Markets Today: Stocks Fall on Weak Revenue Outlook from Micron

Morning Markets

March S&P 500 futures (ESH23) this morning are down -0.52% and March Nasdaq 100 E-Mini futures (NQH23) are down -0.73%. 

Stock indexes this morning are moderately lower as weakness in technology stocks weighs on the overall market.  Micron Technology is down more than -3% in pre-market trading to lead semiconductor stocks lower after it reported lower-than-expected Q1 adjusted revenue and forecast that Q2 revenue will be below consensus.  Also, CarMax plunged more than -12% in pre-market trading after reporting weaker-than-expected Q3 earnings.

Stock indexes extended their losses after T-note yields pushed higher on this morning’s stronger-than-expected economic jobless claim and Q3 GDP reports.  The 10-year T-note yield rose +1.1 bp to 3.673%.

Limiting losses in the overall market is strength in energy stocks in pre-market trading, with the price of WTI crude oil up more than +1% at a 2-week high. 

U.S. weekly initial unemployment claims rose +2,000 to 216,000, showing a stronger labor market than expectations of an increase to 222,000.

U.S. Q3 GDP was revised upward by +0.3 to 3.2% (q/q annualized), stronger than expectations of unchanged at 2.9%, as Q3 personal consumption was revised upward by +0.6 percentage points to 2.3% from 1.7%.  Also, the Q3 core PCE deflator was revised upward to 4.7% from 4.6%.

Overseas stocks are mixed. The Euro Stoxx 50 index is down by -0.24%.  China’s Shanghai Composite closed down -0.46% at a 3-week low, and Japan’s Nikkei Stock Market Index closed up by +0.46%.

European stocks gave up an early advance and are moderately lower.  Weakness in technology stocks weighed on the overall market as semiconductor stocks slide after Micron Technology reported weaker-than-expected Q1 revenue.  Also, interest rate-sensitive stocks are moving lower today after the 10-year German bund yield rose to a 6-week high of 2.356% on hawkish comments for ECB Vice President Guindos.

ECB Vice President Guindos said, "increases of 50 bp by the ECB may become the new norm in the near term, and we should expect to raise interest rates at this pace for a period of time."

China’s Shanghai Composite fell to a 3-week low on concerns that the surge in Covid infections in China will delay the reopening of the economy.  According to analytics firm Airfinity, there are likely more than a million infections and 5,000 deaths occurring every day in China.  Many hospitals in China’s larger cities are full, and city streets are empty with schools and many businesses closed as the pandemic spreads. According to Bloomberg analysis of transit data, Shanghai subway usage in the latest week was down 51% compared to the same period in 2019.  Chinese stocks recovered from their worst levels after Bloomberg reported that China plans to shorten the quarantine period for inbound travelers in January.

Japanese stocks closed moderately higher today on carry-over support from Wednesday’s rally in U.S. stocks.  Also, the action by the BOJ today to boost QE was supportive for stocks. The BOJ conducted additional bond purchases today after the 10-year JGB bond yield soared to a 7-year high Wednesday. The BOJ purchased 650 billion yen of 3-5 year securities and 675 billion yen of 5-10-year securities.  The 10-year JGB bond yield dropped by -80 bp to 0.400% from 0.480% after the BOJ’s bond purchases.

 Pre-Market U.S. Stock Movers

Micron Technology (MU) tumbled more than -3% in pre-market trading after reporting Q1 adjusted revenue of $4.09 billion, below the consensus of $4.13 billion and forecasting Q2 adjusted revenue of $3.6 billion-$4.0 billion, the midpoint below the consensus of $3.88 billion.

CarMax (KMX) plunged more than -12% in pre-market trading after reporting Q3 EPS of 24 cents, well below the consensus of 65 cents.

Energy stocks and energy service providers are climbing in pre-market trading, with WTI crude oil up more than +1% at a 2-week high.  ConocoPhillips (COP), Diamondback Energy (FANG), Devon Energy (DVN), Exxon Mobil (XOM), Haliburton (HAL),  Marathon Petroleum (MPC), and Valero Energy (VLO) are up more than +1%.   

Raytheon Technologies (RTX) gained more than +1% in pre-market trading after being awarded a $412.6 million dollar contract from the U.S. Air Force for development and program support under the Taiwan Surveillance Radar Program.

Today’s U.S. Earnings Reports (12/22/2022)

Apogee Enterprises Inc (APOG), CarMax Inc (KMX), Latch Inc (LTCH), Mission Produce Inc (AVO), Outlook Therapeutics Inc (OTLK), Paychex Inc (PAYX), Vinco Ventures Inc (BBIG).

• 3 Bull Put Spread Ideas For This Thursday
• Pre-Market Brief: Stocks Mostly Lower Ahead of Key U.S. GDP Data
• Stocks Rally as Positive Corporate Earnings Boost Market Sentiment
• The Short End of the Yield Curve is Due for Higher Rates