Pre-Market Brief: Stocks Mixed as Economic Outlook Darkens

Morning Markets

December S&P 500 futures (ESZ22) are trending up +1.03% after three major US benchmark indices continued to fall deeper into correction territory during the regular trading session as investors fretted about further expected interest rate hikes by Federal Reserve officials and decelerating global growth. Three major U.S. stock indexes were weighted down primarily by losses in the Utilities, Consumer Goods, and Technology sectors. 

The latest jobless claims data showed that new claims for unemployment benefits fell to a five-month low of 193,000, suggesting the Fed has more work to do. 

"Good news is bad news in that job number again reiterates that the Fed has a long way to go. The fear in the marketplace is that the Fed is going to push us into a very deep recession, which will cause an earnings recession, which is why the market is selling off," said Phil Blancato, a head of Ladenburg Thalmann Asset Management in New York. 

Meanwhile, U.S. rate futures have priced in a 41.5% chance of a 50 basis point rate increase and a 58.5% chance of a 75 basis point hike at November's monetary policy meeting. Cleveland Fed President Loretta J. Mester said that inflation was 'unacceptably high' and repeated the Fed's readiness to bring inflation down to the 2% target even if the economy slows.

Today, all eyes are focused on the U.S. Core PCE Price Index data in a couple of hours. Economists, on average, forecast that the U.S. August Core PCE Price Index will come in at +0.5% m/m, compared to the previous value of +0.1% m/m.

Also, investors are likely to focus on the Personal Spending data, which was at +0.1% m/m in July. Economists, on average, forecast the August figure to be +0.2% m/m.

U.S. Michigan Consumer Sentiment data will be reported today as well. Economists foresee the new figure to be 59.5, compared to the previous value of 59.5.

In the bond markets, United States 10-Year rates are at 3.714%, down -0.88%.

The Euro Stoxx 50 is up +1.10% this morning amid better than expected U.K. GDP growth data in the second quarter. More precisely, U.K. GDP has been reported at +4.4% y/y in Q2, stronger than an economic forecast of +2.9% y/y. However, those gains are likely to be limited due to the continued fears about lower growth caused by the central banks' monetary tightening across the globe and geopolitical concerns. In addition, Thursday’s hot German inflation data suggests the European Central Bank will continue to hike interest rates aggressively. 

Eurozone CPI, U.K. Nationwide HPI, U.K. Current Account, French Consumer Spending, French CPI & HICP, Switzerland's KOF Leading Indicators, German Unemployment Change, and German Unemployment Rate data were released today. 

Eurozone September CPI (preliminary) has been reported at 10.0%, stronger than expectations of 9.7%.

U.K. September Nationwide HPI stood at 0.0% m/m and 9.5% y/y, weaker than expectations of 0.3% m/m and 10% y/y, respectively.

U.K. Current Account was -33.8B in Q2, stronger than expectations of -43.8B.

The French Consumer Spending was 0.0% m/m in August, stronger than expectations of -0.1% m/m.

France's CPI and HICP figures came in at -0.5% m/m and -0.5% m/m, weaker than expectations of -0.1% m/m and -0.1% m/m, respectively.

Switzerland's KOF Leading Indicators stood at 93.8 in September, stronger than expectations of 84.5.

The German September Unemployment Change came in at 14K, stronger than expectations of 20K.

Germany's Unemployment Rate was 5.5%, in-line with estimates.

Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.55%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -1.83%.

China’s Shanghai Composite today closed down on a worsening economic outlook after surveys of manufacturers showed production and new orders declined in September. In addition, Chinese shares slid amid the recent German inflation reading and the British tax-cut plan.

The Chinese September Manufacturing PMI stood at 50.1, stronger than expectations of 49.6. However, Caixin Manufacturing PMI has been reported at 48.1, below an economic forecast of 49.5.

At the same time, Japan’s Nikkei 225 Stock Index tumbled today on a weakening yen and rising commodity prices, despite better-than-expected industrial production and retail sales data. The index's downward momentum was fueled by losses in the Electrical/Machinery, Power, and Marine Transport sectors. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down 4.94% to 25.03.

Pre-Market U.S. Stock Movers

Amylyx Pharmaceuticals Inc (AMLX) climbed about +7% in pre-market trading after the company received FDA approval for Relyvrio for the treatment of amyotrophic lateral sclerosis (ALS).

Microsoft Corporation (MSFT) rose over +1% in pre-market trading after Raymond James resumed coverage of the stock with an outperform rating and a $300 price target. 

Nike Inc (NKE) plunged more than -9% in pre-market trading after the company reported first-quarter results and warned about gross margin deterioration in FY23.

Uipath Inc (PATH) rose about +1% in pre-market trading after Cathie Wood's ARK Investment bought 951K shares of the company yesterday.

American Virtual Cloud Technologies Inc (AVCT) plunged about -30% after the company announced a 1-for-15 reverse stock split of its issued and outstanding shares of common stock.

Today’s U.S. Earnings Spotlight: Friday - September 30th

Aspen (AZPN), Carnival ADS (CUK), Carnival Corp (CCL), Sprott Physical Gold and Silver Trust (CEF), Skillsoft Corp Class A (SKIL), CIRCOR (CIR), Mesabi Trust (MSB), Niocorp Developments (NIOBF), NextSource Materials (NSRCF), Bridgford (BRID), Wisekey International Holding AG (WKEY), Natuzzi (NTZ), PharmaCyte Biotech (PMCB), Renalytix AI Nas (RNLX), Wolford ADR (WLFDY), US Gold (USAU), Applied Genetic (AGTC), Coffee Holding (JVA), Sears (SHLDQ), Christopher Banks (CBKCQ), Bon-Ton Stores (BONTQ).

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