Markets Today: Stock Indexes Climb as Bank Stocks Rebound

Morning Markets

March S&P 500 futures (ESH23) this morning are up +0.62%, and March Nasdaq 100 E-Mini futures (NQH23) are up +0.53%.

U.S. stock index futures this morning are moderately higher.  Bank stocks are climbing in pre-market trading to lead the overall market higher as they stabilize after the rout seen over the past three sessions as concerns ease about broader contagion in the financial system.  Stock indexes maintained their gains after the pace of U.S. Feb consumer prices eased and came in right on expectations.

U.S. Feb CPI rose +0.4% m/m and +6.0% y/y, right on expectations, with the +6.0% y/y gain the smallest year-on-year increase in 17 months.  Feb CPI ex-food and energy eased to +5.5% y/y from +5.6% y/y in Jan, right on expectations and the slowest pace of increase in 14 months.

Positive corporate news is also supporting gains in stock index futures.  Uber and Lyft are up more than +5% in pre-market trading after a Californian appeals court upheld the current law classifying gig workers as independent contractors instead of employees.  Also, Bunge is up more than +7% after it was announced that it would replace Signature Bank of New York in the S&P 500 prior to the opening of trading on Wednesday.  In addition, ZoomInfo Technologies is up more than +4% after announcing a $100 million stock buyback program.

On the negative side, United Airlines Holdings is down more than -6% in pre-market trading after it cut guidance for Q1 and now said it expected an adjusted loss per share in Q1.  Also, Gitlab plunged more than -30% after forecasting 2024 revenue well below consensus.

This morning’s stock rebound has sapped the safe-haven demand for government debt and pushed bond yields higher.  The 10-year T-note yield today is up +0.8 bp at 3.581%.  Also, the 10-year German bund yield is up +11.6 bp at 2.375%, and the 10-year UK gilt yield I sup +12.1 bp at 3.492%.

Overseas stock markets are mixed.  The Euro Stoxx 50 today is up +0.193.  China’s Shanghai Composite stock index closed down -0.72%, and Japan’s Nikkei Stock Index closed down -2.19%. 

The Euro Stoxx 50 index is moderately higher.  A rally in European real estate stocks is leading the overall market higher on speculation the U.S. banking turmoil will prompt the ECB to slow its pace of interest rate hikes.  The ECB meets on Thursday, and the consensus is for the central bank to raise interest rates by 50 bp.  Weakness in European bank stocks is limiting gains in the overall market.  Credit Suisse Group AG tumbled more than -4% after it said it had identified “material weaknesses” in its reporting procedures for the financial years 2022 and 2021.  Also, Close Brothers Group Plc fell more than -5% after the UK financial services firm reported first-half pretax operating profit that was below the consensus.  Higher European government bond yields are also negative for stocks, with the 10-year German bund yields up +10.0 bp to 2.360% and the 10-year UK gilt yield up +11.3 bp to 3.48%.

Italy Jan industrial production fell -0.7% m/m, weaker than expectations of -0.4% m/m.

China’s Shanghai Composite today dropped to a 1-3/4 month low and closed moderately lower.  Weakness in Chinese financial stocks led the overall market lower as the U.S. banking turmoil reverberates globally.  Also, Chinese telecom companies fell back after Monday’s sharp rally when the country’s three biggest firms disclosed plans to increase their dividend payout ratio for 2022.  On the positive side, China announced that it would resume issuing visas to tourists on Wednesday, a final step toward exiting its Covid Zero policies. 

Japan’s Nikkei Stock Index today tumbled to a 2-1/2 week low and closed sharply lower.  A selloff Japanese bank stocks led the overall market lower today on concerns of contagion from the U.S. bank turmoil.  There are concerns that some Japanese banks and life insurers expanded long-term investments in assets like U.S. mortgage-backed securities using dollar funding from derivative markets and could be vulnerable to rising U.S. interest rates and turmoil in short-term markets.  Also, Japanese airline stocks fell after United Airlines Holdings said it expects to lose money this quarter as it grapples with higher labor costs.

Pre-Market U.S. Stock Movers

First Republic Bank (FRC) is up more than +20% in pre-market trading as it recovers some of its sharp losses seen over the last three sessions. 

Bank stocks are climbing this morning as the market stabilizes after the selloff seen in the sector over the past two sessions.  Western Alliance Bancorp (WAL) and PacWest Bancorp (PACW) are up more than +10%.  Also, Charles Schwab (SCHW), Bank of America (BAC), Comerica (CMA), Citigroup (C), JPMorgan Chase (JPM), and Wells Fargo (WFC) are up +2% or more.

Uber (UBER) and Lyft (LYFT) climbed more than +5% in pre-market trading after a Californian appeals court upheld the current law classifying gig workers as independent contractors instead of employees. 

Amylyx Pharmaceuticals (AMLX) surged more than +17% in pre-market trading after reporting Q4 net product revenue of $21.9 million, well above the consensus of $4.09 million. 

Bunge (BG) jumped more than +7% in pre-market trading after it was announced that it would replace Signature Bank of New York in the S&P 500 before the opening of trading on Wednesday.

Match Group (MTCH) rose more than +3% in pre-market trading after Barclays upgraded the stock to overweight from equal weight.

ZoomInfo Technologies (ZI) jumped more than +4% in pre-market trading after announcing a $100 million stock buyback program.

United Airlines Holdings (UAL) tumbled more than -6% in pre-market trading after it cut guidance for Q1 and now said it expected an adjusted loss per share in Q1 of -60 cents to -$1.00, much weaker than a previous estimate of a gain of 50 cents to $1.00.

Gitlab (GTLB) plunged more than -30% in pre-market trading after forecasting 2024 revenue of $529 million-$533 million, well below the consensus of $587.3 million. 

Ovintiv (OVV) slid more than -1% in pre-market trading after JPMorgan Chase downgraded the stock to neutral from overweight. 

Today’s U.S. Earnings Reports (3/14/2023)

Lennar Corp (LEN), SentinelOne Inc (S), Smartsheet Inc (SMAR).

• Adobe Earnings: Iron Condor Could See 37% Return On Risk
• Stocks Move Higher Before the Open as Investors Await U.S. Inflation Data
• Bank Stocks Crater but Technology Stocks Climb as Bond Yields Slide
• Unusual Options Volume Highlights a Daring Contrarian Move for Goodyear Tire (GT)