Markets Today: Stocks Fall as Strong U.S. Economic Reports Keep the Fed Hawkish

Morning Markets

March S&P 500 futures (ESH23) this morning are down -0.57%, and March Nasdaq 100 E-Mini futures (NQH23) are down -0.61%.

U.S. stock index futures this morning are moderately lower.  Better-than-expected U.S. retail sales and Empire manufacturing reports boosted T-note yields and bolstered the outlook for the Fed to raise interest rates higher for longer. Jan retail sales rose +3.0% m/m, stronger than expectations of +2.0% m/m and the biggest increase in 1-3/4 years. Also, the Feb Empire manufacturing survey general business conditions index rose +27.1 to -5.8, stronger than expectations of -18.0.

This morning’s stronger-than-expected U.S. economic reports pushed the 10-year T-note yield up +1.2 bp to 3.755%, just below Tuesday’s 6-week high of 3.795%.

Negative corporate news today is also weighing on stock index futures.  Devon Energy dropped more than -5% in pre-market trading after reporting weaker-than-expected Q4 core EPS.  Also,  Chevron fell more than -1% after its Richmond refinery in California was forced to shut its gasoline-making unit because of a leak.  In addition, Marriott International and Akamai Technologies are down more than -1% after being downgraded.

On the positive side, travel stocks are moving higher in pre-market trading, with TripAdvisor up more than +10% and Airbnb up more than +9% after reporting better-than-expected Q4 revenue.  Also, Paramount Global is up more than +3% after a 13F filing showed Warren Buffet’s Berkshire Hathaway boosted its stake in the company by 2.4 million shares in Q4. 

Strength in European stocks is providing carry-over support to U.S. stock index futures, with the Euro Stoxx 50 up +0.70% at a new 1-year high.

Overseas markets are mixed.  The Euro Stoxx 50 index is up +0.70%.  China’s Shanghai Composite stock index closed down -0.39%, and Japan’s Nikkei Stock index closed down -0.37%. 

The Euro Stoxx 50 index today recovered from early losses and climbed to a 1-year high.  Strength in consumer stocks is leading the overall market higher.  Kering SA recovered from an early decline and is up more than +5% after Chairman Pinault said the reopening of China’s economy and global travel recovery would boost its sales.  Barclays Plc dropped nearly 10% after reporting quarterly earnings that missed estimates.  Deutsche Lufthansa AG fell more than -2% after grounding all of its flights today because of computer issues.

Today’s economic news was negative for European stocks after Eurozone Dec industrial production fell -1.1% m/m, weaker than expectations of -0.8% m/m.

China’s Shanghai Composite today fell back from a 2-week high and closed moderately lower.  Weakness in Chinese technology stocks weighed on the overall market on demand concerns.  Taiwan Jan exports of IC chips to mainland China, which are primary components in electronic appliances, computers, and smartphones, fell -27.1% y/y, the biggest decline in 14 years.   Strength in Chinese mining companies limited declines in the overall market after Freeport-McMoRan suspended operations at the Grasberg copper mine in Indonesia, the world’s second-biggest, due to landslides.

Japan’s Nikkei Stock Index today closed moderately lower.  Stocks fell back today after Tuesday’s stronger-than-expected U.S. Jan CPI report raised concerns the Fed will have to raise interest rates higher and for longer.  However, losses in the overall market were limited by a decline in the yen today to a 1-1/4 month low against the dollar boosted exporter stocks. 

Japanese economic news today was bearish for stocks after the Dec tertiary industry index unexpectedly fell -0.4% m/m, weaker than expectations of +0.1% m/m and the biggest decline in 5 months. 

Pre-Market U.S. Stock Movers

Devon Energy (DVN) dropped more than -5% in pre-market trading after reporting Q4 core EPS of $1.66, below the consensus of $1.76. 

Chevron (CVX) fell more than -1% in pre-market trading after its Richmond refinery in California was forced to shut its gasoline-making unit because of a leak. 

Akamai Technologies (AKAM) slid more than -1% in pre-market trading after RBC Capital Markets downgraded the stock to sector perform from outperform.

Marriott International (MAR) lost more than -1% in pre-market trading after Evercore ISI downgraded the stock to inline from outperform.

Upstart (UPST) slid more than -4% in pre-market trading after forecasting Q1 revenue of $100 million, well below the consensus of $158 million. 

Credo Technology Group Holding Ltd (CRDO) plunged nearly -50% in pre-market trading after forecasting Q4 revenue of $30 million-$32 million, well below the consensus of $58.3 million. 

Airbnb (ABNB) rallied more than +9% in pre-market trading after reporting Q4 revenue of $1.90 billion, above the consensus of $1.86 billion, and forecast Q1 revenue of $1.75 billion-$1.82 billion, stronger than the consensus of $1.68 billion. 

TripAdvisor (TRIP) jumped more than +10% in pre-market trading after reporting Q4 revenue of $354 million, stronger than the consensus of $343.7 million. 

Nubank Holdings (NU) climbed more than +7% in pre-market trading after reporting Q4 total revenue of $1.45 billion, better than the consensus of $1.28 billion. 

Tesla (TSLA) gained more than +1% in pre-market trading after Barclays initiated coverage of the stock with an overweight rating and a price target of $275. 

Paramount Global (PARA) rose more than +3% in pre-market trading after a 13F filing showed Warren Buffet’s Berkshire Hathaway boosted its stake in the company by 2.4 million shares in Q4. 

Trade Desk (TTD) jumped more than +8% in pre-market trading after reporting Q4 adjusted Ebitda of $245 million, above the consensus of $229.9 million, and forecast Q1 adjusted Ebitda of $78 million, higher than the consensus of $75.4 million. 

Today’s U.S. Earnings Reports (2/15/2023)

Albemarle Corp (ALB), Ameren Corp (AEE), American International Group Inc (AIG), American Water Works Co Inc (AWK), Analog Devices Inc (ADI), Biogen Inc (BIIB), CF Industries Holdings Inc (CF), Cisco Systems Inc (CSCO), EQT Corp (EQT), Equinix Inc (EQIX), Generac Holdings Inc (GNRC), Host Hotels & Resorts Inc (HST), Invitation Homes Inc (INVH), Kraft Heinz Co/The (KHC), Marathon Oil Corp (MRO), Martin Marietta Materials Inc (MLM), Republic Services Inc (RSG), Rollins Inc (ROL), Synopsys Inc (SNPS), Tyler Technologies Inc (TYL), Waters Corp (WAT), Welltower Inc (WELL), Westinghouse Air Brake Technol (WAB).

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