Markets Today: Stock Higher Ahead of FOMC Results

Morning Markets

The S&P 500 ($SPX) is higher this morning, up +0.3%%, and the Nasdaq ($NASX) is up +0.24%. 

Stock indexes this morning are slightly higher ahead of the results of today’s FOMC meeting and Fed Chair Powell’s regular post-meeting press conference.   Fed officials have recently signaled that the Fed will downshift to a +50 bp rate hike at the conclusion of today’s 2-day FOMC meeting after four straight +75 bp increases. 

Tesla (TSLA) is down -1% after Goldman Sachs cut its price target on the stock.  In addition, Charter Communications, the second-largest U.S. cable TV provider, slumped more than -8% after it said it would spend $5.5 billion on its network to bring higher-speed broadband connections to customers.

The 10-year T-note yield up +1.8 bp to 3.519%. T-note yields are higher on caution ahead of today’s FOMC decision and on negative carry-over from a jump in the 10-year German bund yield to a 2-week high. 

Overseas stocks today are mixed.  The Euro Stoxx 50 index is down -0.51%.  European stocks are sliding on long liquidation pressures ahead of the results of today’s FOMC meeting.  Also, today’s weaker-than-expected Eurozone industrial production report is weighing on stocks. In addition, higher European government bond yields are bearish for stocks, with the 10-year German bund yield climbing to a 2-week high today of 1.997%.  The market expects the ECB to raise the main refinancing rate by 50 bp at the conclusion of Thursday’s policy meeting.

Eurozone Oct industrial production fell -2.0% m/m, weaker than expectations of -1.5% m/m.

China’s Shanghai Composite closed up +0.01%, and Japan’s Nikkei Stock Market Index closed up by +0.72%.  The Shanghai Composite recovered from a 1-1/2 week low today and closed little changed. 

Weakness in Chinese technology stocks today initially weighed on the overall market after a Bloomberg report said the U.S. Department of Commerce would add more than 30 Chinese companies to the Entity List that blocks them from buying technology from U.S. suppliers unless they get a special export license from Commerce.  However, a rally in Chinese pharmaceutical stocks helped the market recover its losses after Chinese Vice Premier Sun Chunlan said that China’s Covid focus should shift to medical treatment from infection prevention and control.  Also, Chinese tech stocks with apps on Apple’s app store rose after Apple said it is preparing to allow alternative distribution platforms on iPhones and iPads to comply with EU requirements coming in 2024. 

Japan’s Nikkei Stock Index today rallied to a 1-1/2 week high and closed moderately higher. Japanese stocks moved higher today on positive carry-over from a rally in U.S. stocks after U.S. Nov CPI showed a deceleration in inflation.  Also, stocks received a boost from stronger than expected Japanese economic news on Oct core machine orders and Q4 Tankan large manufacturing business conditions. Gains were limited by weakness in exporters after the Japanese yen climbed to a 1-week high against the dollar.

Today’s Japanese economic news was mostly bullish for stocks.  Japan Oct core machine orders rose +5.4% m/m, stronger than expectations of +1.8% m/m and the largest increase in 6 months.  Also, the Q4 Tankan large manufacturing business conditions fell to 7 from 8 in Q3, stronger than expectations of 6.  Conversely, Oct industrial production was revised downward by -0.6 to -3.2% m/m from the initially reported -2.6% m/m, the biggest decline in 5 months.

Pre-Market U.S. Stock Movers

Tesla (TSLA) fell more than -1% in pre-market trading after Goldman Sachs cut its price target on the stock to $235 from $305 to reflect “softer” supply and demand.

Charter Communications (CHTR) tumbled more than -8% in pre-market trading after saying it will spend $5.5 billion on its network to bring higher-speed broadband connections to customers.

Marriott International (MAR) slid more than -1% in pre-market trading after Citigroup downgraded the stock to neutral from buy.

Mirati Therapeutics (MRTX) tumbled more than -6% in pre-market trading after Piper Sandler cut its price target on the stock to $68 from $87. 

Penn Entertainment (PENN) fell more than -2% in pre-market trading after Bank of America downgraded the stock to neutral from overweight.   

Delta Air Lines (DAL) jumped more than +4% in pre-market trading after forecasting 2023 adjusted EPS of $3.07-$3.12, stronger than the consensus of $2.89. 

Lennar (LEN) and PulteGroup (PHM) are up more than +1% in pre-market trading after Barclays upgraded both stocks to overweight from equal weight. 

Paccar (PCAR) rose more than +1% in pre-market trading after Morgan Stanley upgraded the stock to overweight from equal weight. 

Darden Restaurants (DRI) rose more than +1% in pre-market trading after Wedbush upgraded the stock to outperform from neutral. 

Datadog (DDOG) climbed more than +4% in pre-market trading after Oppenheimer & Co upgraded the stock to outperform from market perform. 

Today’s U.S. Earnings Reports (12/14/2022)

Cenntro Electric Group Ltd (CENN), Cleanspark Inc (CLSK), Enochian Biosciences Inc (ENOB), Lennar Corp (LEN), Nordson Corp (NDSN), Planet Labs PBC (PL), RCI Hospitality Holdings Inc (RICK), REV Group Inc (REVG), Weber Inc (WEBR).

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