Markets Today: Stocks Modestly Lower as Bond Yields Climb on Fed Comments

Morning Markets

December S&P 500 futures (ESZ22) this morning are down -0.26%, and December Nasdaq 100 E-Mini futures (NQZ22) are down -0.48%.  Hawkish Fed comments pushed bond yields higher and are weighing on U.S. stock indexes this morning. 

The 10-year T-note yield is up +7.1 bp this morning at 3.884% after Fed Governor Waller said, "we've still got a ways to go" before the Fed stops raising interest rates, despite good news last week on consumer prices.

Stock index futures recovered from their worst levels on hopes that U.S.-China geopolitical risks may ease after U.S. President Biden met with Chinese President XiJinping today at the G-20 summit in Indonesia and the White House said Secretary of State Blinkin would travel to China to meet with Chinese officials for additional talks.  Also, China over the weekend released a rescue plan for its property sector.

Bitcoin recovered from overnight losses and is up more than +1% this morning after Binance Holding announced plans to set up a recovery fund to help stabilize the cryptocurrency industry after the turmoil caused by the bankruptcy of FTX.com last week.  Binance Holding CEO Zhao said the goal was to “reduce further cascading negative effects” of the FTX.com bankruptcy and assist strong crypto projects facing a liquidity squeeze.

The Euro Stoxx 50 index today is up by +0.44% and just below last Friday’s 6-1/2 month high.  European stocks garnered support today on economic optimism after today’s news showed Eurozone Sep industrial production rose more than expected.  Also, European government bond yields fell on dovish comments from ECB Executive Board member Panetta who said "aggressive tightening is not advisable" and monetary policy should aim to avoid protracted contraction.  The 10-year German bund yield is down -2.5 bp at 2.135%.

Eurozone Sep industrial production rose +0.9% m/m, stronger than expectations of +0.5% m/m.

Asian markets today closed lower.  China’s Shanghai Composite closed down -0.13%, and Japan’s Nikkei Stock Index closed down -1.06%.

China’s Shanghai Composite today fell back from a 7-week high and closed slightly lower on concern the government may have to ramp up pandemic lockdowns and restrictions after China reported 15,525 new Covid infections on Sunday, the most in more than 6-months.  Chinese stock today initially rallied after the government issued sweeping directives to rescue the property sector. 

The People's Bank of China (PBOC) and the China Banking and Insurance Regulatory Commission issued a 16-point plan to financial firms to ensure the "stable and healthy development" of the property sector, with measures that range from addressing home developers’ liquidity crisis to loosening down-payment requirements for homebuyers.  In addition, authorities will give "quality" developers access to as much as 30% of funds from presold properties with letters of guarantee from banks.

Japan’s Nikkei Stock Index today closed moderately lower on concern about possible contagion risk from the bankruptcy of FTX.com.   Also, disappointing Q2 quarterly earnings results from Softbank Group weighed on the overall market as Softbank fell nearly -10%.

Pre-Market U.S. Stock Movers

Hasbro (HAS) tumbled more than -5% in pre-market trading after Bank of America downgraded the stock by two notches to underperform from buy. 

Dentsply Sirona (XRAY) dropped more than -10% in pre-market trading after reporting Q3 adjusted net sales of $947 million, weaker than the consensus of $1.03 million, and then cutting its full-year net sales forecast to $3.85 billion-$3.88 billion from a previous forecast of $4.1 billion-$4.2 billion, below the consensus of $4.06 billion.

Advanced Micro Devices (AMD) rose more than +2% in pre-market trading after Baird upgraded the stock to buy from outperform with a price target of $95. 

Biogen (BIIB) rose more than +3%, and Eli Lilly rose more than +2% in pre-market trading after Roche’s Alzheimer’s drug, a potential competitor to Biogen’s and Eli Lilly’s Alzheimer’s drugs, failed a pair of large studies.

U.S.-listed Chinese stocks are climbing in pre-market trading after China put forward a sweeping package to rescue its ailing property sector.  JD.com (JD) is up more than +5%.  Also, Pinduoduo (PDD), Baidu (BIDU), Alibaba Group Holding (BABA), and NetEase (NTES) are up more than +2%.

Oak Street Health (OSH) gained more than +1% in pre-market trading after Morgan Stanley upgraded the stock to overweight from equal weight.

Silvergate Capital (SI) surged more than +15% in pre-market trading after the company said its exposure to the bankrupt  FTX.com exchange represented less than 10% of its total deposits.

Medical Properties Trust (MPW) rose more than +1% in pre-market trading after Bank of America upgraded the stock to buy from neutral. 

Today’s U.S. Earnings Reports (11/14/2022)

AECOM (ACM), Azenta Inc (AZTA), DENTSPLY SIRONA Inc (XRAY), Ginkgo Bioworks Holdings Inc (DNA), Thoughtworks Holding Inc (TWKS), Tyson Foods Inc (TSN).

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