Pre-Market Brief: Stocks Mixed Ahead Of FOMC Meeting

Morning Markets

December S&P 500 futures (ESZ22) are moderately down -0.08% this morning after three major US benchmark indices rebounded from 9-week lows to close higher during the regular session as market participants turned their attention to this week's policy meeting at the Federal Reserve. Three major U.S. stock indexes were fueled primarily by gains in the Basic Materials, Utilities, and Consumer Goods sectors.

"This is all about what's going to happen on Wednesday and what comes out of the Fed's hands on Wednesday, so I think people are just going to wait and see until then. We had a poor print when the Consumer Price Index (CPI) came in, so the Fed - who is behind the 8-ball - is now trying to get ahead of the curve and curb inflation, and that (awareness) is driving equity markets," said Josh Markman, a partner at Bel Air Investment Advisors. On the ground of this, U.S. rate futures have priced in an 84% chance of a 75 basis point rate increase and a 26% chance of a full 100-basis-point hike later in the week.

Today, investors are likely to focus on the U.S. Building Permits data, which was at 1.685M in July. Economists, on average, forecast the new figure to be 1.610M.

Canada's August core CPI and CPI data will be reported today. Economists, on average, expect that the CPI figure will stand at -0.1% m/m.

U.S. Housing Starts data will come in today as well. Economists foresee this figure to be 1.445M in August, compared to the previous value of 1.446M.

In the bond markets, United States 10-Year rates are at 3.520%, up +0.89%.

The Euro Stoxx 50 is volatile this morning, dropping from +0.43% to -0.83% as market participants remain cautious ahead of the start of the U.S. Federal Reserve’s two-day policy meeting. In addition, the Bank of England, the Swiss National Bank, and the Norges Bank in Norway are expected to hike rates this week.

The German Producer Price Index (PPI) data were released today. 

Germany's August PPI stood at +7.9% m/m and +45.8% y/y, stronger than expectations of +1.6% m/m and +37.1% y/y.

Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.22%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.44%.

China’s Shanghai Composite today closed up following the rebound on Wall Street ahead of the Fed policy meeting. In addition, China's government noted that a revision to its debatable COVID-19 hotel quarantine policy for all arrivals was coming soon. 

The Chinese PBoC Loan Prime Rate stood at 3.65%, in line with forecasts.

"The market will now pay close attention to the tone of speech coming out of the meeting. As long as the Fed officials don't deliver strong hawkish remarks, stock markets could (further) rebound," said Zhang Zihua, a chief investment officer at Beijing Yunyi Asset Management.

At the same time, Japan’s Nikkei Stock Index closed higher today, fueled by gains in the Banking, Gas & Water, and Insurance sectors. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up 4.16% to 21.02.

The Japanese August National Core CPI has been reported at +2.8% y/y, stronger than an economic forecast of +2.7% y/y.

Pre-Market U.S. Stock Movers

Ford Motor Company (F) dropped more than -4% in pre-market trading after the company announced that inflation-related supplier costs during Q3 will run about $1.0 billion higher than initially expected. In addition, the automaker expects an inventory of about 40,000-45,000 vehicles in Q3 amid the lack of certain parts.

General Motors Company (GM) fell about -2% in pre-market trading after peer Ford warned about $1 billion in higher inflation-related costs. On the positive side, Cathie Wood's ARK Investment bought 120K shares of General Motors yesterday.

Virios Therapeutics Llc (VIRI) plunged more than -70% in pre-market trading after its FORTRESS study did not meet the primary endpoint. In addition, the company announced the pricing of a $5 million stock offering.

Enovix Corp (ENVX) rose about +3% in pre-market trading after Piper Sandler initiated coverage with an overweight rating and a price target of $29.00.

Cognex Corporation (CGNX) gained over +3% in pre-market trading after the company increased its revenue guidance for the third quarter of 2022 ahead of the company's triennial Analyst Day. Cognex now expects revenue to be between $195 million and $205 million, up from previous guidance of $160 million to $180 million.

Change Healthcare Inc (CHNG) jumped over 7% in pre-market trading after a judge denied the U.S. Dept. of Justice's request to block its sale to UnitedHealth (UNH).

Today’s U.S. Earnings Spotlight: Tuesday - September 20th

Kingfisher ADR (KGFHY), Apogee (APOG), Stitch Fix (SFIX), Aurora Cannabis (ACB), Ecmoho (MOHO), Destination Maternity (DESTQ).

More Stock Market News from Barchart

• 2 Bull Call Spread Trade Ideas For ENPH This Tuesday
• Stocks Recover Early Losses With Help From Apple
• Citizens Financial Group Raised Its Dividend Giving It a 4.5% Yield
• Cathie Wood’s ARK ETFs Depend Heavily on Nvidia