Pre-Market Brief: Stocks Mixed as Bond Yields Rebound

Morning Markets

December S&P 500 futures (ESZ22) are trending lower -1.15% this morning, erasing yesterday’s gains after three major US benchmark indices bounced back sharply during the regular session as risk appetite returned after the Bank of England launched an emergency bond-buying program, triggering a slump in U.S. Treasury yields. Three major U.S. stock indexes were fueled primarily by gains in the Oil & Gas, Consumer Services, and Basic Materials sectors. 

The Bank of England said it will buy as much as 5 billion pounds a day of long-dated government bonds until October 14th. It spent about a billion pounds on Wednesday, and 30-year gilt yields fell 105 basis points, which is the most substantial drop ever.

"The yield on the two-year Treasury has gone up persistently over the course of the last several weeks, and for the first time, we've seen it go down for two days in a row, and that has given equities a breather," said Art Hogan, a chief market strategist at B. Riley Wealth.

However, the outlook remains uncertain as central banks across the globe are expected to keep rising interest rates this year. Atlanta Fed President Raphael Bostic projected on Wednesday that the Fed would need to hike interest rate by another 75-basis-point in November. "Inflation is still high ... and it is not moving with enough speed back down to our 2% target," Bostic said in a conference call from Atlanta. Meanwhile, U.S. rate futures have priced in a 41.2% chance of a 50 basis point rate increase and a 58.8% chance of a 75 basis point hike at November's monetary policy meeting.

Today, all eyes are focused on the U.S. Gross Domestic Product (GDP) data in a couple of hours. Economists, on average, forecast that the U.S. GDP in Q2 will stand at -0.6% q/q, compared to the previous value of -1.6% q/q.

Also, investors are likely to focus on the U.S. Initial Jobless Claims data, which was at 213K last week. Economists foresee the new figure to be 215K.

Canada's GDP data will be reported today as well. Economists foresee this figure to come in at -0.1% m/m, compared to the previous value of +0.1% m/m.

In the bond markets, United States 10-Year rates are at 3.850%, up +3.86%.

The Euro Stoxx 50 is down -1.56% this morning, giving back yesterday’s gains as the Bank of England move fizzled out. Investors are awaiting Germany's inflation data for clues on interest rate increases by the ECB. Europe’s economic outlook remains highly uncertain, especially considering the region’s current energy crisis as winter approaches. Another negative factor for European equities is the more than -3% drop in shares of Swedish group H&M (HMB.S.DX) after the company reported dismal earnings.

The Spanish Consumer Price Index (CPI) & Harmonised Index of Consumer Prices (HICP), and Italian Producer Price Index (PPI) data were released today. 

Spain's CPI has been reported at +9.0% y/y, weaker than an economic forecast of +10.0% y/y.

The Spanish September HICP came in at +9.3% y/y, weaker than expectations of +10.1% y/y.

Italy's August PPI stood at 40.1% y/y, compared to the previous value of 36.9% y/y.

Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.13%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.95%.

China’s Shanghai Composite today erased earlier gains and closed down amid concerns about the country's coronavirus-driven economic slowdown. On the positive side, the Chinese government announced more stimulus measures. The country allocated about 300 billion yuan for infrastructure projects through three state policy banks, aiming to stimulate economic growth by launching large public infrastructure projects.

At the same time, Japan’s Nikkei Stock Index rebounded sharply from steep losses this week, driven by gains in the Pharmaceutical Industry, Power, and Paper & Pulp sectors. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up 7.56% to 26.33, a new 3-months high.

Pre-Market U.S. Stock Movers

Windtree Therapeutics Inc (WINT) spiked over +50% in pre-market trading after the company announced that the SEISMiC study met its primary endpoint. 

Altus Power Inc (AMPS) plunged more than -16% in pre-market trading after the company's selling stockholder affiliated with Blackstone announced the offering of 7M shares of Class A common stock for holders.

First Solar Inc (FSLR) rose about +1% in pre-market trading after Evercore ISI upgraded the stock to outperform from in line with a price target of $150.00, up from $88.00.

Sunlight Financial Holdings Inc (SUNL) tumbled more than -20% in pre-market trading after the company withdrew its FY22 guidance.

Connexa Sports Technologies Inc (CNXA) plunged over -15% in pre-market trading after the company entered into a securities purchase agreement with a single institutional investor for the issuance and sale of 12M shares of its common stock.  

Today’s U.S. Earnings Spotlight: Thursday - September 29th

Nike (NKE), Micron (MU), Aspen (AZPN), CarMax (KMX), Carnival ADS (CUK), Carnival Corp (CCL), Sprott Physical Gold and Silver Trust (CEF), Worthington Industries (WOR), ETV Limited Duration (EVV), Rite Aid (RAD), Skillsoft Corp Class A (SKIL), Mesabi Trust (MSB), Comtech (CMTL), Niocorp Developments (NIOBF), Bassett (BSET), Bridgford (BRID), Renalytix AI Nas (RNLX), PharmaCyte Biotech (PMCB), Via Optronics (VIAO), Wolford ADR (WLFDY), US Gold (USAU), Applied Genetic (AGTC), Coffee Holding (JVA), Sears (SHLDQ), Terrace Energy Corp. (TCRRF), Christopher Banks (CBKCQ), Bon-Ton Stores (BONTQ).

• Quite a Month This Week for US Stock Indexes
• This VIX Butterfly Spread Profits If VIX Is Between 30 and 50
• Stocks Rally as Bond Yields Plunge on BOE Bond-Buying
• Micron Earnings May Give Clues on Holiday Shopping Demand