Morning Markets
March S&P 500 futures (ESH23) this morning are down -0.91% and March Nasdaq 100 E-Mini futures (NQH23) are down -1.07%.
U.S. stock index futures this morning are under pressure on weakness in bank stocks after several earnings disappointments. Also, Tesla tumbled in pre-market trading after announcing it was cutting car prices in the U.S. and Europe.
In addition, stocks fell after this morning’s U.S. economic news showed that Dec import prices ex-petroleum unexpectedly rose. The increase in import prices pushed bond yields higher, with the 10-year T-note yield up +3.6 bp at 3.476%.
Negative corporate news this morning is weighing on stocks. Tesla is down more than -5% in pre-market trading after cutting prices of its Model 3 sedan and Model Y SUV in the U.S. and several European markets. Also, Delta Air Lines is down more than -2% in pre-market trading after forecasting Q1 adjusted EPS that was well below consensus.
U.S. bank stocks are sliding today on disappointing Q4 earnings results. Wells Fargo is down more than -3% in pre-market trading after reporting weaker-than-expected Q4 revenue. Also, JPMorgan Chase is down more than -2% after reporting weaker-than-expected Q4 FICC sales and trading revenue. In addition, Bank of America is down more than -2% after reporting Q4 net interest income FTE below consensus.
The U.S. Dec import price index ex-petroleum unexpectedly rose +0.8% m/m, the most in 9 months and above expectations of a -0.3% m/m decline, which was an unfavorable inflation indicator.
Overseas markets today are mixed. The Euro Stoxx 50 index is up +0.16%. The Shanghai Composite Stock index closed up by +1.01%, and Japan’s Nikkei Stock index closed down -1.25%.
The Euro Stoxx 50 today rallied to a 10-3/4 month high and is moderately higher. Better-than-expected Eurozone economic news is lifting stocks today after Eurozone Nov industrial production rose more than expected and after German 2022 GDP rose +1.9%, above expectations of +1.8%. Lower government bond yields are also supportive for stocks, with the 10-year German bund yield down -2.9 bp at 2.130%, just above Thursday’s 4-week low of 2.093%. European stocks fell back from their best levels as bank stocks fell on negative carry-over from a slide in U.S. bank stocks after several reported weaker-than-expected Q4 earnings.
The Shanghai Composite Stock index today rallied to a 1-month high. Strength in Asian technology stocks led the overall market higher after Taiwan Semiconductor Manufacturing Co reported stronger-than-expected quarterly earnings results. Foreign buying of Chinese stocks also lifted the overall market as foreign funds today bought 13.3 billion yuan ($1.98 billion) of shares via trading links with Hong Kong. Foreign buyers have returned to China as it emerges from Covid restrictions and pivots to pro-growth policies.
Today’s Chinese trade news was weak but came in better than expected. China Dec exports fell -9.9% y/y, the biggest decline in 2-3/4 years but slightly better than expectations of -10.0% y/y. Also, Dec imports fell -7.5% y/y, a smaller decline than expectations of -10.0% y/y.
Japan’s Nikkei Stock Index closed moderately lower. Weakness in exporters weighed on the overall market after the yen rallied to a 7-1/2 month high against the dollar. The yen is soaring on speculation the BOJ as soon as next week will announce a change to its ultra-easy monetary policy. Also, Japanese government bond yields climbed and undercut stocks after the 10-year JGB bond yield jumped to an 8-1/4 year high of 0.575%, well above the BOJ’s upper target limit of 0.50%.
The BOJ boosted QE and announced unscheduled bond purchases for a second time on Friday after the first round of buying failed to lower the 10-year JGB bond yield. As a result, the BOJ bought a record amount of bonds Friday, including 1.8 trillion yen ($14 billion) of one-to-25-year debt at market yields and 3.21 trillion yen of 10-year notes and futures-linked securities at a fixed yield of 0.5%.
The BOJ also said it would conduct additional outright purchases of Japanese government bonds on Monday, with the amounts to be determined by market conditions. The BOJ has conducted a combination of additional unlimited and fixed-amount purchase operations every business day since Dec 28, except for Jan 5, 10, and 12.
Pre-Market U.S. Stock Movers
Tesla (TSLA) tumbled more than -5% in pre-market trading after cutting prices of its Model 3 sedan and Model Y SUV in the U.S. and several European markets. Other electric vehicle makers also fell on the news, with Rivian Automotive (RIVN) and Lucid (LCID) down more than -2%.
Wells Fargo (WFC) dropped more than -3% in pre-market trading after reporting Q4 revenue of $19.66 billion, below the consensus of $19.95 billion
JPMorgan Chase (JPM) fell more than -2% in pre-market trading after reporting Q4 FICC sales and trading revenue of $3.74 billion, weaker than the consensus of $3.91 billion.
Bank of America (BAC) dropped more than -2% in pre-market trading after reporting Q4 net interest income FTE of $14.80 billion, below the consensus of $14.95 billion, and Q4 net charge-offs of $689 million, above the consensus of $639.6 million.
Lockheed Martin (LMT) fell more than -3% in pre-market trading after Goldman Sachs downgraded the stock to sell from neutral.
Delta Air Lines (DAL) fell more than -2% in pre-market trading after forecasting Q1 adjusted EPS of 15 cents-40 cents, well below the consensus of 54 cents.
Fortinet (FTNT) slid more than -3% in pre-market trading after BTIG LLC downgraded the stock to neutral from buy.
Hanesbrands (HBI) jumped more than +5% in pre-market trading after it said it would report Q4 net sales “slightly above the top end” of its guidance range.
Carrier Global (CARR) rose more than +1% in pre-market trading after Mizuho Securities upgraded the stock to buy from neutral with a price target of $53.
Icon Plc (ICLR) gained nearly +1% in pre-market trading after Barclays upgraded the stock to overweight from equal weight.
Today’s U.S. Earnings Reports (1/13/2023)
Bank of America Corp (BAC), Bank of New York Mellon Corp/T (BK), BlackRock Inc (BLK), Citigroup Inc (C), Delta Air Lines Inc (DAL), First Republic Bank/CA (FRC), JPMorgan Chase & Co (JPM), UnitedHealth Group Inc (UNH), Wells Fargo & Co (WFC).
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On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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