Stocks Climb Before The Open As Positive Earnings Overshadow Rate Hike Worries

March S&P 500 futures (ESH23) are trending up +0.86% this morning after three major U.S. benchmark indices finished the regular session lower as market participants digested hawkish statements by multiple Fed officials as well as a fresh deluge of earnings results. Three major U.S. stock indexes were weighed down primarily by losses in the Communication Services, Utilities, and Technology sectors.

In Wednesday’s trading session, all three major indexes were under pressure as a slew of Federal Reserve officials continued to stress the need for more interest rate hikes. Also, weakness in technology stocks wounded the overall market as Alphabet Inc (GOOGL) dropped more than -7% after its new AI chatbot Bard delivered inaccurate answers in an online advertisement.

Federal Reserve Governor Christopher Waller said on Wednesday that the battle to reach the Fed’s 2% inflation target “might be a long fight,” and interest rates could go higher than some expect. Also, New York Fed President John Williams said the Fed still has “more work to do” on inflation, but financial conditions look broadly in line with the central bank’s outlook on policy. In addition, Federal Reserve Governor Lisa Cook said more interest rate increases are likely needed to reach the 2% inflation target. She emphasized that inflation remains “unacceptably high” and requires more action from the Fed. 

“The markets are confused, and investors are confused. The stock and bond markets are seeing different things. Some investors are still very defensive, and some investors clearly have become more aggressive,” said Tim Ghriskey, a chief investment strategist at Inverness Counsel in New York. 

On the earnings front, shares of Walt Disney Company (DIS) rose over +6% in pre-market trading after the company’s first-quarter results topped Wall Street estimates. Also, the entertainment giant announced it would cut 7,000 jobs from its global workforce. At the same time, shares of Mattel Inc (MAT) sank more than -9% in pre-market trading after the toy manufacturer reported weaker-than-expected Q4 results and posted light Q1 guidance.

Fourth-quarter earnings season is in full swing, with investors anticipating new reports from major global companies, including AbbVie (ABBV), PepsiCo (PEP), Philip Morris (PM), and PayPal Holdings Inc (PYPL).

Today, all eyes are focused on the U.S. Initial Jobless Claims data in a couple of hours. Economists, on average, forecast that Initial Jobless Claims will stand at 190K, compared to last week’s value of 183K.

Also, investors will likely focus on the U.S. Continuing Jobless Claims data, which was at 1,655K last week. Economists foresee the new figure to be 1,658K.

In the bond markets, United States 10-Year rates are at 3.614%, down -0.59%.

The Euro Stoxx 50 futures are up +1.47% this morning, hitting a fresh nine-month high as investors digested the latest German inflation data and positive quarterly earnings reports. Data on Thursday showed that Germany’s consumer prices rose 8.7% on year in January, below the 8.9% expected and 1.0% on the month, stronger than expectations of 0.8%. In corporate news, Siemens Ag (SIE.D.DX) climbed about +8% after the company reported better-than-expected Q1 earnings and raised FY23 sales guidance. In addition, Legrand (LEGD.PA) rose more than +6% after the electric component maker topped 2022 revenue and operating profit expectations.

Germany’s HICP (preliminary) data was also released today.

The German January HICP came in at +0.5% m/m and +9.2% y/y, weaker than expectations of +1.2% m/m and +10.0% y/y.

Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed up +1.18%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.08%. 

China’s Shanghai Composite closed today higher as investors bet on a rebound in economic activity after the country relaxed most anti-COVID curbs earlier this year. State media reports indicated that the People’s Bank of China injected fresh liquidity into the economy this week, with investor attention shifting to Chinese inflation data due on Friday for further signs of a rebound in activity. Chinese equities also received a boost from a successful initial public offering by a developer of sensor technologies used in self-driving cars, Hesai Group, which raised $190 million in upsized U.S. offering.

At the same time, Japan’s Nikkei 225 Stock Index closed slightly lower today amid remaining uncertainty over rate hikes and inflation. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down 3.86% to 15.92.

Pre-Market U.S. Stock Movers

Applovin Corp (APP) jumped over +29% in pre-market trading after the company reported better-than-expected revenue in Q4 and released above-consensus Q1 revenue guidance. 

Affirm Holdings Inc (AFRM) plunged about -18% in pre-market trading after the company reported downbeat Q2 results and issued weak Q3 and FY23 guidance. 

Robinhood Markets Inc (HOOD) gained about +5% in pre-market trading after reporting an increase in average revenue per user and a second consecutive quarter of positive adjusted EBITDA.

Sonos Inc (SONO) rose about +15% in pre-market trading after the company reported upbeat Q1 results and reaffirmed its full-year guidance.

Cardiovascular Systems Inc (CSII) gained over +46% in pre-market trading after announcing it is being acquired by Abbott.

Equinor ASA ADR (EQNR) rose about +2% in pre-market trading after Pareto and Nordea upgraded the stock to buy from hold.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Thursday - February 9th

AbbVie (ABBV), PepsiCo (PEP), Philip Morris (PM), Unilever ADR (UL), S&P Global (SPGI), PayPal Holdings Inc (PYPL), British American Tobacco ADR (BTI), Duke Energy (DUK), Zurich Insurance Group (ZFSVF), Vinci ADR (VCISY), Thomson Reuters (TRI), Motorola (MSI), Apollo Global Management A (APO), DexCom (DXCM), Hilton Worldwide (HLT), Banco Bradesco (BBD), SwissCom AG (SCMWY), TELUS (TU), DNB Bank ASA (DNBBY), Willis Towers Watson (WTW), Equity Residential (EQR), Ares Management (ARES), ArcelorMittal ADR (MT), Legrand ADR (LGRDY), Baxter (BAX), Kellogg (K), VeriSign (VRSN), Ventas (VTR), Cloudflare (NET), Warner Music (WMG), Expedia (EXPE), IPG (IPG), ASE Industrial ADR (ASX), BB Seguridade Participacoes SA (BBSEY), Credit Suisse ADR (CS), Kimco Realty (KIM), Masco (MAS), News Corp (NWS), News Corp A (NWSA), Cameco (CCJ), Regency Centers (REG), Credicorp (BAP), BorgWarner (BWA), Bruker (BRKR), Aegon ADR (AEG), Tapestry (TPR), Huntington Ingalls Industries (HII), Genpact (G), National Retail Properties (NNN), Wex (WEX), Sealed Air (SEE), Mohawk Industries (MHK), Ralph Lauren A (RL), ITT (ITT), Tempur Sealy International (TPX), RBC Bearings (RBC), First American (FAF), Apartment (AIRC), MDU Resources (MDU), LYFT (LYFT), Cyberark Software (CYBR), TELUS International (TIXT), Tenet Healthcare (THC), Chemours Co (CC), TIM Participacoes (TIMB), Bloom Energy (BE), SPS Commerce (SPSC), Colliers International (CIGI), Qualys (QLYS), Callaway Golf (MODG), Insperity (NSP), Alteryx (AYX), Lumentum Holdings Inc (LITE), Cabot Corp (CBT), Onto Innovation (ONTO), Brighthouse Financial (BHF), Cousins Properties (CUZ), Insight Enterprises (NSIT), Phillips Edison Co (PECO), Gates Industrial Corp (GTES), Terex (TEX), EngageSmart LLC (ESMT), Corporate Office Properties (OFC), Shutterstock (SSTK), Coursera (COUR), Yelp (YELP), Victory Capital (VCTR), Lions Gate (LGFa), Caretrust Inc (CTRE), Madison Square Garden Entertainment (MSGE), SolarWinds Corp (SWI), Knowles Cor (KN), Patrick (PATK), Corsair (CRSR), Construction Partners (ROAD), TechTarget (TTGT), Ladder Capital A (LADR), Canopy Growth (CGC), PROS (PRO), PC Connection (CNXN), Universal Logistics (ULH).

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