Markets Today: Stocks Fall on Mixed Corporate Earnings Results

Morning Markets

March S&P 500 futures (ESH23) this morning are down -0.49% and March Nasdaq 100 E-Mini futures (NQH23) are down -0.45%.

U.S. stock index futures this morning are moderately lower amid mixed earnings reports.  Prudential Financial is down more than -3% in pre-market trading after reporting weaker-than-expected Q4 adjusted operating EPS. Also, Lumen Technologies plunged more than -13% after forecasting full-year adjusted Ebitda below consensus. 

Inflation concerns are also weighing on stock index futures today after Manheim reported that the U.S. Jan average used-vehicle prices rose +2.5% m/m.  Used car prices are one of the larger components of the Consumer Price Index, making up 4.5% of its core. 

On the positive side, Fortinet jumped more than +12% in pre-market trading to lead a rally in cybersecurity stocks after forecasting full-year revenue above estimates.  Also, Uber Technologies is up more than +6% after reporting better-than-expected Q4 revenue.  In addition, lower bond yields are supportive for stocks, with the 10-year T-note yield down -1.7 bp to 3.657%.

Overseas markets are mixed.  The Euro Stoxx 50 index is up +0.35%.  China’s Shanghai Composite stock index closed down -0.49%, and Japan’s Nikkei Stock index closed down -0.29%. 

The Euro Stoxx 50 index today is moderately higher as it tracked Tuesday’s rally in U.S. stocks.  Also, some positive corporate news is underpinning the overall market after Equinor ASA, Akzo Nobel NV, and AN Amro Bank NV reported better-than-expected earnings results.   European bank stocks also rose after the ECB said it would keep capital requirements for banks steady this year, saying the banks have “solid capital and liquidity positions and increased profitability.”  On the negative side is higher European government bond yields, with the 10-year German bund yield today climbing to a 5-week high of 2.399%.

Today’s Eurozone economic news was supportive for stocks after Italy’s Dec retail sales fell -0.2% m/m, stronger than expectations of -0.7% m/m.

China’s Shanghai Composite today closed moderately lower.  Weakness in Chinese technology stocks led the overall market lower as Meituan dropped more than -6% after a report said the company plans to hire as many as 10,000 people this quarter as the food delivery service company tries to fend off a challenge from ByteDance Ltd.  Losses in the overall market were limited as Alibaba Group Holding and NetEase rallied after both companies said they would soon roll out demo product similar to ChatGBT’s artificial intelligence bot. 

Japan’s Nikkei Stock Index today closed moderately lower.  A plunge of more than -7% in Nintendo led Japanese technology stocks lower and weighed on the overall market after the company missed quarterly profit estimates and cut its full-year outlook as sales of its Switch game console missed targets.  Weakness in bank stocks also pressured the overall market after SoftBank Group fell more than -6% when it reported an unexpected Q4 loss of -783.4 billion yen ($5.9 billion) versus expectations of a profit of 205.9 billion yen.

Today’s Japanese economic news was supportive for stocks after the Jan eco-watchers outlook survey rose +2.5 to an 8-month high of 49.3, stronger than expectations of 47.6.

Pre-Market U.S. Stock Movers

Prudential Financial (PRU) fell more than -3% in pre-market trading after reporting Q4 adjusted operating EPS of $2.42, weaker than the consensus of $2.50 billion. 

Lumen Technologies (LUMN) tumbled more than -13% in pre-market trading after forecasting full-year adjusted Ebitda of $4.6 billion to $4.8 billion, below the consensus of $5.15 billion. 

Yum China (YUMC) fell more than -1% in pre-market trading after reporting Q4 revenue of $2.09 billion, below the consensus of $2.22 billion.

Chipotle Mexican Grill (CMG) tumbled more than -5% in pre-market trading after reporting Q4 comparable same-store sales rose +5.60%, well below the consensus of +7.04%. 

Fortinet (FTNT) jumped more than +12% in pre-market trading after forecasting full-year revenue of $5.37 billion-$5.43 billion, above the consensus of $5.36 billion.  Other cybersecurity stocks rose on the Fortinet news.  Pala Alto Networks (PANW) is up more than +3%, and Crowdstrike Holdings (CRWD), Zscaler (ZS), and SentinelOne (S) are up more than +2%.

Uber Technologies (UBER) climbed more than +6% in pre-market trading after reporting Q4 revenue of $8.61 billion, stronger than the consensus of $8.47 billion. 

American Express (AXP) rose more than +1% in pre-market trading after Morgan Stanley upgraded the stock to overweight from equal weight. 

CVS Health (CVS) gained more than +1% in pre-market trading after forecasting full-year revenue of $332.7 billion-$338.5 billion, well above the consensus of $324.87 billion. 

Under Armour (UAA) jumped more than +5% in pre-market trading after reporting Q3 net revenue of $1.60 billion, better than the consensus of $1.55 billion. 

Today’s U.S. Earnings Reports (2/8/2023)

AvalonBay Communities Inc (AVB), CDW Corp/DE (CDW), Ceridian HCM Holding Inc (CDAY), CME Group Inc (CME), CVS Health Corp (CVS), Dominion Energy Inc (D), Eaton Corp PLC (ETN), Emerson Electric Co (EMR), Equifax Inc (EFX), Everest Re Group Ltd (RE), Federal Realty Investment Trus (FRT), FleetCor Technologies Inc (FLT), Fox Corp (FOXA), International Flavors & Fragra (IFF), Lincoln National Corp (LNC), MGM Resorts International (MGM), Molina Healthcare Inc (MOH), Monolithic Power Systems Inc (MPWR), O'Reilly Automotive Inc (ORLY), STERIS PLC (STE), Trimble Inc (TRMB), Walt Disney Co/The (DIS), Wynn Resorts Ltd (WYNN), Yum!  Brands Inc (YUM).

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