Markets Today: Stock Indexes Rise as Labor Market Softens

Morning Markets

March S&P 500 futures (ESH23) this morning are up +0.03%, and March Nasdaq 100 E-Mini futures (NQH23) are down -0.04%.

U.S. stock index futures this morning erased overnight losses and are little changed after bond yields fell when weekly U.S. jobless claims rose more than expected, easing concerns a hot labor market will force the Fed to be more hawkish.  The 10-year T-note yield is down -2.5 bp to 3.965%.

U.S. weekly initial unemployment claims rose +21,000 to a 2-1/4 month high of 211,000, showing a weaker labor market than expectations of 195,000.  Also, weekly continuing claims rose +69,000 to a 2-1/2 month high of 1.718 million, showing a weaker labor market than expectations of 1.660 million.

Bitcoin (^BTCUSD) fell more than -1% to a 3-week low today after Silvergate Capital said it plans to wind down operations and liquidate its bank. Silvergate collapsed amid scrutiny from regulators and a criminal investigation by the Justice Department's fraud unit into dealings with FTX and Alameda Research.  Silvergate Capital is down more than -40% in pre-market trading, and other crypto-related stocks fell on the news. 

Negative corporate news today is weighing on the overall market.  SVB Financial plunged more than -30% in pre-market trading after the company announced the sale of $21 billion of securities, resulting in a Q1 after-tax loss of about $1.8 billion.  Also, MongoDB fell more than -10% after forecasting 2024 revenue below consensus.  In addition, Etsy is down more than -6% after Jeffries double-downgraded the stock to underperform from buy.

On the positive side, BJ’s Wholesale Club Holdings is up more than +3% after reporting better-than-expected Q4 revenue.  Also, Uber is up more than +1% after saying it was considering spinning off its freight business, which Piper Sandler said would be positive for the company and could increase its chances of being included in the S&P 500 Index.  In addition, American Express is up more than +1% after approving a stock repurchase plan and increasing its quarterly dividend.

Overseas stock markets are mixed.  The Euro Stoxx 50 today is down -0.20%.  China’s Shanghai Composite stock index closed down -0.22%, and Japan’s Nikkei Stock Index closed up +0.63%. 

The Euro Stoxx 50 index is moderately lower.  Some negative corporate news is weighing on the overall market.  Credit Suisse AG fell more than -5% after it delayed the publication of its annual report and compensation details for 2022 after U.S. regulators raised technical questions about previous statements.  Also, Hugo Boss AG fell more than -1% after its 2023 guidance came in below expectations, with Jeffries citing the company’s inventory build that is weighing on its net financial position.  In addition, higher government bond yields are undercutting stocks, with the 10-year German bund yield up +3.3 bp to 2.680%. 

China’s Shanghai Composite today dropped to a 1-week low and posted moderate losses.  Chinese stocks moved lower after today’s economic news showed China’s consumer and producer prices eased after the end of the Lunar New Year holiday, suggesting that an economic rebound driven by the ending of Covid restrictions may take longer than expected.  Chinese stocks are also weighed down by a lack of major catalysts to come from the National People’s Congress.  Limiting losses in the overall market was a rally in Chinese suppliers of materials for semiconductors after unsubstantiated reports of impending Japanese export curbs circulated on social media.  The report comes as U.S. allies, including the Netherlands, agreed to join the U.S. in restricting the export of advanced chipmaking gear to China.

China Feb CPI rose +1.0% y/y, weaker than expectations of +1.9% y/y and the smallest pace of increase in a year.  China Feb PPI fell -1.4% y/y, weaker than expectations of -1.3% y/y and the largest decline in over 2 years.

Japan’s Nikkei Stock Index today rallied to a 6-1/2 month high and closed moderately higher.  Japanese financial stocks rallied today on speculation the BOJ may make a surprise move on interest rates or its yield curve control program ahead of the results of the 2-day BOJ meeting that ends Friday. The consensus is for no change in BOJ policy, but Goldman Sachs and BNP Paribas are among the minority, citing the risk that BOJ Governor Kuroda may surprise the markets at his last meeting as the head of the BOJ.  Japanese insurance stocks also rallied today after Nomura said it expected the sector to “shift to shareholder returns and earnings” in the near term. 

Japan’s economic news today was weaker than expected and bearish for stocks.  Japan Q4 GDP was unexpectedly revised downward to +0.1% (q/q annualized) from the initially reported +0.6% q/q, weaker than expectations of an upward revision to +0.8% q/q.  Also, Feb machine tool orders fell -10.7% y/y, the biggest decline in nearly 2-1/2 years.

Pre-Market U.S. Stock Movers

Tesla (TSLA) dropped more than -2% in pre-market trading after U.S. regulators Wednesday said they were investigating the company over complaints the steering wheel can fall off certain Model Y vehicles while they’re in use. 

Etsy (ETSY) tumbled more than -6% in pre-market trading after Jeffries double-downgraded the stock to underperform from buy. 

SVB Financial (SIVB) plunged more than -30% in pre-market trading after the company announced the sale of $21 billion of securities, resulting in a Q1 after-tax loss of about $1.8 billion.

MongoDB (MDB) fell more than -10% in pre-market trading after forecasting 2024 revenue of $1.48 billion-$1.51 billion, well below the consensus of $1.58 billion.

Crypto-related stocks fell in pre-market trading after Silvergate Capital (SI) plunged more than -40% in pre-market trading when it said it plans to wind down its operations and liquidate its bank following turmoil in the crypto industry.  Likewise, crypto-friendly Signature Bank of New York (SBNY) sank -10% on the news.  Also, Marathon Digital (MARA) and Riot Platforms (RIOT) are down more than -3%, and Coinbase Global (COIN) is down more than -2%.

Methode Electronics (MEI) dropped more than -3% in pre-market trading after cutting its full-year net sales forecast to $1.16 billion-$1.8 billion from a prior estimate of $1.17 billion-$1.20 billion, weaker than the consensus of $1.19 billion.

Trade Desk (TTD) fell more than -3% in pre-market trading after Benchmark downgraded the stock to sell from hold. 

Uber (UBER) rose more than +1% in pre-market trading after the company said it was considering spinning off its freight business, a move Piper Sandler said would be positive for the company and could increase its chances of being included in the S&P 500 Index. 

American Express (AXP) gained more than +1% in pre-market trading after the company approved the repurchase of up to 120 million common shares and announced an increase in its quarterly dividend by 8 cents to 60 cents per share. 

BJ’s Wholesale Club Holdings (BJ) climbed more than +3% in pre-market trading after reporting Q4 revenue of $4.93 billion, stronger than the consensus of $4.81 billion.

Exact Sciences (EXAS) rose more than +2% in pre-market trading after Citigroup upgraded the stock to buy from neutral with a price target of $90.

EnLink Midstream LLC (ENLC) gained more than +1% in pre-market trading after Citigroup upgraded the stock to buy from neutral.

Today’s U.S. Earnings Reports (3/9/2023)

BJ's Wholesale Club Holdings Inc (BJ), DocuSign Inc (DOCU), Gap Inc/The (GPS), Oracle Corp (ORCL), Toro Co/The (TTC), Ulta Beauty Inc (ULTA), Vail Resorts Inc (MTN).

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