Morning Markets
December S&P 500 futures (ESZ22) this morning are down by -0.72%. U.S. stock indexes erased an overnight rally and are moderately lower as bond yields climb. Hawkish comments Tuesday evening from Minneapolis Fed President Kashkari pushed up the 10-year T-note yield to a 14-year high of 4.119% when he said the Fed can't pause its campaign of monetary policy tightening if "underlying" inflation is still accelerating.
U.S. stock indexes initially rallied in overnight trade on stronger-than-expected Q3 corporate earnings results. Netflix is up more than +12% in pre-market trading after reporting that Q3 streaming paid memberships rose more than expected. Also, airline stocks are moving higher, led by a +5% jump in United Airlines Holdings in pre-market trading after reporting stronger-than-expected Q3 EPS.Â
This morning’s economic news was mixed for stocks. On the negative side, Sep housing starts fell -8.1% m/m to 1.439 million, weaker than expectations of 1.461 million. Conversely, Sep building permits, a proxy for future construction, unexpectedly rose +1.4% m/m to 1.564 million, stronger than expectations of a decline to 1.530 million.
Minneapolis Fed President Kashkari said the Fed can't pause its campaign of monetary policy tightening once the fed funds rate reaches 4.50% to 4.75% if "underlying" inflation is still accelerating.
The Euro Stoxx 50 today is up by +0.35%. Strength in technology stocks is leading the Euro Stoxx 50 higher today, with ASML Holding NV up more than +5% after forecasting Q4 sales will be higher than expected due to strong demand for its advance chip-making machines.  Higher European government bond yields today are limiting gains in stocks after the UK reported Sep consumer prices rose to +10.1% y/y and matched a 40-year high. The 10-year UK gilt yield is up +6.4 bp to 4.014%, and the 10-year German bund yield is up +8.5 bp to 2.370%.Â
Eurozone Sep CPI was revised downward by -0.1 to 9.9% from the previously reported 10.0% y/y.
Eurozone Aug construction output fell -0.6% m/m.
Asian markets today settled mixed. China’s Shanghai Composite closed down -1.19%, and Japan’s Nikkei Stock Index closed up +0.37%.Â
China’s Shanghai Composite today closed moderately lower. A sell-off in consumer stocks weighed on the overall market on concern about earnings due to ongoing pandemic lockdowns and restrictions in China. Stock losses accelerated today after Beijing reported that new Covid cases rose to a 4-month high, which may lead to additional lockdowns and restrictions that undercut economic activity.Â
Japan’s Nikkei Stock Index today climbed to a 1-1/2 week high and closed moderately higher. A rally in Japanese shipping stocks was positive for the overall market after the Baltic Dry Index, which measures pricing for global shipping rates, gained for the third day. Japanese exporters also moved higher today after the yen fell to a new 32-year low against the dollar.Â
Pre-Market U.S. Stock Movers
Mega-cap technology stocks are moving lower in pre-market trading after the 10-year T-note yield climbed to a 14-year high. Apple (AAPL), Alphabet (GOOGL), Microsoft (MSFT), and Nvidia (NVDA) are down -1% or more.Â
Best Buy (BBY), Lowe’s (LOW), Advance Auto Parts (AAP), and Petco Health & Wellness (WOOF) are all down more than -1% in pre-market trading after Evercore ISI downgraded the stocks to in-line from outperform.Â
Ally Financial (ALLY) tumbled -9% in pre-market trading after reporting Q3 net revenue of $2.02 billion, weaker than the consensus of $2.16 billion.Â
Polaris (PII) dropped more than -3% in pre-market trading after Citigroup downgraded the stock to neutral from buy.
U.S.-listed gaming stocks with exposure to Macau are falling in pre-market trading after data from the Macau gaming inspection, and coordination bureau showed Macau Q3 VIP sector gaming revenue fell -81% y/y to 1.16 billion patacas ($142.9 million). Wynn Resorts (WYNN), Las Vegas Sands (LVS), and MGM Resorts International (MGM) are all down more than -1%.
Generac Holdings (GNRC) plunged -16% in pre-market trading after announcing Q3 preliminary adjusted Ebitda of about $184 million, well below the consensus of $308.1 million, and cutting its full-year sales growth forecast to +22% to +24% from a previous estimate of +36% to +40%.Â
Hubbell (HUBB) fell nearly -3% in pre-market trading after JPMorgan Chase downgraded the stock to underweight from overweight.
Netflix (NFLX) surged more than +12% in pre-market trading after reporting Q3 EPS of $3.10, well above the consensus of $2.12, and reporting Q3 streaming paid memberships of 223.09 million, above the consensus of 221.7 million.Â
United Airlines Holdings (UAL) jumped +5% in pre-market trading after reporting Q3 EPS of $2.81, well above the consensus of $2.29. Other airlines also moved higher on the news, with American Airlines Group (AAL), Delta Air Lines (DAL), and Southwest Airlines (LUV) up more than +1%.Â
Procter & Gamble (PG) rose +2% in pre-market trading after reporting Q1 net sales of $20.61 billion, better than the consensus of $20.34 billion.
Intuitive Surgical (ISRG) jumped more than +9% in pre-market trading after reporting Q3 revenue of $1.56 billion, above the consensus of $1.52 billion
ASML Holding NVÂ (ASML) climbed more than +5% in pre-market trading after reporting Q3 net sales of 5.78 billion euros, better than the consensus of 5.32 billion euros.
Today’s U.S. Earnings Reports (10/19/2022)
Abbott Laboratories (ABT), Baker Hughes Co (BKR), Citizens Financial Group Inc (CFG), Comerica Inc (CMA), Crown Castle Inc (CCI), Elevance Health Inc (ELV), Equifax Inc (EFX), International Business Machine (IBM), Kinder Morgan Inc (KMI), Lam Research Corp (LRCX), Las Vegas Sands Corp (LVS),Â
M&T Bank Corp (MTB), MarketAxess Holdings Inc (MKTX), Nasdaq Inc (NDAQ), Northern Trust Corp (NTRS), PPG Industries Inc (PPG), Procter & Gamble Co/The (PG), Prologis Inc (PLD), Tesla Inc (TSLA),Â
Travelers Cos Inc/The (TRV).
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