Markets Today: Stock Indexes Climb as Bank Stocks Rebound

Morning Markets

March S&P 500 futures (ESM23) this morning are up +0.46%, and March Nasdaq 100 E-Mini futures (NQM23) are up +0.90%.

U.S. stock index futures this morning are moderately higher as bank stocks recover in pre-market trading from Wednesday’s rout.  U.S. bank stocks tumbled Wednesday after Treasury Secretary Yellen told lawmakers that the government wasn’t considering “blanket” deposit insurance to stabilize the U.S. banking system.

Some positive corporate news today was also positive for stock index futures.  Accenture climbed more than +4% in pre-market trading after reporting better-than-expected Q2 revenue.  Also,  Regeneron Pharmaceuticals jumped more than +9% on positive drug testing news.

Stock index futures fell back from their best levels after bond yields rose when U.S. weekly jobless claims unexpectedly declined, a sign of strength in the labor market that is hawkish for Fed policy.

U.S. weekly initial unemployment claims unexpectedly fell -1,000 to 191,000, showing a stronger labor market than expectations of an increase to 197,000.

The U.S. Feb Chicago Fed national activity index fell -0.42 to -0.19, weaker than expectations of 0.10.

Global bond yields are mixed.  The 10-year T-note yield today is up +7.9 bp at 3.513%.  However, the 10-year German bund yield is down -4.9 bp at 2.280%, while the 10-year UK gilt yield is up +0.6 bp at 3.457%. 

Overseas stock markets are higher.  The Euro Stoxx 50 today is down -0.27%.  China’s Shanghai Composite stock index closed up +0.64%, and Japan’s Nikkei Stock Index closed down -0.17%. 

The Euro Stoxx 50 index today is moderately higher.  European bank stocks are under pressure as market sentiment weakened when U.S. Treasury Secretary Yellen on Wednesday pushed back about providing “blanket” deposit insurance to stabilize the U.S. banking system. Also, Fed Chair Powell dampened sentiment when he said he “doesn’t see” Fed rate cuts this year.  In addition, rate hikes by several European central banks today weighed on stocks.  The BOE, as expected, raised its key rate by 25 bp to 4.25% and said signs of inflation persistence would require more rate hikes.  Also, the Swiss National Bank raised interest rates by 50 bp today and said “it cannot rule out additional rate increases to ensure price stability,” and the Bank of Norway raised rates by 25 bp today and signaled another rate hike in May.   

China’s Shanghai Composite today rallied to a 2-week high and closed moderately higher.  Chinese internet stocks rallied today, led by an +8% surge in Tencent Holdings, after it reported better-than-expected quarterly revenue after five straight quarters of misses.  Tencent also recorded a +15% jump in online advertising revenue in Q4, boosting optimism in China’s economy.  Chinese semiconductor stocks rose today with renewed interest in artificial intelligence stocks after Nvidia’s annual developer conference introduced new chips and supercomputing services.  The yuan rallied to a 6-week high today on dollar weakness.  

Japan’s Nikkei Stock Index today closed slightly lower. Wednesday’s slide in U.S. bank stocks weighed on Japanese bank stocks today after U.S. Treasury Secretary Yellen said the government wasn’t considering “blanket” deposit insurance to stabilize the banking system.   Also, hawkish comments from Fed Chair Powell dampened market sentiment when he said he was ready to keep raising interest rates until inflation shows signs of cooling.  A rally in the yen to a 1-1/2 month high against the dollar today undercut Japanese exporter stocks.  An increase in M&A activity limited losses in the overall market after Nikkei Asia reported today that Toshiba would accept a buyout offer put forward by a coalition led by Japanese Industrial Partners estimated to be worth 2 trillion yen ($15.3 billion).

Pre-Market U.S. Stock Movers

Bank stocks are climbing in pre-market trading as they recover some of Wednesday’s losses after Treasury Secretary Yellen said regulators are not looking to provide “blanket” deposit insurance to stabilize the U.S. banking system. First Republic Bank (FRC) is up more than +3%. Also, Lincoln National (LNC), M&T Bank (MTB), US Bancorp (USB), Zions Bancorp (ZION), Citizens Financial Group (CFG), Regions Financial (RF), and Western Alliance Bancorp (WAL) are up +2% or more.

Accenture (ACN) climbed more than +4% in pre-market trading after reporting Q2 revenue of $15.81 billion, above the consensus of $15.56 billion.

Regeneron Pharmaceuticals (REGN) jumped more than +9% in pre-market trading after collaborator Sanofi said its Dupixent drug to treat chronic obstructive pulmonary disease (COPD) met the primary endpoint in a Phase 3 trial. 

Coinbase Global (COIN) plunged more than -13% in pre-market trading after it said it received a notice from the SEC that it plans to bring an enforcement action against the company for violating securities laws. 

Chewy (CHWY) tumbled more than -6% in pre-market trading after forecasting 2024 sales growth of 10% to 12%, down from 13.6% growth in fiscal 2022.

Samsara (IOT) fell more than -2% in pre-market trading after Morgan Stanley downgraded the stock to equal weight from overweight.

Today’s U.S. Earnings Reports (3/23/2023)

Accenture PLC (ACN), Darden Restaurants Inc (DRI), FactSet Research Systems Inc (FDS), and General Mills Inc (GIS).

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