Pre-Market Brief: Stocks Slump As Recessionary Fears Grow

Morning Markets

September S&P 500 futures (ESU22) are trending down -1.02% this morning after three major US benchmark indices resumed declines during the regular session as a variety of economic data failed to change the expected path of aggressive tightening by the Federal Reserve amid growing fears of a global recession. Three major U.S. stock indexes were weighted down primarily by losses in the Oil & Gas, Utilities, and Technology sectors. Another negative factor for U.S. stock futures is the more than -18% drop in FedEx Corp. in pre-market trading after the company warned for the first quarter and withdrew guidance for the year. 

On the ground of this, U.S. rate futures have priced in a 74% chance of a 75 basis point rate increase and a 26% chance of a super-sized 100-basis-point hike at next week's monetary policy meeting.

"The question is what’s going to happen in November?" said Robert Pavlik, a senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. "If the Fed really wants to handle it properly, it will be 50 basis-point drop in November, a 25 basis-point cut in December, and then they'll reassess."

Investors are likely to focus on Michigan Consumer Sentiment data today, which was at 58.2 in August. Economists forecast the new figure to be 60.0.

Canadian August Housing Starts data will be reported today. Economists foresee this figure to stand at 265.0K, down from July's figure of 275.3K.

Canadian Wholesale Sales data will come in today as well. Economists, on average, expect this figure to be -0.6% m/m, compared to the previous value of +0.1% m/m.

In the bond markets, United States 10-Year rates are at 3.467%, up +0.23%.

The Euro Stoxx 50 is down -1.75% this morning amid renewed fears that aggressive monetary tightening will lead to a global recession. European stocks have received a negative handover from Wall Street after the major U.S. indices closed sharply lower. At the same time, the European Central Bank signaled more hikes ahead to combat soaring prices, fueling recession concerns even more.

Eurozone Consumer Price Index (CPI), Italy CPI, U.K. Retail Sales, and U.K. Core Retail Sales data were released today. 

U.K. August Retail Sales came in at -1.6% m/m and -5.4% y/y, weaker than expectations of -0.5% m/m and -4.2% y/y.

U.K. August Core Retail Sales stood at -1.6% m/m and -5.0% y/y, weaker than expectations of -0.7% m/m and -3.4% y/y.

Italy's August CPI rose +0.8% m/m and +8.4% y/y, in line with expectations of +0.8% m/m and +8.4% y/y.

Eurozone August CPI rose +0.6% m/m and +9.1% y/y, compared to expectations of +0.5% m/m and +9.1% y/y.

Asian stock markets today closed in the red. China’s Shanghai Composite Index (SHCOMP) closed down -2.30%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -1.11%.

China’s Shanghai Composite today closed down amid the drop in real estate stocks after data showed Chinese house prices fell at their worst pace in seven years. On the other hand, the Chinese August Industrial Production has been reported at +4.2% y/y, above an economic forecast of +3.8% y/y and above July's figure of +3.8% y/y.

The Chinese Unemployment Rate stood at 5.3% in September, stronger than forecasts of 5.4%.

At the same time, Japan’s Nikkei 225 Stock Index tumbled today, fueled by losses in the Steel, Warehousing, and Shipbuilding sectors. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down 2.47% to 20.18.

Pre-Market U.S. Stock Movers

FedEx Corporation (FDX) plunged more than -18% in pre-market trading after the firm reported preliminary Q1 results that widely missed estimates. Also, the company withdrew guidance for the year. KeyBanc downgraded the stock to sector weight from overweight.

Amazon.com Inc (AMZN) dropped more than -2% in pre-market trading on FedEx's warning.

Adobe Systems Incorporated (ADBE) fell about -2% in pre-market trading after Oppenheimer downgraded the stock to perform from outperform and removed a $400 price target on the company's stock. 

United Parcel Service Inc (UPS) plunged about -6% in pre-market trading after FedEx's profit warning.

Syros Pharmaceuticals (SYRS) gained +14%, and Tyme Technologies (TYME) jumped +13% in pre-market trading after shareholders voted in favor of the merger between the two biotech companies. 

General Electric Company (GE) fell about -4% in pre-market trading after the company discussed continued supply chain problems at yesterday's conference.

InterContinental Hotels Group PLC ADR (IHG) fell about -4% in pre-market trading after Citi downgraded the stock to sell from neutral.

Today’s U.S. Earnings Spotlight: Friday - September 16th

Aspen (AZPN), Sprott Physical Gold and Silver Trust (CEF), Skillsoft Corp Class A (SKIL), Mesabi Trust (MSB), Niocorp Developments (NIOBF), Anixa Biosciences (ANIX), Bridgford (BRID), Champions Oncology (CSBR), Renalytix AI Nas (RNLX), Butler National (BUKS), PharmaCyte Biotech (PMCB), Applied Genetic (AGTC), Sears (SHLDQ), Coffee Holding (JVA), InMed Pharmaceuticals (INM), Aytu BioScience (AYTU), Sunwin Stevia International Inc (SUWN), Bon-Ton Stores (BONTQ).

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