Markets Today: Stocks Fall as Concerns Continue to Weigh on the Market

Morning Markets

The S&P 500 ($SPX) is down -0.3% this morning and the Nasdaq ($NASX) is down -0.59%.

On the open, U.S. stock index futures were following other global bourses higher as signs of China’s recovery have fueled some hope about the global economy.  A recovery in subway use in major cities in China indicates Covid infections in China may have peaked.  Market sentiment is also improving on hopes that supply chain issues in China will continue to ease, which could help bring down inflation. However, a -3.3% move lower in Apple (AAPL) and a -9.4% move lower in Tesla have dragged the indices lower.  Tesla is down after it reported that it delivered fewer-than-expected vehicles in Q4.  Also, Capital One Financial and CVS Healthcare are down more than -1% after being downgraded.

The 10-year T-note yield this morning falling -11 bp to 3.77%. T-note yields are lower on carry-over after the 10-year German bund yield today fell to a 2-week low when German Dec CPI rose less than expected. 

Overseas markets today are higher.  The Euro Stoxx 50 index is up +0.66%.   The Shanghai Composite index closed up +0.88%, and Hong Kong’s Hang Seng Index closed up +1.84%.  Japan’s Nikkei Stock index was closed for the New Year’s holiday.

European stocks today are moving higher on optimism that China’s Covid infections may have peaked.  Gains in travel and leisure stocks are leading the overall market higher. Also, better-than-expected Eurozone economic news was bullish for stocks after German Dec unemployment unexpectedly declined and German Dec CPI rose less than expected.  In addition, lower government bond yields are supportive for stocks after the 10-year German bund yield fell to a 1-1/2 week low of 2.342%. 

German Dec unemployment unexpectedly fell -13,000, showing a stronger labor market than expectations of +15,000.  Also, the German Dec unemployment rate was unchanged at 5.5%, showing a stronger labor market than expectations of 5.6%.

Germany Dec CPI (EU harmonized) rose +9.6% y/y, weaker than expectations of +10.2% y/y and the slowest pace of increase in 4 months.

China’s Shanghai Composite rallied to a 2-week high today on signs that Covid infections in China have eased.  Eleven major Chinese cities reported a recovery in subway use in the past week, a sign that Covid infections may have peaked.  Also, Foxconn Technology Group, Apple’s biggest production partner, reported that its iPhone plant in Zhengzhou is now running at 90% of capacity as more workers return to work. 

Hong Kong’s Hang Seng Stock Index climbed to a 4-1/2 month high today as pandemic concerns eased in China.  Data from Bloomberg shows that mainland investors bought a new $537 million of Hong Kong stocks via trading links today, the biggest one-day inflow since Dec 12. 

The China Dec Caixin manufacturing PMI fell -0.4 to 49.0, weaker than expectations of 49.1.

Pre-Market U.S. Stock Movers

PayPal Holdings (PYPL) jumped more than +3% in pre-market trading after Truist Securities upgraded the stock to buy from hold with a price target of $95. 

U.S.-listed Chinese stocks moved higher in pre-market trading amid signs that Covid infections in China may have peaked.  Pinduoduo (PDD) is up more than +3%.  Also, JD.com (JD), Baidu (BIDU), NetEase (NTES), and Alibaba Group Holding (BABA) are up more than +2%. 

U.S. casino operators with exposure to Macau are climbing in pre-market trading after JPMorgan Chase said it remains bullish on the operators heading into this year.  Wynn Resorts (WYNN), MGM Resorts International (MGM), and Las Vegas Sands (LVS) are up more than +3%.

Block Inc (SQ) rose more than +4% in pre-market trading after Baird upgraded the stock to outperform from neutral.

Coty Inc (COTY) climbed more than +3% in pre-market trading after Piper Sandler upgraded the stock to overweight from neutral.

Tesla (TSLA) tumbled more than -4% in pre-opening trading after reporting it delivered 405,268 vehicles in Q4, below the consensus of 420,760.

Gilead Sciences (GILD) slid -1% in pre-market trading after RBC Capital Markets downgraded the stock to sector perform from outperform.

CVS Healthcare (CVS) fell more than -1% in pre-market trading after Evercore ISIS downgraded the stock to inline from outperform.

Capital One Financial (COF) dropped nearly -1% in pre-market trading after Barclays downgraded the stock to equal weight from overweight.

Today’s U.S. Earnings Reports (1/3/2023)

SMART Global Holdings Inc (SGH).

More Stock Market News from Barchart

• Johnson and Johnson Stock Has Stable Earnings Attracting Value Investors
• How To Buy WBA Stock For An 9% Discount Or Achieve A 24% Annual Return
• Pre-Market Brief: Stocks Climb As Investors Await FOMC Minutes
• Value Buyers are Watching Google Stock for a Rebound in January