Markets Today: Stocks Slip on Disappointing Earnings from Disney and News Corp

Morning Markets

December S&P 500 futures (ESZ22) this morning are down -0.50%, and December Nasdaq 100 E-Mini futures (NQZ22) are down -0.60%.  A slump of more than -7% in Walt Disney and News Corp in pre-market trading is weighing on the overall market after both companies reported disappointing quarterly earnings results.  Also, higher T-note yields are bearish for stocks, with the 10-year T-note yield up +3.6 bp at 4.159%.  The markets are still waiting for various elections results that will determine control of the House and Senate.

A sell-off in cryptocurrencies deepened today, with Bitcoin down more than -6% at a 2-year low.  Bitcoin and other cryptocurrencies plunged Tuesday after crypto exchange Binance bought rival FTX.com, which sparked an exodus of investors from cryptocurrencies on liquidity concerns about FTX.com. 

Signs of stress in corporate earnings are showing as Bloomberg data show 111 of the 453 S&P 500 companies that have reported earnings so far this season failing to meet forecasts. Meanwhile, 12-month blended forward estimates for company profits have fallen -2.7% since mid-September.

On the positive side, Meta Platforms is up more than +5% in pre-market trading after CEO Zuckerberg announced 11,000 job cuts and said the company would extend its hiring freeze through Q1. 

The Euro Stoxx 50 index today is down by -0.55%.  Economic concerns are undercutting European stocks today after the German government forecasted the German economy would shrink by -0.2% next year due to the “massive” burden on households and companies from soaring energy costs and inflation.  Also, German Chancellor Scholz’s economic advisers more than doubled their inflation projection for Germany next year to +7.4% from +3.4%.  Strength in bank stocks limited losses in the overall market as ABN Amro Bank NV climbed more than +3% after reporting Q3 net income of 743 million euros, well above the consensus of 290.7 million euros. 

Asian markets today closed lower.  China’s Shanghai Composite closed down -0.53%, and Japan’s Nikkei Stock Index closed down -0.56%.

China’s Shanghai Composite today closed moderately lower.  Chinese consumer stocks fell after Citigroup said that China’s Singles Day spending over November 1-11 would likely be “soft” amid disrupted economic activity.  Also, concern about pandemic restrictions undercut stocks today after China reported 7,740 new Covid infections on Tuesday, the most in over six months.  In addition, Chinese suppliers of Apple products fell after China extended Covid restrictions around the world's biggest iPhone factory in Zhengzhou, which may mean lower iPhone production.

Today's losses in Chinese stocks were tempered by better-than-expected inflation news.  China Oct PPI fell -1.3% y/y, the steepest decline in nearly 2 years. China Oct CPI rose +2.1% y/y, weaker than expectations of +2.4% y/y and the smallest pace of increase in 5 months.

Japan’s Nikkei Stock Index today posted moderate losses.  Economic concerns weighed on stocks after today’s economic news showed the Japan Oct eco watchers survey outlook unexpectedly fell -2.8 to 46.4, weaker than expectations of an increase to 50.1.  Also, a drop of more than -7% in Nintendo undercut stocks after the game maker lowered its target for Switch console unit sales, citing chip supply problems.  On the positive side, Suzuki Motor rose more than +3% after reporting better-than-expected Q2 operating profit and raising its full-year forecast.

Pre-Market U.S. Stock Movers

Walt Disney (DIS) tumbled more than -7% in pre-market trading after reporting Q4 revenue of $20.15 billion, well below the consensus of $21.26 billion. 

Cryptocurrency-exposed stocks are falling in pre-market trading, with the price of Bitcoin down more than -6% at a 2-year low.  MicroStrategy (MSTR) is down more than -7%.  Also, Marathon Digital (MARA), Riot Blockchain (RIOT), and Coinbase Global (COIN) are down more than -5%. 

News Corp (NWSA) sank more than -11% in pre-market trading after reporting Q1 Ebitda of $350.0 million, weaker than the consensus of $355.3 million. 

CarGurus (CARG) plunged more than -20% after reporting Q3 revenue of $426.5 million, weaker than the consensus of $461.9 million, and forecasting Q4 revenue of $270 million-$300 million, well below the consensus of $468.4 million.

Affirm Holdings (AFRM) sank more than -14% in pre-market trading after reporting a Q1 loss of -86 cents a share, wider than the consensus of -60 cents, and cut its full-year revenue forecast to $1.60 billion-$1.68 billion from a previous forecast of $1.63 billion-$1.73 billion, weaker than the consensus of $1.71 billion. 

Dominion Energy (D) fell more than -1% in pre-market trading after Bank of America downgraded the stock by two notches to underperform from buy.

DR Horton (DHI) slid more than -2% in pre-market trading after reporting Q4 revenue of $9.64 billion, weaker than the consensus of $10.17 billion.

Upstart Holdings (UPST) plummeted more than -25% in pre-market trading after reporting an unexpected Q3 adjusted Ebitda loss of -$14.4 million versus the consensus of a profit of $0.27 million and forecasting a Q4 adjusted Ebitda loss of -$35 million versus the consensus of a profit of $13.4 million.

Meta Platforms (META) climbed more than +5% in pre-market trading after CEO Zuckerberg announced 11,000 job cuts and said the company would extend its hiring freeze through Q1. 

Axon Enterprise (AXON) jumped more than +7% in pre-market trading after reporting Q3 net sales of $311.8 million, stronger than the consensus of $279.8 million, and raising its full-year adjusted Ebitda estimate to $215 million-$220 million from a previous estimate of $200 million, above the consensus of $201 million. 

Kroger (KR) rose more than +1% in pre-market trading after Evercore ISI upgraded the stock to outperform. 

General Digital (GEN) climbed more than +1% in pre-market trading after reporting Q2 revenue of $748.0 million, better than the consensus of $721.5 million. 

Today’s U.S. Earnings Reports (11/9/2022)

Atmos Energy Corp (ATO), DR Horton Inc (DHI), STERIS PLC (STE), Wynn Resorts Ltd (WYNN).

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