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Day Ahead: Top 3 Things to Watch

Investing.com - Here’s a preview of the top 3 things that could rock markets tomorrow.

1. FedEx Heads Earnings Calendar

Package delivery behemoth FedEx (NYSE:FDX) leads earnings tomorrow, reporting after the bell.

The company is expected to report earnings of $3.14 a share for its fiscal third quarter, up from $3.11 a year ago, according to analysts polled by Investing.com. Revenue is forecast at $17.62 billion, up 6.8% from a year ago. FedEx shares rose 2.5% on Monday and are up more than 13% this year.

“FedEx stock looks cheap when compared to its peers after the significant downward correction of the past 12 months,” Investing.com’s Haris Anwar wrote Monday. “Its price-to-earnings ratio of 15.68 is lower than the industry average of 25.84.”

And whatever numbers FedEx reports tomorrow, investors shouldn’t forget the dividend of $0.65 per share, with an annual yield of 1.45%, Anwar said.

“This yield looks meager when compared to some high-yielding stocks in the market,” he said. “But we would still prefer FedEx stock over other, riskier, names because the company has a lot of room to grow its payouts.”

Ahead of trading, Michaels Companies Inc (NASDAQ:MIK), which operates the Michaels hobby-center chain and the Aaron Brothers picture-framing business, is expected to report $1.42 a share in the fiscal-fourth quarter, up from $1.19 a share a year ago. Revenue is expected at $1.78 billion, down 5.8% from a year ago. The stock is down nearly 47% from its 52-week high.

After the bell, Steelcase (NYSE:SCS), the venerable maker of office furniture systems, is expected to report 26 cents a share in earnings for the fiscal-fourth quarter, up from 19 cents a year ago.

And Smartsheet (NYSE:SMAR), which went public a year ago, is expected to report a loss of 14 cents a share for the fiscal-fourth quarter. Analysts see revenue jumping 50.8% to $49.7 million. The company makes cloud-based collaboration and work management software. The stock is up 191% since its IPO.

2. Factory Orders Seen Rising

It’s a light economic calendar tomorrow and investors will likely want to keep their powder dry until the Federal Reserve weighs in on interest rates on Wednesday.

The Census Bureau will report January factory orders at 10:00 AM ET (14:00 GMT). On average, economists expect that orders rose 0.3% in January, according to forecasts compiled by Investing.com.

Factory orders rose just 0.1% in December, well below the 1.5% the market was expecting at the time.

3. Draw in Crude Supplies to Continue?

A fresh batch of crude oil inventory data from the American Petroleum Institute will be closely watched to determine whether U.S. oil producers have ramped up output following data last Tuesday showing a draw in oil inventories.

The American Petroleum Institute reported crude oil stockpiles fell by 2.6 million barrels for the week ended March 15.

Crude oil futures gained 1% to settle at $59.09 a barrel after Saudi Arabia talked up the prospect of extending output cuts beyond June into the second half of 2019.

U.S. oil prices are near four-month highs, but some have warned that a rise non-OPEC production, led by U.S. producers, could offset OPEC's efforts to avert a glut in global supplies.

"When it comes to non-OPEC production, all eyes are on the U.S.," Stratas Advisors said, but added that while it expects a substantial amount of U.S. production growth to occur this year (up 1.1 million bpd) "we do not think volumes will be overwhelming."

The rise in crude prices has also boosted demand for currencies with strong ties to the price of oil like the Norwegian Krone.

"Tactically, we still like longs in NOK at these (oil) prices. Short USD/NOK and short EUR/NOK both appeal," Societe Generale said in a note.

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