Markets Today: Stock Indexes Climb as Tech Strength Buoys Sentiment

Morning Markets

March S&P 500 futures (ESM23) this morning are up +0.79%, and March Nasdaq 100 E-Mini futures (NQM23) are up +0.82%.

U.S. stock index futures this morning are moderately higher.  Technology stocks are climbing in pre-market trading to lead stock index futures higher after Micron Technology forecasted stronger-than-expected Q3 sales. 

Also, technology stocks have carry-over support from a rally in Chinese technology companies after Alibaba Group Holding’s plan, announced on Tuesday, to split into six separate units sparked optimism that China’s regulatory crackdown on the sector was over. 

Some positive corporate news is bullish for stocks.  Lululemon Athletica surged more than +16% in pre-market trading after reporting stronger-than-expected Q4 net revenue and forecasting 2024 net revenue above consensus. Also, Arcturus Therapeutics surged more than +25% after reporting Q4 EPS well above consensus and saying a repayment of debts will allow its “cash runway” to extend to 2026.

Energy stocks and energy service providers are climbing in pre-market trading, with WTI crude oil up more than +1% at a 2-week high. 

Global bond yields are moving higher today as fears about banking turmoil continued to wane.  The 10-year T-note yield is up +1.7 bp at 3.587%.  Also, the 10-year German bund yield is up +3.6 bp at 2.3262%, and the 10-year UK gilt yield is up +3.8 bp at 3.494%. 

Overseas stock markets are mixed.  The Euro Stoxx 50 today is up +1.08%.  China’s Shanghai Composite stock index closed down -0.16%, and Japan’s Nikkei Stock Index closed up +1.33%. 

The Euro Stoxx 50 index today climbed to a 2-week high and is modestly higher.  Strength in technology stocks is leading the broader market higher.  Also, a larger-than-expected increase in the April German GfK consumer confidence index to a 9-month high supported stocks.  In addition, upbeat forecasts from Infineon Technologies AG and Micron Technology sparked a rally in chip stocks. European bank stocks rose, led by a +2% jump in UBS Group AG, after the company brought back a former CEO to oversee the acquisition of Credit Suisse Group AG.  Finally, shares of Adidas AG rallied more than +2% after Lululemon Athletica gave an annual outlook that surpassed market expectations, driven by high demand for activewear.

ECB Chief Economist Lane said the ECB will need to increase interest rates further if recent tensions in the financial system stay "fairly limited." 

ECB Governing Council member Kazimir said the ECB should continue with interest-rate increases despite the turbulence around the financial industry, though the pace of hikes may need to slow.

The German Apr GfK consumer confidence index rose +1.1 to a 9-month high of -29.5, stronger than expectations of -30.0.

China’s Shanghai Composite today gave up an early advance and posted modest losses.  Weakness in telecom stocks weighed on the overall market, with China Telecom Corp falling nearly -3%.  Also, Chinese pharmaceutical companies declined, led by a -9% fall in HitGen.  The Shanghai Composite initially moved higher today as technology stocks rallied after Alibaba Group Holding announced plans Tuesday to split its $250 billion company into six business units that will individually raise capital and explore initial public offerings.  The plan by Alibaba to split its operations sparked speculation that other Chinese mega-cap technology stocks may follow suit with similar plans.  In addition, Alibaba’s split boosts optimism that China’s regulatory crackdown on the technology sector has ended.

Japan’s Nikkei Stock Index today rallied to a 2-week high and closed moderately higher.  SoftBank Group, which has a large position in Alibaba Group Holding, jumped more than +6% after Alibaba announced its plans to split.  Japanese chipmakers also rose today after Micron Technology forecasted stronger-than-expected Q3 sales.  Stocks gains accelerated in the Nikkei Stock Index ahead of Thursday’s ex-dividend date for some 1,500 Japanese stocks.

Pre-Market U.S. Stock Movers

Lululemon Athletica (LULU) surged more than +16% in pre-market trading after reporting Q4 net revenue of $2.77 billion, above the consensus of $2.70 billion and forecast 2024 net revenue of $9.30 billion-$9.41 billion, stronger than the consensus of $9.10 billion.

Micron Technology (MU) rose more than +2% in pre-market trading after forecasting Q3 sales of $3.90 billion, better than the consensus of $3.75 billion.  Other chip makers also moved higher on the news, with Advanced Micro Devices (AMD), Intel (INTC), Nvidia (NVDA), and Qualcomm (QCOM) up +1% or more.

Arcturus Therapeutics (ARCT) surged more than +25% in pre-market trading after reporting Q4 EPS of $4.33.  well above the consensus of $1.71 and saying a repayment of debts will allow its “cash runway” to extend to 2026.

Hartford Financial Services Group (HIG) rose more than +2% in pre-market trading after Goldman Sachs upgraded the stock to buy from hold.

Carnival (CCL) is up more than +2% in pre-market trading after Susquehanna Financial upgraded the stock to positive from neutral.

N-Able (NABL) jumped more than +7% in pre-market trading after S&P said the stock would replace iStar in the SmallCap 600, effective April 3. 

Energy stocks and energy service providers are climbing in pre-market trading, with WTI crude oil up more than +1% at a 2-week high. ConocoPhillips (COP), Devon Energy (DVN), Haliburton (HAL), Marathon Oil (MRO), Schlumberger (SLB), and Valero Energy (VLO) are up more than +1%.

Retail stocks retreated in pre-market trading after UBS downgraded five stocks.  Ross Stores (ROST), Foot Locker (FL), Burlington Stores (BURL), Urban Outfitters (URBN), and Bath & Body Works (BBWI) dropped more than -3% in pre-market trading after UBS downgraded the stocks to sell.

Interpublic Group (IPG) fell nearly -1% in pre-market trading after BNP Paribas Exane downgraded the stock to neutral from outperform.

Penumbra (PEN) slid more than -12% in pre-market trading after Needham & Co downgraded the stock to hold from buy.

Today’s U.S. Earnings Reports (3/29/2023)

Cintas Corp (CTAS), Concentrix Corp (CNXC), Paychex Inc (PAYX), RH (RH).

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