Economic Growth Slows as Omicron Hits Services

Eurozone business activity growth slowed for a second consecutive month in January, as the spread of the Omicron variant took an increasing toll on the region's economy, IHS Markit says.

The eurozone composite PMI fell to 52.4 in January from 53.3 in December, according to the flash estimate. The latest reading indicates the slowest rate of output growth since the recovery from lockdowns started in March 2021.

Rising Interest Rates Hit Municipal-Bonds Market

Municipal bonds are off to their worst start since 2011.

The early-year bond rout has dragged returns on the S&P Municipal Bond Index to minus 1.1% through Jan. 20, counting price changes and interest payments. The loss is an early sign that rising interest rates could make 2022 rockier than last year, when federal stimulus and elevated demand from homebound savers led to record low volatility and historically high prices.

U.S. Food Supply Is Under Pressure, From Plants to Store Shelves

The U.S. food system is under renewed strain as Covid-19's Omicron variant stretches workforces from processing plants to grocery stores, leaving gaps on supermarket shelves.

In Arizona, one in 10 processing plant and distribution workers at a major produce company were recently out sick. In Massachusetts, employee illnesses have slowed the flow of fish to supermarkets and restaurants. A grocery chain in the U.S. Southeast had to hire temporary workers after roughly one-third of employees at its distribution centers fell ill.

Surging Food Prices Turn More Shoppers Into Bargain Hunters

Rising food prices are leading American consumers to fill their shopping carts with cheaper groceries.

Shoppers are seeking more discounts and are switching to lower-cost store brands for cooking oil, frozen food and items in other grocery sections, supermarket executives said. To stretch their dollars, people increasingly are comparing prices at various stores and signing up for savings programs such as automatic delivery that give additional discounts.

Tech Rout Fueled by Bond-Market Turn

Shifts within the bond market are removing a key pillar of support for Wall Street's more speculative bets, dragging down major stock indexes as investors flee everything from tech stocks to cryptocurrencies.

Spooked in large part by rising bond yields, investors continued to dump stocks last week, extending early-year losses that have taken many off guard with their speed and severity. Once again, tech shares were at the forefront. Selling also broadened to include sectors such as banking and energy, sending the S&P 500 to its worst stretch of declines since the onset of the Covid-19 pandemic.

Dispute Between Apollo Co-Founders Black, Harris Boils Over

Tension between Leon Black and his Apollo Global Management Inc. co-founder Josh Harris is boiling over, threatening to buffet the investment giant with fresh controversy.

In a filing last week in a rape and defamation case brought by a woman with whom he has admitted to having a yearslong affair, Mr. Black accused Mr. Harris of plotting his removal from Apollo in an act of revenge for being passed over to succeed Mr. Black as chief executive officer.

Companies' U.S. Pension Plans Are More Overfunded Than They Have Been in Years

Companies' U.S. pension plans are more overfunded than they have been in years amid strong equity markets.

Wells Fargo Is Up, JPMorgan Is Down: Bank Stocks Are Diverging in 2022

After three weeks of trading in the new year, the big bank stocks are all over the place.

Wells Fargo & Co. shares fell in the past week along with the broader market, but they're still up 12% for the year. The bank is well positioned to benefit from rising U.S. interest rates, given its large base of U.S. deposits and loans. Analysts at KBW, who rate the stock outperform, recently raised its price target to $67, citing stronger-than-expected growth in net interest income. Wells Fargo closed Friday at $53.67.

U.A.E. Intercepts Two Ballistic Missiles Over Capital as Gulf Tensions Escalate

DUBAI-The United Arab Emirates said it intercepted two ballistic missiles launched by the Houthi rebels in the most recent attack targeting its capital of Abu Dhabi that threatens to widen Yemen's yearslong civil war across the region.

The U.A.E said early Monday that the attack resulted in no casualties but scattered shards of missiles across Abu Dhabi. Videos posted to social media Monday before dawn showed bright lights in the sky above the city, and residents reported hearing explosions.

State Department Tells Families of U.S. Diplomats in Ukraine to Leave

The State Department instructed the families of U.S. diplomats in Ukraine to leave the country and authorized some embassy staff members to also depart, while the Biden administration considers sending several thousand troops to Europe amid a Russian military buildup.

The State Department decision, announced Sunday, comes as U.S. officials have warned that an attack could come at any time.

Protesters March in Washington Against Covid-19 Vaccine Mandates

Protesters rallied in the nation's capital Sunday against government mandates for Covid-19 vaccinations, a sign of the challenges for public-health officials looking for ways to persuade more Americans to get the shots.

Protesters marched along the National Mall and gathered in front of the Lincoln Memorial, despite cold temperatures Sunday morning.

Former Minneapolis Police Officers' Trial Begins for Allegedly Violating George Floyd's Civil Rights

The legal fallout from the May 2020 killing of George Floyd enters its next chapter Monday, when federal prosecutors will have the first opportunity to make the case that three of the former police officers who were on the scene that day should be punished for his death.

Wisconsin's Field of Democratic Senate Hopefuls Is Lining Up on Left of Biden

The current top tier of Democrats campaigning for U.S. Senate in Wisconsin includes a lieutenant governor, a state treasurer, a county executive and a former Goldman Sachs analyst who is a billionaire's son. None could be described as centrists.

In a state decided by less than 1 percentage point in the 2020 presidential election-the third-narrowest outcome nationally-six Democrats who have raised the most money so far are all taking positions to the left of President Biden's.

Write to paul.larkins@dowjones.com TODAY IN CANADA

Earnings:

None

Economic Indicators:

None

Stocks to Watch:

Endeavour Mining reported 2021 gold production above guidance and reaffirmed the outlook for 2022.

On 2021 production:

"Strong 4Q-2021 production of 398koz, up 4% over 3Q-2021, while AISC remained stable at around $900/oz."

"Record FY-2021 production of 1,536koz, beating the annual guidance of 1,365-1,495koz, at an AISC of around $880/oz, achieving the annual guidance of $850-900/oz; marks ninth consecutive year of achieving or beating annual guidance."

On 2022 outlook:

"FY-2022 production guidance of 1,400-1,500koz at AISC of $890-940/oz, in line with outlook provided during June 2021 investor day."

On finances and shareholder distributions:

"Net cash position of $76m achieved at year-end, despite absorbing circa $330m of Teranga net debt and paying $268m in shareholder returns during the year."

"2H-2021 dividend of $70m declared, totalling $140m for FY-2021 which is above the minimum committed dividend of $125m for the full year."

"Share buybacks continue to supplement shareholder returns with a total of $138m of shares repurchased since April 2021, $44m of which were repurchased in 4Q-2021."

Centamin's Performance Should Start to Improve This Year: RBC Capital Markets

2022 is set to be another challenging year for gold miner Centamin from a cash-flow perspective, but over the next 12 months, production and costs should start to move in the right direction, Tyler Broda from RBC Capital Markets said.

There are a lot of catalysts this year, including updates on exploration, a pre-feasibility study for the Doropo project in Ivory Coast and a potential change in the company's capital structure, Broda noted.

Centamin shares continue to be attractive, considering the upside potential of its flagship Sukari gold mine in Egypt, and the unpriced optionality associated with its other exploration projects, Broda said, reaffirming an outperform rating on the stock.

Expected Major Events for Monday

00:30/JPN: Jan Japan Flash Manufacturing PMI

08:15/FRA: Jan France Flash PMI

08:30/GER: Jan Germany Flash PMI

09:30/UK: Jan Flash UK PMI

13:30/US: Dec CFNAI Chicago Fed National Activity Index

14:45/US: Jan US Flash Manufacturing PMI

14:45/US: Jan US Flash Services PMI

All times in GMT. Powered by Kantar Media and Dow Jones.

Expected Earnings for Monday

Advaxis Inc (ADXS) is expected to report for 4Q.

AltiGen Communications (ATGN) is expected to report for 1Q.

Atlantic Capital Bancshares Inc (ACBI) is expected to report $0.52 for 4Q.

BancorpSouth Bank is expected to report $-0.52 for 4Q.

Bank Of Marin Bancorp (BMRC) is expected to report $0.60 for 4Q.

Bank of Hawaii Corp (BOH) is expected to report $1.35 for 4Q.

Brown & Brown (BRO) is expected to report $0.39 for 4Q.

Business First Bancshares Inc (BFST) is expected to report for 4Q.

California First Leasing Corp (CFNB) is expected to report for 2Q.

City Holding Co (CHCO) is expected to report $1.33 for 4Q.

Community Bank System (CBU) is expected to report $0.82 for 4Q.

Crane Co (CR) is expected to report $1.18 for 4Q.

Enterprise Financial Services Corp (EFSC) is expected to report $1.18 for 4Q.

Equity Lifestyle Properties Inc (ELS) is expected to report for 4Q.

Esquire Financial Holdings Inc (ESQ) is expected to report $0.65 for 4Q.

First Capital Inc (FCAP) is expected to report for 4Q.

Flexsteel (FLXS) is expected to report for 2Q.

German American Bancorp (GABC) is expected to report $0.73 for 4Q.

Great Southern Bancorp (GSBC) is expected to report $1.27 for 4Q.

Halliburton Co (HAL) is expected to report $0.35 for 4Q.

HomeStreet Inc (HMST) is expected to report $1.31 for 4Q.

Hope Bancorp Inc (HOPE) is expected to report $0.41 for 4Q.

IBM (IBM) is expected to report $3.08 for 4Q.

Inter Parfums Inc (IPAR) is expected to report for 4Q.

Investar Holding Corp (ISTR) is expected to report $0.54 for 4Q.

Magyar Bancorp (MGYR) is expected to report for 1Q.

Northwest Bancshares Inc (NWBI) is expected to report $0.22 for 4Q.

Park National (PRK) is expected to report $2.14 for 4Q.

Peoples Bancorp of NC (PEBK) is expected to report for 4Q.

PetMed Express (PETS) is expected to report $0.31 for 3Q.

RBB Bancorp (RBB) is expected to report $0.73 for 4Q.

ServisFirst Bancshares Inc (SFBS) is expected to report $0.98 for 4Q.

Sierra Bancorp (BSRR) is expected to report $0.66 for 4Q.

SmartFinancial Inc (SMBK) is expected to report $0.48 for 4Q.

Southern Missouri Bancorp Inc (SMBC) is expected to report $1.21 for 2Q.

Steel Dynamics (STLD) is expected to report $5.78 for 4Q.

Timberland Bancorp Inc (TSBK) is expected to report for 1Q.

Trustco Bank Corp (TRST) is expected to report for 4Q.

WSFS Financial (WSFS) is expected to report $-0.08 for 4Q.

Zions Bancorp (ZION) is expected to report $1.31 for 4Q.

Powered by Kantar Media and Dow Jones.

ANALYST RATINGS ACTIONS

Activision Blizzard Cut to Market Perform From Outperform by Raymond James

Acumen Pharmaceuticals Raised to Buy From Neutral by B of A Securities

Antero Resources Raised to Buy From Neutral by Goldman Sachs

Beyond Meat Cut to Hold From Reduce by HSBC

Boise Cascade Raised to Neutral From Sell by Goldman Sachs

Callon Petroleum Cut to Underweight From Neutral by JP Morgan

Centennial Resource Devt Raised to Neutral From Underweight by JP Morgan

Cloudflare Raised to Outperform From Neutral by Credit Suisse

Cognizant Tech Solutions Raised to Neutral From Sell by UBS

Commercial Metals Raised to Outperform From Neutral by Exane BNP Paribas

Coty Raised to Buy From Neutral by DA Davidson

Devon Energy Cut to Neutral From Buy by Goldman Sachs

Ecolab Cut to Sector Perform From Outperform by RBC Capital

Eli Lilly Raised to Buy From Hold by DZ Bank

HB Fuller Cut to Neutral From Overweight by JP Morgan

Herc Holdings Raised to Buy From Neutral by Northcoast Research

Inovio Pharma Raised to Neutral From Underperform by B of A Securities

Intuitive Surgical Raised to Buy From Neutral by Citigroup

KB Home Raised to Buy From Neutral by Seaport Global

Louisiana-Pacific Raised to Neutral From Sell by Goldman Sachs

Mayville Engineering Cut to Neutral From Outperform by Baird

Moderna Raised to Neutral From Underperform by B of A Securities

Netflix Cut to Equal-Weight From Overweight by Barclays

Netflix Cut to Equal-Weight From Overweight by Morgan Stanley

Netflix Cut to Hold From Buy by Truist Securities

Netflix Cut to In-Line From Outperform by Evercore ISI Group

Netflix Cut to Neutral From Buy by Monness, Crespi, Hardt

Netflix Cut to Neutral From Outperform by Baird

Netflix Cut to Neutral From Outperform by Credit Suisse

Netflix Cut to Sector Weight From Overweight by Keybanc

Netflix Cut to Underperform From Neutral by Macquarie

Peloton Interactive Raised to Buy From Hold by Stifel

Spire Inc Cut to Neutral From Buy by Guggenheim

SVB Financial Cut to Neutral From Buy by Janney Montgomery Scott

Travelers Cut to Equal-Weight From Overweight by Barclays

Webster Raised to Strong Buy From Outperform by Raymond James

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

January 24, 2022 05:53 ET (10:53 GMT)

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