Markets Today: Stocks Retreat Ahead of FOMC Results Later Today

Morning Markets

The S&P 500 is lower this morning ahead of the results of today’s FOMC meeting.  The market has priced in a 100% chance the Fed will raise the federal funds target range by +75 bp today.  The markets will also scour post-meeting comments from Fed Chair Powell for clues about the size of future rate hikes.

Concerns about global economic growth are also undercutting stocks after Eurozone Oct manufacturing activity sank to its lowest level in 2-1/2 years, and after shipper A.P. Moller-Maersk A/S, a bellwether for global trade, cut its forecast for the global container market, saying inflation will persist even as demand drops as much as 4% this year.

Technology stocks are slightly higher in pre-market trading, led by a jump of more than +4% in Advanced Micro Devices after it reported better-than-expected Q3 EPS. However, gains in tech stocks were limited as Apple fell more than -1% in pre-market trading after China ordered a seven-day lockdown of the area around Foxconn Technology Group’s main plant in Zhengzhou, which will severely curtail shipments in and out of the world’s largest iPhone factory.

This morning’s U.S. labor market news was better-than-expected, which may keep the Fed hawkish and is bearish for stocks.  U.S. Oct ADP employment rose +239,000, stronger than expectations of +185,000.

The Euro Stoxx 50 index today is down by -0.23%.  Economic concerns weighed on European stocks after the Eurozone Oct S&P Global manufacturing PMI was revised downward to its steepest pace of contraction in 2-1/2 years.  Also, weaker-than-expected German trade news for September weighed on the overall market. In addition, shipper Moller-Maersk A/S slumped more than -7% after cutting its global container demand forecast. Strength in healthcare stocks limited losses in the overall market after Novo Nordisk A/S climbed more than +5% due to a hike in its operating profit and sales forecasts for the year. 

The Eurozone Oct S&P Global manufacturing PMI was revised downward by -0.2 to 46.4, from the previously reported 46.6, the steepest pace of contraction in nearly 2-1/2 years.

German Sep exports unexpectedly fell -0.5% m/m, weaker than expectations of +0.5% m/m.  German Sep imports fell -2.3% m/m, weaker than expectations of -0.6% m/m and the biggest decline in 8 months.

Asian markets today settled mixed.  China’s Shanghai Composite closed up +1.15%, and Japan’s Nikkei Stock Index closed down -0.06%.

China’s Shanghai Composite today extended Tuesday’s sharp rally on speculation that Chinese policymakers are making preparations to gradually exit the strict Covid Zero policies.  New unverified social media posts said the Chinese government is considering changes to its Covid Zero policy, including a shorter quarantine period for inbound travelers. 

Chinese stocks fell back from their best levels today after the government ordered a seven-day lockdown of the area around Foxconn Technology Groups main plant in Zhengzhou due to rising Covid infections.  The plant produces four out of five of Apple’s latest handsets.

Japan’s Nikkei Stock Index today fell back from a 6-week high and closed slightly lower.  Japanese stocks today initially rose on speculation China would soon loosen its strict Covid Zero policy.  Also, Sony Group jumped more than +7% today after it said production of its PlayStation5 went better than expected in the past quarter. Weakness in Japanese exporters weighed on the overall market as the yen rallied against the dollar for a second day.

Pre-Market U.S. Stock Movers

Advanced Micro Devices (AMD) climbed more than +4% in pre-market trading after reporting Q3 adjusted EPS of 67 cents, above the consensus of 65 cents. 

Mondelez International (MDLZ) rose more than +3% in pre-market trading after reporting Q3 revenue of $7.76 billion, stronger than the consensus of $7.42 billion, and forecasting full-year organic net revenue will climb at least +10%, better than the consensus of +8.96%. 

Dupont de Nemours (DD) rose more than +3% in pre-market trading after it scrapped a planned $5.2 billion acquisition of Rogers Corp. 

U.S.-listed Chinese stocks moved higher in pre-market trading after new unverified social media posts saying the Chinese government is considering changes to its Covid Zero policy, including a shorter quarantine period for inbound travelers.  Yum China (YUMC) is up more than +12%.  Also, Pinduoduo (PDD), Alibaba Group Holding (BABA), JD.com (JD), NetEase (NTES), and Baidu (BIDU) are up more than +3%.

Bandwidth (BAND) jumped more than +14% in pre-market trading after reporting Q3 revenue of $148.3 million, above the consensus of $140.7 million, and raised its full-year revenue forecast to $562 million-$564 million from a previous forecast of $551 million-$557 million, better than the consensus of $553.1 million. 

Match Group (MTCH) surged more than +15% in pre-market trading after reporting Q3 revenue of $809.5 million, above the consensus of $794.4 million.

Caesars Entertainment (CZR) rallied nearly +6% in pre-market trading after reporting Q3 same-store adjusted Ebitda of $1.0 billion, well above the consensus of $933.5 million.

CVS Health Corp (CVS) climbed more than +2% in pre-market trading after reporting Q3 adjusted EPS of $2.09, better than the consensus of $1.99, and raising its full-year adjusted EPS estimate to $8.55-$8.65 from a prior estimate of $8.40-$8.60. 

Apple (AAPL) is down more than -1% in pre-market trading after China ordered a seven-day lockdown of the area around Foxconn Technology Group’s main plant in Zhengzhou due to rising Covid infections. The plant produces four out of five of Apple’s latest handsets.

Airbnb (ABNB) tumbled more than -6% in pre-market trading after forecasting Q4 revenue of $1.80 billion-$1.88 billion, the midpoint below the consensus of $1.86 billion. 

Cleveland-Cliffs (CLF) slid more than -2% in pre-market trading after Wolfe Research downgraded the stock to underperform from peer perform. 

Livent Corp (LTHM) dropped more than -4% in pre-market trading after reporting Q3 revenue of $231.6 million, below the consensus of $247.1 million.

Estee Lauder (EL) sank more than -11% in pre-market trading after cutting its full-year EPS estimate to $5.01-$5.1 from a previous forecast of $7.11-$7.33.

Today’s U.S. Earnings Reports (11/2/2022)

Albemarle Corp (ALB), Allstate Corp/The (ALL), ANSYS Inc (ANSS), APA Corp (APA), Booking Holdings Inc (BKNG), Broadridge Financial Solutions (BR), CDW Corp/DE (CDW), Ceridian HCM Holding Inc (CDAY), CF Industries Holdings Inc (CF), CH Robinson Worldwide Inc (CHRW), Charles River Laboratories Int (CRL), Cognizant Technology Solutions (CTSH), CVS Health Corp (CVS), DISH Network Corp (DISH), eBay Inc (EBAY), Entergy Corp (ETR), Equinix Inc (EQIX), Estee Lauder Cos Inc/The (EL), Etsy Inc (ETSY), Eversource Energy (ES), FleetCor Technologies Inc (FLT), Fortinet Inc (FTNT), Generac Holdings Inc (GNRC), Host Hotels & Resorts Inc (HST), Humana Inc (HUM), Ingersoll Rand Inc (IR), Lincoln National Corp (LNC), Lumen Technologies Inc (LUMN), Marathon Oil Corp (MRO), Martin Marietta Materials Inc (MLM), MGM Resorts International (MGM), Paramount Global (PARA), PTC Inc (PTC), Qorvo Inc (QRVO), QUALCOMM Inc (QCOM), Realty Income Corp (O), Rockwell Automation Inc (ROK), TE Connectivity Ltd (TEL), Trane Technologies PLC (TT), Trimble Inc (TRMB), Vulcan Materials Co (VMC), Yum!  Brands Inc (YUM), Zimmer Biomet Holdings Inc (ZBH).

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