Markets Today: Stock Indexes Mildly Higher on Big Tech Earnings Optimism

Morning Markets

March S&P 500 futures (ESH23) this morning are up +0.20%, and March Nasdaq 100 E-Mini futures (NQH23) are up +0.29%. 

U.S. stock index futures this morning shook off overnight losses and are mildly higher on earnings optimism about mega-cap technology companies after Netflix last week reported better-than-expected results.  Microsoft, Tesla, and Intel will report quarterly earnings this week.

Increased M&A activity is supportive of the overall market.  Evoqua Water Technologies surged more than +15% in pre-market trading after Xylem agreed to acquire the company in an all-stock deal valued at about $7.5 billion.  Also, Western Digital is up more than +1% after Bloomberg reported the company and Kioxia are progressing in their merger talks.

Positive corporate news today is supporting stocks, with Synchrony Financial up more than +1% in pre-market trading after reporting better-than-expected Q4 EPS.  Also,  Salesforce is up more than +4% in pre-market trading after hedge fund Elliot Investment Management took a substantial activist stake in the company.  In addition, Wayfair, Qualcomm, Seagate Technology Holdings, and Advanced Micro Devices are all up more than +1% after being upgraded.

On the negative side for stocks, PayPal Holdings is down more than -2% in pre-market trading after Bloomberg reported that the company was being investigated by the German Cartel Office for possible obstruction of competitors and restriction of price competition.  Also, Abbott Laboratories is down more than -1% after Dow Jones reported that the U.S. Justice Department is investigating the company over conduct at its infant-formula plant that shut down last year.  Applied Materials, Crowdstrike Holdings, Check Point Software Technologies, and SentinelOne are all down more than -1% after being downgraded.

Another negative for stocks is higher global bond yields.  The 10-year T-note yield this morning is up +5.9 bp at 3.538%.  Also, the 10-year German bund yield is up +2.8 bp to 2.210% on hawkish comments from ECB Governing Council members Kazimir and Knot.

Overseas markets are higher.  The Euro Stoxx 50 index is up +0.37%, and Japan’s Nikkei Stock index closed up +1.33%.  China and Hong Kong were closed for the Lunar New Year holidays. 

European stocks are moderately higher today ahead of quarterly corporate earnings results. Also, an easing of energy crisis concerns in Europe has bolstered confidence that the Eurozone economy will be able to avoid recession.  European nat-gas prices today are down -0.77% and just above last week’s 16-month low. EUR/USD climbed to a 9-month high today, and German bund yields ticked higher on hawkish comments today from ECB Governing Council members Kazimir and Knot, who said there is no reason for the ECB to slow its pace of interest rate hikes. 

ECB Governing Council member Kazimir said there is no reason for the ECB to slow the pace of interest rate hikes, and he believes "we need to deliver two more +50 bp rate hikes."

ECB Governing Council member Knot said the time for the ECB to slow the pace of its interest rate hikes is "still far away," and he wants at least two more +50 bp rate hikes.

Japan’s Nikkei Stock Index today rallied to a 1-month high and closed moderately higher.  Asian equity markets are underpinned amid optimism about China’s reopening and its easing crackdown on large tech companies. Japanese stocks also garnered support from last Friday’s comments from Fed Governor Waller, who expressed support for a moderation of Fed rate hikes.  A rally in Japanese tiremakers supported the overall market after Bridgestone said it would raise domestic tire prices by an average of 6-8%.

Pre-Market U.S. Stock Movers

Western Digital (WDC) rose more than +1% in pre-market trading after Bloomberg reported the company and Kioxia are progressing in their merger talks.

Salesforce (CRM) jumped more than +4% in pre-market trading after hedge fund Elliot Investment Management took a substantial activist stake in the company.

Wayfair (W) jumped more than +4% in pre-market trading after JPMorgan Chase upgraded the stock to overweight from underweight.

Qualcomm (QCOM), Seagate Technology Holdings (STX), and Advanced Micro Devices (AMD) rose more than +1% in pre-market trading after Barclays upgraded the stocks to overweight from equal weight. 

Synchrony Financial (SYF) rose more than +1% in pre-market trading after reporting Q4 EPS of $1.26, better than the consensus of $1.11. 

Evoqua Water Technologies (AQUA) surged more than +15% in pre-market trading after Xylem agreed to acquire the company in an all-stock deal valued at about $7.5 billion.

Skechers USA (SKX) gained more than +2% in pre-market trading after Cowen upgraded the stock to outperform from market perform.

Applied Materials (AMAT) slid more than -1% in pre-market trading after Barclays downgraded the stock to underweight from equal weight.

Crowdstrike Holdings (CRWD), Check Point Software Technologies (CHKP), and SentinelOne (S) all fell more than -1% in pre-market trading after Deutsche Bank downgraded the stocks to hold from buy. 

PayPal Holdings (PYPL) dropped more than -2% in pre-market trading after Bloomberg reported that the company was being investigated by the German Cartel Office for possible obstruction of competitors and restriction of price competition. 

Abbott Laboratories (ABT) is down more than -1% in pre-market trading after Dow Jones reported that the U.S. Justice Department is investigating the company over conduct at its infant-formula plant that shut down last year.

Tapestry (TPR) fell more than -1% in pre-market trading after Barclays downgraded the stock to equal weight from overweight.

Today’s U.S. Earnings Reports (1/23/2023)

Baker Hughes Co (BKR), Brown & Brown Inc (BRO), Synchrony Financial (SYF), Zions Bancorp NA (ZION).

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