March S&P 500 futures (ESH23) are trending down -0.11% this morning after three major U.S. benchmark indices finished the regular session in the red as rising bond yields put pressure on rate-sensitive stocks ahead of a key speech from Fed Chair Jerome Powell. Three major U.S. stock indexes were weighed down primarily by losses in the Technology, Communication Services, and Basic Materials sectors.
In Monday’s trading session, major U.S. stock indexes closed lower as higher bond yields weighed on technology and other rate-sensitive stocks. U.S. Treasury yields rose after the strong U.S. economic data on Friday renewed investor worries about a more aggressive Federal Reserve, with the 10-year T-note yield hitting a one-month high.
“Investors are going to have to come to grips with the fact that rates are going to stay higher for longer, and it's still unlikely the Fed is going to cut rates this year,” said Antho Saglimbene, a chief market strategist at Ameriprise Financial.
Federal Reserve Bank of Atlanta President Raphael Bostic said on Monday that January’s stronger-than-expected jobs report raises the possibility that the Fed will need to hike interest rates to a higher peak than policymakers had previously anticipated. At the same time, U.S. Treasury Secretary Janet Yellen said Monday the U.S. economy might avoid a recession, with inflation coming down and the economy remaining strong. “You don't have a recession when you have 500,000 jobs and the lowest unemployment rate in more than 50 years,” she said.
On the earnings front, shares of Chegg Inc (CHGG) plunged more than -23% in pre-market trading after the California-based education services company reported better-than-expected fourth-quarter results but offered a weak sales outlook for 2023. Also, Pinterest Inc (PINS) fell about -4% in pre-market trading on a Q4 revenue miss and light Q1 outlook.
Fourth-quarter corporate earnings season continues, with analysts expecting aggregate S&P 500 earnings to notch a 2.8% year-over-year decline in the fourth quarter.
Today, market participants will be closely watching the speech by Federal Reserve Chair Jerome Powell at the Economic Club of Washington D.C. for clues about the central bank’s response to the last week’s red-hot jobs report.
Also, investors are likely to focus on the U.S. Trade Balance data, which was at -61.50B in November. Economists foresee the new figure to be -68.50B.
In the bond markets, United States 10-Year rates are at 3.619%, down -0.35%.
The Euro Stoxx 50 futures are down -0.17% this morning as market participants digested a slew of corporate earnings and more regional economic data while awaiting the speech by Federal Reserve Chair Jerome Powell later today. In corporate news, shares of BP Plc (BP-.LN) gained over +3% after the oil giant reported a record profit of just under $28 billion in 2022 and increased its dividend by 10%.
U.K.’s Halifax House Price Index, Germany’s Industrial Production, France’s Trade Balance, and Spain’s Industrial Production data were released today.
U.K. January Halifax House Price Index has been reported at 0.0% m/m and +1.9% y/y, stronger than expectations of -0.8% m/m and -0.3% y/y.
The German December Industrial Production stood at -3.1% m/m, weaker than expectations of -0.7% m/m.
The French December Trade Balance came in at -14.9B, weaker than expectations of -12.2B.
The Spanish December Industrial Production was at +0.6% y/y, stronger than expectations of -0.6% y/y.
Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.29%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.03%.
China’s Shanghai Composite today recouped some recent losses and closed higher as investor attention shifted to the upcoming speech by Fed Chair Jerome Powell.
At the same time, Japan’s Nikkei 225 Stock Index lagged its Asian peers and closed slightly lower amid continued uncertainty over the path of monetary policy in the country. Also, data on Tuesday showed Average Cash Earnings stood at +4.8% y/y in December, close to a three-decade high. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up 1.78% to 16.58.
Pre-Market U.S. Stock Movers
Bed Bath & Beyond Inc (BBBY) tumbled over -31% in pre-market trading after the company announced a convertible stock offering.
Skyworks Solutions Inc (SWKS) rose about +2% in pre-market trading after the company reported better-than-expected revenue in the first quarter and announced a $2 billion share buyback till 2025.
Baidu Inc (BIDU) climbed about +15% in pre-market trading after Bloomberg reported that the company confirmed the plan to launch a ChatGPT-like bot in March.
Alpha and Omega Semiconductor Ltd (AOSL) slid around -14% in pre-market trading after the company reported downbeat Q2 results.
Blink Charging Co (BLNK) dropped about -6% in pre-market trading after the company announced its intentions to offer and sell up to $75M of shares of its common stock in an underwritten registered public offering.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Tuesday - February 7th
Linde PLC (LIN), Vertex (VRTX), Fiserv (FISV), Daikin Industries ADR (DKILY), KKR & Co (KKR), Chipotle Mexican Grill (CMG), Itau Unibanco (ITUB), Fortinet (FTNT), Centene (CNC), Transdigm (TDG), Carrier Global (CARR), Prudential Financial (PRU), DuPont De Nemours (DD), Illumina (ILMN), Enphase (ENPH), Gartner (IT), Yum China Holdings (YUMC), Carlsberg AS (CABGY), Paycom Soft (PAYC), Incyte (INCY), Xylem (XYL), Omnicom (OMC), Royal Caribbean Cruises (RCL), Amcor PLC (AMCR), Atmos Energy (ATO), Jacobs Engineering (J), FMC (FMC), SS&Cs (SSNC), Healthpeak Properties (PEAK), Carlyle Group (CG), Jack Henry&Associates (JKHY), Carlisle (CSL), Catalent Inc (CTLT), Aramark Holdings (ARMK), Qiagen (QGEN), Crown (CCK), Ares Capital (ARCC), AGCO (AGCO), EastGroup Properties (EGP), Graphic Packaging (GPK), Inspire Medical Systems (INSP), Assurant (AIZ), nVent Electric (NVT), Voya Financial Inc (VOYA), FirstService (FSV), H&R Block (HRB), Encompass Health (EHC), Exelixis (EXEL), Hertz Global Holdings (HTZ), Western Union (WU), Sharp ADR (SHCAY), OneMain Holdings (OMF), Black Hills (BKH), Haemonetics (HAE), Freshworks (FRSH), Madison Square Garden Sports (MSGS), New Relic Inc (NEWR), Adient (ADNT), Zurn Water Solutions (ZWS), Weatherford (WFRD), Brother Industries ADR (BRTHY), Premier Inc (PINC), NCR (NCR), Oaktree Specialty Lending (OCSL), Spirit Aerosystems (SPR), Douglas Emmett (DEI), Highwoods Properties (HIW), PJT Partners Inc (PJT), Nordic Semiconductor (NDCVF), Macerich (MAC), Werner (WERN), CNO Financial (CNO), ViaSat (VSAT), Silicon Motion (SIMO), American Assets (AAT), Consol Energy (CEIX), The Hain Celestial (HAIN), Compass Minerals (CMP), INTL FCStone (SNEX), Nabors Industries (NBR), Model N Inc (MODN), CTS Corp (CTS), Horace Mann Educators (HMN), ePlus (PLUS), Malibu Boats Inc (MBUU), A10 Network (ATEN), USANA Health Sciences (USNA), Deciphera Pharma (DCPH), Enanta (ENTA), KKR Real Estate (KREF), Ichor Holdings (ICHR).
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On the date of publication, Oleksandr Pylypenko 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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