Markets Today: Stocks Rally Off Early Morning Lows

Morning Markets

The S&P 500 is up by +1.3%, after opening in the red. The 10-year T-note yield today climbed to a 15-year high of 4.335% earlier in the morning but has since retraced to 4.247%. 

American Express (AXP) is down more than -5% after it set aside more for expected bad loans.  Social media stocks are falling, led by a -25% plunge in Snap after it reported weaker-than-expected Q3 revenue, a sign of weakness for the online ad market.  In addition, Tenet Healthcare is falling after reporting disappointing Q3 earnings.

On the positive side, better-than-expected Q3 earnings results from CSX Corp and Schlumberger are pushing those stocks higher. 

The Euro Stoxx 50 today is sharply lower by -1.89%.  European stocks are under pressure today as Adidas AG plunged more than -8% after cutting its outlook for the year due to slowing demand and rising inventories. Also, rising bond yields are pressuring stocks as the 10-year German bund yield climbed to an 11-year high today at 2.532%.

European stocks also fell after today’s monthly report from the Bundesbank said, “the German economy is likely on the cusp of a recession.”  The Bundesbank also said, “the persistently high level of inflation and the uncertainty about the energy supply and its costs are having a significant impact on the German economy.”

Asian markets today settled mixed.  China’s Shanghai Composite closed up +0.13%, and Japan’s Nikkei Stock Index closed down -0.43%. 

China’s Shanghai Composite today closed slightly higher.  Strength in energy stocks led the Shanghai Composite higher.  Also, exporters climbed after the yuan fell to a 14-year low against the dollar, boosting exporters' earnings prospects.  Chinese stocks remain under pressure on concern about consumer demand in China amid lockdowns and rising Covid cases.  The government today locked down parts of the central city of Xi’an, confining some of the city’s 13 million people to their homes for at least a week.  Also, Foxconn Technology Group imposed restrictions in its main iPhone assembly campus in Zhengzhou as the city seeks to tame a Covid flareup.

Japan’s Nikkei Stock Index today closed moderately lower.  Japanese stocks tied to Covid reopening fell after Morgan Stanley downgraded several stocks in the sector, saying most stocks in the sector won’t see a major shift in earnings until Chinese visitors return to Japan.  Also, weakness in chemical makers and railway stocks pressured the overall market today.  Soaring T-note yields pressured the yen which fell to a new 32-year low against the dollar today.   

Stronger-than-expected Japanese consumer prices were bearish for stocks after Japan’s Sep national CPI rose +3.0% y/y, stronger than expectations of +2.9% y/y and the biggest increase in 8 years.  Also, Japan Sep national CPI ex-food & energy rose +1.8% y/y, right on expectations and the fastest pace of increase in 7-1/2 years.

The BOJ today announced unscheduled bond purchases today of 250 billion yen ($1.7 billion) of 5-year maturities and longer after the 10-year JGB bond yield rose above +0.25%, the upper limit of the BOJ's 10-year yield target.

Pre-Market U.S. Stock Movers

American Express (AXP) tumbled more than -4% in pre-market trading after reporting Q3 network volume of $394.40 billion, below the consensus of $401.74 billion.  The company said it expects its full-year EPS guidance range will be above its original range of $9.25-$9.65, below the consensus of $9.90. 

Whirlpool (WHR) dropped -4% in pre-market trading after cutting its full-year EPS estimate to $19 from a prior estimate of $22-$24, weaker than the consensus of $21.85.

Social media stocks are sliding in pre-market trading, led by a -25% plunge in Snap Inc (SNAP) after it reported Q3 revenue of $1.13 billion, slightly weaker than the consensus of $1.14 billion.  Pinterest (PINS) is down -7%, Meta Platforms (META) is down more than -3%, and Alphabet (GOOGL) is down more than -1%. 

Under Armour (UAA) fell more than -3% in pre-market trading after Telsey Advisory Group downgraded the stock to market perform from outperform. 

SVB Financial (SIVB) sank -17% in pre-market trading after lowering its full-year net interest income estimate to growth in the low-40s percentage range from a previous estimate of mid-40s percentage range.

Tenet Healthcare (THC) tumbled -18% in pre-market trading after narrowing its full-year net operating revenue estimate to $19.00 billion-$19.20 billion from a prior estimate of $19.00 billion-$19.40 billion, below consensus of $19.34 billion.

Robert Half International (RHI) dropped more than -10% in pre-market trading after reporting Q3 revenue of $1.83 billion, weaker than the consensus of$1.92 billion. 

CSX Corp (CSX) climbed more than +3% in pre-market trading after reporting Q3 revenue of $3.90 billion, above the consensus of $3.75 billion. 

Autoliv (ALV) jumped more than +5% in pre-market trading after forecasting full-year organic revenue growth of about 15%, higher than the consensus of 14.5%. 

Juniper (JNPR) rose more than +1% in pre-market trading after Raymond James upgraded the stock to strong buy from outperform with a price target of $37. 

Schlumberger (SLB) climbed more than +2% in pre-market trading after reporting Q3 adjusted Ebitda of $1.76 billion, higher than the consensus of $1.63 billion. 

Today’s U.S. Earnings Reports (10/21/2022)

American Express Co (AXP), HCA Healthcare Inc (HCA), Huntington Bancshares Inc/OH (HBAN), Interpublic Group of Cos Inc/T (IPG), Regions Financial Corp (RF), Schlumberger NV (SLB), Verizon Communications Inc (VZ).

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