Markets Today: Stocks Under Pressure From Weak Energy Stocks and Higher Bond Yields

Morning Markets

December S&P 500 futures (ESZ22) this morning are down by -0.22% at a 1-week low. Weakness in energy stocks in pre-market trading is dragging the overall market lower, with the price of WTI crude oil down more than -2%.  Also, technology stocks are lower, with Meta Platforms down more than -1% in pre-market trading after being downgraded by Atlantic Equities, and Intel down 1% after Wells Fargo cut its price target on the stock.  The markets are awaiting earnings season as big U.S. banks kick off the Q3 earnings season in earnest later this week.

Higher T-note yields are also weighing on stock index futures this morning after the 10-year T-note yield today rose to a 1-1/2 week high of 4.005%.  In addition, the markets are bracing for U.S. consumer price data on Thursday.

The Euro Stoxx 50 today is down by -0.30% and fell to a 1-week low.  Weakness in technology and energy stocks is leading the overall market lower.  Also, concern about the escalation of the war in Ukraine weighs on European stocks after Russian President Putin threatened further missile attacks on Ukraine after unleashing the most intense barrage of strikes Monday on Ukraine since the war began.

Italy Aug industrial production unexpectedly rose +2.3% m/m, stronger than expectations of a -0.1% m/m decline and the largest increase in 6 months.

Asian markets today settled mixed.  China’s Shanghai Composite closed up +0.11%, and Japan’s Nikkei Stock Index closed down -2.64%. 

China’s Shanghai Composite today recovered from a 5-1/2 month low and posted modest gains.  Chinese stocks recovered in late trading on rumors of state-sponsored buying of equities.  The government typically steps in to support the market ahead of important events such as the once-in-five-year party congress that begins later this week.  Stocks today initially fell after an article in the state-sponsored People’s Daily said Covid Zero policy is “sustainable” and the country must stick to the strategy.  That dampened speculation that China would fully reopen its economy after the end of the week-long party congress.

Japan’s Nikkei Stock Index tumbled to a 1-week low today as Japanese markets reopened from Monday’s holiday.  A plunge in Japanese chip stocks led the overall market lower after the U.S. announced new curbs on companies conducting technology business with China last Friday. Morgan Stanley warned today that the broader restrictions around supercomputers and multinational capital investment in China could be “disruptive.”  Japanese tool makers get around 30% of their new orders from China.  

The Japan Sep eco watchers outlook survey unexpectedly fell -0.2 to 49.2, weaker than expectations of an increase to 50.8.

Pre-Market U.S. Stock Movers

Energy stocks and energy service providers are moving lower in pre-market trading, with the price of WTI crude down more than -2%.  Devon Energy (DVN), ConocoPhillips (COP), Marathon Oil (MRO), Occidental Petroleum (OXY), and Schlumberger (SLB) are down more than -2%.

Meta Platforms (META) slid more than -1% in pre-market trading after Atlantic Equities downgraded the stock to neutral from overweight. 

Leggett & Platt (LEG) tumbled more than -8% in pre-market trading after cutting its full-year sales forecast to $5.1 billion-$5.2 billion from a previous forecast of $5.2 billion-$5.4 billion, weaker than the consensus of $5.32 billion. 

Zoom Video Communications (ZM) dropped more than -3% in pre-market trading after Morgan Stanley downgraded the stock to equal weight from overweight. 

Intel (INTC) fell almost -1% in pre-market trading after Wells Fargo Securities cut its price target on the stock to $32 from $45. 

Skyworks Solutions (SWKS) fell nearly -3% in pre-market trading after Wells Fargo Securities downgraded the stock to equal weight from overweight. 

Amgen (AMGN) gained more than +2% in pre-market trading after Morgan Stanley upgraded the stock to overweight from equal weight.

Lululemon Athletica (LULU) rose more than +1% in pre-market trading after Piper Sandler upgraded the stock to overweight from neutral.  

Marvel Technology (MRVL) gained nearly +1% in pre-market trading after Wells Fargo Securities upgraded the stock overweight from equal weight. 

Warner Music Group (WMG) climbed more than +2% in pre-market trading after Goldman Sachs reinstated coverage of the stock with a buy rating and a price target of $32. 

Today’s U.S. Earnings Reports (10/11/2022)

Applied Blockchain Inc (APLD), AZZ Inc (AZZ), E2open Parent Holdings Inc (ETWO), Matson Inc (MATX).

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