Markets Today: Stocks Climb on Positive Earnings Results and Lower Bond Yields

Morning Markets

March S&P 500 futures (ESH23) this morning are up +0.80%, and March Nasdaq 100 E-Mini futures (NQH23) are up +1.25%.

U.S. stock index futures this morning are moderately higher on positive earnings reports and a decline in bond yields.  Stock indexes maintained their gains after this morning’s U.S. weekly jobless claims report showed that unemployment claims rose more than expected, a dovish factor for Fed policy. 

Positive carry-over from a rally in the Euro Stoxx 50 index today to a 1-year high is also boosting U.S. stock index futures.  An easing of German price pressures knocked bond yields lower and gave stocks a lift after German Jan CPI eased to +9.2% y/y from +9.6% y/y in Dec, a 5-month low. 

Better-than-expected quarterly earnings reports are lifting the overall market today.  Disney is up more than +6% in pre-market trading after reporting better-than-expected Q1 revenue and announcing a restructuring that includes 7,000 job cuts and $5.5 billion in cost savings.  Also, MGM Resorts International, Wynn Resorts, O’Reilly Automotive, Hilton Worldwide Holdings, and PepsiCo are all up more than +1% in pre-market trading after reporting stronger-than-expected Q4 earnings results.

Lower bond yields are supporting stocks, with the 10-year T-note yield down -3.5 bp to 3.575% and the 10-year German bund yield down -10.3 bp to 2.260%.

U.S. weekly initial unemployment claims rose +13,000 to 196,000, showing a weaker labor market than expectations of 190,000. Weekly continuing claims rose +38,000 to 1.688 million, showing a weaker labor market than expectations of 1.660 million.

Overseas markets are mixed.  The Euro Stoxx 50 index is up +1.28%.  China’s Shanghai Composite stock index closed up +1.18%, and Japan’s Nikkei Stock index closed down -0.08%. 

The Euro Stoxx 50 index today rallied to a 1-year high.  An easing of German price pressures knocked European government bond yields lower and sparked gains in stocks after German Jan consumer prices unexpectedly eased to +9.2% y/y, the slowest pace in 5 months. Also, some positive corporate news gave equities a lift after Siemens AG, and AstraZeneca Plc reported better-than-expected quarterly earnings.  On the negative side, Credit Suisse Group AG tumbled -12% after warning that it expects a substantial loss this year. 

Today’s Eurozone economic news was bullish for stocks after German Jan CPI (EU harmonized) unexpectedly eased to +9.2% y/y from +9.6% y/y in Dec, weaker than expectations of +10.0% y/y and the slowest pace of increase in 5 months.

China’s Shanghai Composite today recovered from a 3-week low and posted moderate gains.  Gains in technology stocks supported the overall market, led by a surge in artificial intelligence (AI) related stocks.  Casino stocks exposed to Macau rose today after JPMorgan Chase said it was “bullish” on the sector as “the market significantly underappreciates the pace and magnitude of demand recovery.” 

Japan’s Nikkei Stock Index today fell to a 1-week low and closed slightly lower.  Japanese stocks were undercut by negative carry-over from Wednesday when U.S. stocks slid on hawkish Fed comments.  Also, weak economic news undercut stocks after Japan Jan machine tool orders posted their biggest decline in 2-1/4 years.  In addition, weakness in exporter stocks weighed on the overall market as the yen rose against the dollar. 

Today’s Japanese economic news was bearish for stocks after Jan machine tool orders fell -9.7% y/y, the biggest decline in 2-1/4 years.

Pre-Market U.S. Stock Movers

Walt Disney (DIS) jumped more than +6% in pre-market trading after reporting Q1 revenue of $23.51 billion, above the consensus of $23.39 billion, and announcing a restructuring that includes 7,000 job cuts and $5.5 billion in cost savings. 

Tesla (TSLA) climbed more than +3% on signs that recent price cuts are spurring demand for the company’s electric vehicles after it delivered 66,051 China-made cars in January, up +18.4% m/m. 

MGM Resorts International (MGM) rallied more than +6% in pre-market trading after reporting Q4 net revenue of $3.59 billion, stronger than the consensus of $3.34 billion, and authorizing an additional $2 billion for share buybacks.

Wynn Resorts (WYNN) jumped more than +5% in pre-market trading after reporting Q4 operating revenue of $1.0 billion, well above the consensus of $953.7 million. 

O’Reilly Automotive (ORLY) climbed more than +2% in pre-market trading after reporting Q4 sales of $3.64 billion, better than the consensus of $3.50 billion, and forecasting full-year comparable sales will climb +4% to +6%, stronger than the consensus of +3.75%.

Hilton Worldwide Holdings (HLT) rose more than +2% in pre-market trading after reporting Q4 adjusted Ebitda of $740 million, above the consensus of $666.3 million. 

PepsiCo (PEP) rose more than +1% in pre-market trading after reporting Q4 core EPS of $1.67, better than the consensus of $1.64, and forecast full-year organic revenue will climb +6%, above the consensus of +5.08%. 

Equifax (EFX) fell more than -1% in pre-market trading after forecasting full-year adjusted EPS of $7.05-$7.35, weaker than the consensus of $7.65. 

Mattel (MAT) sank more than -9% in pre-market trading after reporting Q4 adjusted EPS of 18 cents, weaker than the consensus of 29 cents, and forecast full-year adjusted EPS of $1.10-$1.20, well below the consensus of $1.65.

Lincoln National (LNC) dropped more than -3% in pre-market trading after reporting Q4 adjusted operating EPS of 97 cents, well below the consensus of $1.79.

U-Haul Holding Co (UHAL) tumbled more than -6% in pre-market trading after reporting Q3 revenue fell -2.1% y/y to $1.38 billion.

DraftKings (DKNG) fell more than -1% in pre-market trading after Roth MKM downgraded the stock to sell from neutral.

Today’s U.S. Earnings Reports (2/9/2023)

AbbVie Inc (ABBV), Baxter International Inc (BAX), BorgWarner Inc (BWA), Dexcom Inc (DXCM), Duke Energy Corp (DUK), Equity Residential (EQR), Expedia Group Inc (EXPE), Hilton Worldwide Holdings Inc (HLT), Huntington Ingalls Industries (HII), Interpublic Group of Cos Inc/T (IPG), Kellogg Co (K), Kimco Realty Corp (KIM), Masco Corp (MAS), Mettler-Toledo International Inc (MTD), Mohawk Industries Inc (MHK), Motorola Solutions Inc (MSI), News Corp (NWSA), PayPal Holdings Inc (PYPL), PepsiCo Inc (PEP), Philip Morris International In (PM), Ralph Lauren Corp (RL), Regency Centers Corp (REG), S&P Global Inc (SPGI), Sealed Air Corp (SEE), Tapestry Inc (TPR), Ventas Inc (VTR), VeriSign Inc (VRSN), Willis Towers Watson PLC (WTW).

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