Markets Today: Stocks Mixed Ahead of Big-Tech Earnings

Morning Markets

December S&P 500 futures (ESZ22) this morning are down by -0.2%%.  Stock indexes are mixed today on a decline in T-note yields and optimism ahead of earnings reports from mega-cap technology companies. The 10-year T-note yield is down -4.2 bp to 4.177%.  The five biggest tech firms by revenue, Apple, Microsoft, Alphabet, Amazon.com, and Meta Platforms, will release their quarterly earnings results this week. 

AT&T and Avis Budget Group are moving higher after they were all upgraded today by several brokerage firms. Conversely, Williams- Sonoma and NXP Semiconductors are down more than -2% after being downgraded.  Also, Tesla is down more than -5% after cutting the cost of its cars in China by 5% following signs of softening demand.

The Euro Stoxx 50 today is up by +1.56%.  European stocks rallied to a 5-week high today, led by gains in media, travel, and leisure stocks.  Also, energy crisis concerns have eased and are giving stocks a boost after European nat-gas prices dropped to a 4-1/4 month low today.  A decline in European government bond yields is supportive for stocks, with the 10-year German bund yield down -8.3 bp to 2.335%. 

European economic news today was on the weak side and negative for stocks.  The Eurozone Oct S&P Global manufacturing PMI fell -1.8 to 46.6, weaker than expectations of 47.9 and the steepest pace of contraction in nearly 2-1/2 years.  Also, the Eurozone Oct S&P Global composite PMI fell -1.0 to a 2-year low of 47.1, weaker than expectations of 47.6.

Asian markets today settled mixed.  China’s Shanghai Composite closed down -2.02%, and Japan’s Nikkei Stock Index closed up +0.31%. 

China’s Shanghai Composite today dropped to a 1-1/2 week low and closed sharply lower.  Chinese stocks retreated today, and the yuan tumbled to a 14-year low against the dollar. Chinese President Xi Jinping moved to stack his leadership ranks with loyalists following the week-long party congress, bolstering concern China will shift toward more state control versus a market-driven economy.  Also, China looks to maintain its Covid Zero policies that will weigh on economic growth.

Today’s Chinese economic news was mostly better than expected and was positive for stocks.  China Q3 GDP rose +3.9% q/q and +3.9% y/y, stronger than expectations of +2.8% q/q and +3.3% y/y.  Also, China Sep industrial production rose +6.3% y/y, stronger than expectations of +4.8% y/y and the biggest increase in 14 months. Conversely, China Sep retail sales rose +2.5% y/y, weaker than expectations of +3.0% y/y.

Chinese trade data was better than expected and bullish for stocks.  China Sep exports rose +5.7% y/y, stronger than expectations of +4.0% y/y. Also, China Sep imports rose +0.3% y/y, stronger than expectations of no change.

Japan’s Nikkei Stock Index today closed moderately higher and garnered carry-over support from last Friday’s rally in U.S. stocks.  The Japanese yen whipsawed lower today even after suspected intervention in the currency market by Japanese authorities to prop up the yen today and last Friday. Today’s economic news was slightly negative for stocks after the Japan Oct Jibun Bank manufacturing PMI fell -0.1 to 50.7, the sixth consecutive month that the pace of manufacturing activity has slowed.

Pre-Market U.S. Stock Movers

AT&T (T) is up more than +1% in pre-market trading after Raymond James upgraded the stock to strong buy from outperform.

Avis Budget Group (CAR) climbed more than +2% in pre-market trading after JPMorgan Chase upgraded the stock to overweight from neutral.

Wolfspeed (WOLF) rose nearly +3% in pre-market trading after JPMorgan Chase upgraded the stock to overweight from neutral.

ServiceNow (NOW) jumped more than +3% in pre-market trading after Guggenheim Securities upgraded the stock to buy from neutral. 

Myovant Sciences Ltd (MYOV) jumped more than +8% in pre-market trading after Sumitovant Biopharma said it entered into a definitive agreement to acquire all outstanding shares of Myovant it doesn’t already own for $27 a share in cash. 

FedEx (FDX) fell nearly -2% in pre-market trading after Wells Fargo Securities downgraded the stock to equal weight from overweight. 

Williams-Sonoma (WSM) dropped more than -3% in pre-market trading after Jeffries downgraded the stock to underperform from hold.

NXP Semiconductors (NXPI) slid more than -2% in pre-market trading after Barclays downgraded the stock to equal weight from overweight.

U.S.-listed Chinese stocks tumbled in pre-market trading on concern China will pivot toward more state control versus a market-driven economy after Chinese President Xi Jinping moved to stack his leadership ranks with loyalists.  Pinduoduo (PDD) and JD.com (JD) are down more than -14%.  Also, Alibaba Group Holding (BABA) is down more than -13, and Baidu (BIDU) and NetEase (NTES) are down more than -10%. 

Tesla (TSLA) fell more than -2% in pre-market trading after cutting the price of its cars in China by about 5%. 

U.S.-listed casino stocks with exposure to Macau are falling in pre-market trading on concern China will maintain its strict Covid Zero policies.  Las Vegas Sands (LVS), Wynn Resorts (WYNN), and Melco Resorts (MLCO) are down more than -8%. 

Today’s U.S. Earnings Reports (10/24/2022)

Alexandria Real Estate Equities (ARE), Brown & Brown Inc (BRO), Cadence Design Systems Inc (CDNS), 

Discover Financial Services (DFS), Packaging Corp of America (PKG), W R Berkley Corp (WRB), Zions Bancorp NA (ZION).

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