Markets Today: Stock Indexes Moderately Lower on Price Pressures in Europe

Morning Markets

March S&P 500 futures (ESH23) this morning are down -0.14% and March Nasdaq 100 E-Mini futures (NQH23) are down -0.10%.

U.S. stock index futures this morning are moderately lower.  Stock index futures gave up overnight gains and turned lower on signs of faster inflation in Europe, which is pushing global interest rates higher.   Stock index futures initially moved higher in overnight trade on optimism in the global economic outlook after Chinese manufacturing activity last month expanded by the fastest pace in more than ten years.

Higher bond yields today are bearish for stocks, with the 10-year T-note yield up +2.4 bp to 3.944%.  A jump in European government bond yields is undercutting T-note prices, as the 10-year German bund yield rose to an 11-year high today at 2.726% after German Feb CPI unexpectedly accelerated to 9.3% y/y from Jan’s +9.2% y/y pace.

Negative corporate news is also weighing on the overall market.  Rivian Automotive is down more than -8% in pre-market trading after forecasting full-year production below estimates. Also,  Kohl’s is down more than -5% after reporting weaker-than-expected Q4 net sales.  In addition, Monster Beverage is down more than -4% after reporting Q4 adjusted EPS below the consensus.

On the positive side, HP Inc and Axon Enterprise are up more than +3% in pre-market trading after reporting better-than-expected Q4 adjusted EPS.  Also,  B&G Foods is up more than +11% after reporting Q4 net sales above the consensus.

Overseas stock markets are higher.  The Euro Stoxx 50 today is up +0.26%.  China’s Shanghai Composite stock index closed up +1.00%, and Japan’s Nikkei Stock Index closed up +0.26%. 

The Euro Stoxx 50 index today is moderately higher.  Carryover support from today’s rally in Chinese stocks to a 7-1/2 month high is lifting European stocks.  Market sentiment also improved after today’s economic news showed Chinese manufacturing activity in Feb expanded at its fastest pace in more than ten years, which bolsters confidence in the global economic outlook. Limiting the upside in stocks is a -4% fall in ASM International after the semiconductor-equipment manufacturer reported Q4 gross margin of 46.4%, below the consensus of 47.6%.   Stock gains were limited on concern the ECB may have to raise interest rates higher for longer after German consumer prices last month unexpectedly accelerated.  That pushed the 10-year German bund yield up to an 11-year high of 2.726%.

ECB Governing Council member and Bundesbank President Nagel said, "the 50 bp interest rate increase announced for March will not be the last.  Further significant interest-rate steps might even be necessary afterward, too."

German Feb CPI (EU harmonized) rose +1.0% m/m and +9.3% y/y, stronger than expectations of +0.7% m/m and +9.0% y/y.

German Feb unemployment unexpectedly rose +2,000, showing a weaker labor market than expectations of -10,000.

China’s Shanghai Composite today rallied to a 7-1/2 month high and closed moderately higher.  Better-than-expected Chinese economic news on manufacturing activity boosted the overall market today after the China Feb manufacturing PMI expanded at its strongest pace in more than ten years.  Homebuilding and property stocks rose today after China home sales rose in February for the first time in 20 months.  Also, casino stocks with exposure to Macau gained after gaming revenue in Macau jumped 33% last month.  In addition, telecommunication stocks rallied for a second day after guidelines released by the central committee of the Communist Party and the State Council said the government will promote the digital sector’s integration with the real economy to bolster economic growth.

The China Feb manufacturing PMI rose +2.5 to 52.6, stronger than expectations of 50.6 and the fastest pace of expansion in more than ten years.  Also, the Feb non-manufacturing PMI rose +1.9 to 56.3, stronger than expectations of 54.9 and the fastest pace of expansion in 2 years.

Japan’s Nikkei Stock Index today closed moderately higher.  Japanese companies with heavy exposure to China rallied today after Chinese economic reports on manufacturing PMI, and non-manufacturing PMI rose more than expected. Gains in the overall market were muted as a stronger yen weighed on exporter stocks.

The Japan Feb Jibun Bank manufacturing PMI was revised upward by +0.3 to 47.7 from the previously reported 47.4.

Pre-Market U.S. Stock Movers

Axon Enterprise (AXON) climbed more than +3% in pre-market trading after reporting Q4 adjusted EPS of 70 cents, better than the consensus of 53 cents. 

Sarepta Therapeutics (SRPT) surged more than +18% in pre-market trading after the company said the FDA doesn’t plan to hold an advisory committee for the approval of its experimental gene therapy to treat Duchenne muscular dystrophy, which should accelerate the drug’s path to approval. 

HP Inc (HPQ) gained more than +3% in pre-market trading after reporting Q4 adjusted EPS of 75 cents, above the consensus of 74 cents, and forecast full-year adjusted EPS of $3.20-$3.60, the midpoint above the consensus of $3.29.

U.S.-listed Chinese stocks are rallying in pre-market trading after economic reports today showed China’s economy is on track for a stronger recovery.  Baidu (BIDU) is up more than +6%, and Alibaba Group Holding (BABA) and NetEase (NTES) are up more than +5%.  Also, JD.com (JD) and PDD Holdings (PDD) are up more than +4%. 

B&G Foods (BGS) jumped more than +11% in pre-market trading after reporting Q4 net sales of $623.2 million, well above the consensus of $586.2 million. 

Reata Pharmaceuticals (RETA) soared more than +175% in pre-market trading after the FDA approved the company’s Skyclarys (omaveloxolone) drug to treat the degenerative neuromuscular disorder Friedreich’s ataxia. 

Kohl’s (KSS) tumbled more than -5% in pre-market trading after reporting Q4 net sales of $5.78 billion, weaker than the consensus of $6.09 billion. 

Monster Beverage (MNST) dropped more than -4% in pre-market trading after reporting Q4 adjusted EPS of 57 cents, below the consensus of 62 cents.

Rivian Automotive (RIVN) sank more than -8% in pre-market trading after forecasting full-year production of 50,000 vehicles, well below the consensus of 62,797. 

Luminar Technologies (LAZR) dropped more than -4% in pre-market trading after reporting a Q4 adjusted loss per share of -26 cents, wider than the consensus of -21 cents. 

Ross Stores (ROST) fell over 2% in pre-market trading after forecasting Q1 EPS of 99 cents-$1.05, weaker than the consensus of $1.18. 

Today’s U.S. Earnings Reports (3/1/2023)

agilon health Inc (AGL), CCC Intelligent Solutions Hold (CCCS), Certara Inc (CERT), Clarivate PLC (CLVT), Clean Harbors Inc (CLH), Dollar Tree Inc (DLTR), Donaldson Co Inc (DCI), DoubleVerify Holdings Inc (DV), Erie Indemnity Co (ERIE), Ginkgo Bioworks Holdings Inc (DNA), Healthcare Realty Trust Inc (HR), Horizon Therapeutics Plc (HZNP), Jazz Pharmaceuticals PLC (JAZZ), Kohl's Corp (KSS), Liberty Media Corp-Liberty For (FWONA), Liberty Media Corp-Liberty Sir (LSXMA), Lowe's Cos Inc (LOW), Okta Inc (OKTA), Plug Power Inc (PLUG), Pure Storage Inc (PSTG), Salesforce Inc (CRM), Snowflake Inc (SNOW), Splunk Inc (SPLK), Starwood Property Trust Inc (STWD), UWM Holdings Corp (UWMC), Veeva Systems Inc (VEEV), Vistra Corp (VST), Wendy's Co/The (WEN).

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