Markets Today: Stocks Slightly Higher on Lower Bond Yields

Morning Markets

December S&P 500 futures (ESZ22) this morning are up by +0.10%.  Stock index futures gave up most of their overnight gains after this morning’s U.S. economic news showed August personal spending and inflation data topped expectations, bolstering inflation concerns and strengthening the likelihood for the Fed to maintain its aggressive monetary tightening campaign.  Lower T-note yields today are supporting gains in stock index futures, with the 10-year T-note yield down -9.5 bp at 3.690%.

A slump of more than -9% in Nike in pre-market trading also undercut apparel makers and weighed on the overall market after Nike reported a surge in inventory and disappointing profitability.

U.S. Aug personal spending rose +0.4% m/m, stronger than expectations of +0.2% m/m.  Also, Aug personal income rose +0.3% m/m, right on expectations. 

The U.S. Aug PCE core deflator rose +0.6% m/m and +4.9% y/y, stronger than expectations of +0.5% m/m and +4.7% y/y.

The Euro Stoxx 50 today is up by +0.28%.   European stocks edged higher as fund managers rebalance portfolios and square up positions, with today being the last trading day of the month and quarter.  Lower government bond yields have also sparked some short-covering in equities, with the 10-year German bund yield down -7.5 bp to 2.106%.  However, gains in equities are muted on inflation concerns after today’s news that Eurozone Sep consumer prices surged to a record +10.0% y/y. 

Eurozone Sep CPI rose by a record +10.0% y/y, stronger than expectations of +9.7% y/y.  Also, the Eurozone Sep core CPI rose by a record  +4.8% y/y, slightly stronger than expectations of +4.7% y/y.

Asian markets today closed lower.  China’s Shanghai Composite Index closed down -0.55%, and Japan’s Nikkei Stock Index closed down -1.83%. 

China’s Shanghai Composite Index today dropped to a 4-1/2 month low and closed moderately lower.  Concern that rising interest rates around the world will spark a global recession are undercutting stock prices.  Mixed Chinese economic news also weighed on stocks as pandemic lockdowns in China led to a decline in services sector activity in China for the third straight month. Property stocks and real estate companies also fell after the China Real Estate Information Corp reported that China’s top 100 property developers saw their combined contract sales plunged -25.4% y/y to 571 billion yuan in September.   

The China Sep manufacturing PMI rose +0.7 to 50.1, stronger than expectations of 49.7.  However, the China Sep non-manufacturing PMI fell -2.0 to 50.6, weaker than expectations of 52.4.

Japan’s Nikkei Stock Index slid to a 3-1/4 month low. Weakness in Japanese chipmakers led technology stocks lower today after Micron gave a weak forecast for the current quarter.  Also, Japanese automakers declined following U.S. peers lower Thursday after disappointing sales results from used-car dealer CarMax.  In addition, suppliers of Nike slid after the company reported a surge in inventory and disappointing profitability on higher discounts. Today’s Japanese economic news was mixed for stocks.

Japan Aug industrial production rose +2.7% m/m, stronger than expectations of +0.2% m/m.

Japan Aug retail sales rose +1.4% m/m, stronger than expectations of +0.2% m/m and the largest increase in 5 months.

The Japan Sep consumer confidence index unexpectedly fell -1.7 to 30.8, weaker than expectations of an increase to 33.3.

Pre-Market U.S. Stock Movers

Micron (MU) climbed more than +3% in pre-market trading after Summit Insights Group upgraded the stock to buy from hold, predicting dynamics in the memory chips (DRAM) industry to improve “once channel inventory correction is completed by the first half of 2023.” 

Amylyx Pharmaceuticals (AMLX) jumped more than -11% in pre-market trading after winning FDA approval for its Relyvrio drug to treat amyotrophic lateral sclerosis (ALS) in adults. 

Rithm Capital Corp (RITM) gained +1% in pre-market trading after Piper Sandler upgraded the stock to neutral from underweight. 

Nike (NKE) tumbled more than -9% in pre-market trading after reporting Q1 gross margins of 44.3%, below the consensus of 45.4%. Also, Lululemon Athletica (LULU) fell more than -4%, Foot Locker (FL) fell more than -3%, and Skechers (SKX) fell -2% on the news.

Rent-A-Center (RCII) plunged more than -17% in pre-market trading after forecasting Q3 adjusted EPS of 85 cents-95 cents, well below the consensus of $1.16. 

VF Corp (VFC) slid nearly -1% in pre-market trading after Deutsche Bank cut its price target on the stock to $43 from $56.

Today’s U.S. Earnings Reports (9/30/2022)

2seventy bio Inc (TSVT), Carnival Corp (CCL), CIRCOR International Inc (CIR), National Energy Services Reuni (NESR).

• Pre-Market Brief: Stocks Mixed as Economic Outlook Darkens
• Stocks Falter as Fed Officials Remain Hawkish
• You Might Want to Think Twice Before Giving Up on Roblox
• Investors Still Waiting for Signs of a Bottom in Technology Stocks