Markets Today: Stock Index Futures Mixed on Pressure from Higher Bond Yields

Morning Markets

June S&P 500 futures (ESM23) this morning are up +0.02%, and June Nasdaq 100 E-Mini futures (NQM23) are down -0.03%.

U.S. stock index futures this morning are mixed.  An increase in M&A activity is positive for stocks after Merck said it would acquire Prometheus Biosciences for around $10.8 billion.  However, higher bond yields today are limiting gains in stock index futures.  Also, chip stocks falling in pre-market trading after a report said Taiwan Semiconductor Manufacturing, the world’s biggest contract manufacturer of chips, is planning to cut its capital expenditures. 

On the positive side for stocks, Prometheus Biosciences surged more than +70% in pre-market trading after Merck struck a deal to acquire the company for around $10.8 billion.  Also, Charles Schwab and M&T Bank are up more than +2% after reporting better-than-expected Q1 net interest revenue.  Moderna is up more than +3% after it said studies showed that adding its cancer vaccine developed with Merck with Keyrtuda kept more melanoma patients in remission than the immune therapy alone.

On the negative side, Alphabet is down more than -3% after the New York Times reported that Microsoft’s Bing might replace Alphabet’s Google as the default search service on Samsung electronic devices.  Also, chip stocks are moving lower in pre-market trading after Taiwan’s Economic Daily reported that Taiwan Semiconductor Manufacturing would cut its capex target to a range of $28 billion-$32 billion. In addition, State Street is down more than -9% after reporting an unexpected contraction in Q1 net flows.

The U.S. Apr Empire manufacturing survey general business conditions index rose +35.4 to a 9-month high of 10.8, stronger than expectations of -18.0.

Global bond yields are higher.  The 10-year T-note yield rose to a 2-week high of 3.562% and is up +4.6 bp at 3.558%.  The 10-year German bund yield rose to a 1-month high of 2.482% and is up +4.0 bp at 2.480%, and the 10-year UK gilt yield rose to a 5-week high of 3.678% and is up +0.9 bp at 3.676%.

Overseas stock markets are mixed.  The Euro Stoxx 50 is down -0.43%.  China’s Shanghai Composite closed up +1.42%, and Japan’s Nikkei Stock Index closed up +0.07%. 

The Euro Stoxx 50 index today fell back from a 17-month high and is moderately lower.  The index gave up an early advance on weakness in technology stocks.  ASML Holding NV dropped more than -3% as chip stocks retreated after the Economic Daily reported that Taiwan Semiconductor Manufacturing plans to cut capital spending, citing a worse-than-expected recovery in the semiconductor industry.  Also, a jump in European government bond yields weighed on stocks after the 10-year German bund yield today climbed to a 1-month high.  European stocks initially opened higher as bank stocks rallied on hopes for positive earnings after big U.S. banks reported better-than-expected earnings results last Friday.

China’s Shanghai Composite Stock Index today rallied to a 9-1/4 month high and closed moderately higher. Optimism in China’s recovery sparked a rally in stocks.  Expectations that Tuesday’s economic news will show China’s recovery quickened underpinned stocks with China Q1 GDP expected to expand +4% y/y from +2.9% in Q4.  Also, China March retail sales are expected to jump +7.5% y/y.  The end of Covid Zero restrictions in China prompted consumers to fill restaurants and shopping malls, boosting spending and other activity. Chinese property stocks also rallied today after economic news showed that China March new home prices posted their largest increase in 1-3/4 years.  Hopes that the People’s Bank of China (PBOC) may boost stimulus to aid the recovery were supportive for stocks after the PBOC late last Friday said, “The economy is showing a recovering and improving trend, but the foundation of the recovery Is not net solid.” 

China March new home prices rose +0.44% m/m, the largest increase in 1-3/4 years.

Japan’s Nikkei Stock Index today climbed to a 5-week high and closed slightly higher.  Improved sentiment toward financial stocks sparked a rally in Japanese financial stocks today after better-than-expected earnings results last Friday from JPMorgan Chase, and Citigroup helped calm concerns around U.S. bank stability.  A rally in Japanese exporter stocks also gave the overall market a boost after the yen fell to a 1-month low against the dollar, improving the earnings prospects of exporters.  However, stocks fell back from their best levels on the increase in Japanese government bond yields as the 10-year JGB bond yield rose to a 5-week high today at 0.491%, just below the BOJ’s 0.50% upper yield target limit. 

Pre-Market U.S. Stock Movers

Prometheus Biosciences (RXDX) surged more than +70% in pre-market trading after Merck struck a deal to acquire the company for around $10.8 billion. 

Charles Schwab (SCHW) gained more than +2% in pre-market trading after reporting Q1 net interest revenue of $2.77 billion, better than the consensus of $2.74 billion.   

Dexcom (DXCM) rose more than +2% in pre-market trading after Raymond James upgraded the stock to a strong buy from outperform with a price target of $138. 

HP Inc (HPQ) climbed more than +2% in pre-market trading after JPMorgan Chase upgraded the stock to overweight from neutral with a price target of $35.

BlackRock (BLK) is up more than +1% in pre-market trading after Morgan Stanly raised its price target on the stock to $861 from $829. 

Moderna (MRNA) climbed more than +3% in pre-market trading after it said studies showed that adding its cancer vaccine developed with Merck with Keytruda kept more melanoma patients in remission than the immune therapy alone.

M&T Bank (MTB) rose more than +3% in pre-market trading after reporting Q1 net interest income of $1.82 billion, above the consensus of $1.78 billion.

Alphabet (GOOGL) dropped more than -3% in pre-market trading after the New York Times reported that Microsoft’s Bing might replace Alphabet’s Google as the default search service on Samsung electronic devices.

Chip stocks are moving lower in pre-market trading after Taiwan’s Economic Daily reported that Taiwan Semiconductor Manufacturing would cut its capex target to a range of $28 billion-$32 billion.  As a result, advanced MicroDevices (AMD), Applied Materials (AMAT), ASML Holding NV (ASML), Global Foundries (GFS), Lam Research (LRCX), and Marvell Technology (MRVL) are down -2% or more. 

Dell Technologies (DELL) and Wolfspeed (WOLF) dropped more than -2% in pre-market trading after JPMorgan Chase downgraded the stocks to neutral from overweight.

Ovintiv (OVV) slid more than -1% in pre-market trading after Wells Fargo Securities downgraded the stock to equal weight from overweight. 

Teradyne (TER) fell more than -3% in pre-market trading after JPMorgan Chase downgraded the stock to underweight from neutral.

Zoom Video Communications (ZM) dropped more than -2% in pre-market trading after Citigroup said, “We see negative data points piling up, which could further pressure growth rates.”

State Street (STT) tumbled more than -9% in pre-market trading after reporting Q1 net flows unexpectedly fell -$26 billion versus the consensus of an +$8.44 billion increase.

Cryptocurrency-exposed stocks are moving lower in pre-market trading, with the price of Bitcoin down more than -2%.  Riot Platforms (RIOT), Coinbase Global (COIN), Bit Digital (BTBT), and Marathon Digital (MARA) are down more than -2%. 

Today’s U.S. Earnings Reports (4/17/2023)

Charles Schwab Corp/The (SCHW), JB Hunt Transport Services Inc (JBHT), M&T Bank Corp (MTB), State Street Corp (STT).

Stocks Set To Open Mixed As Investors Brace For Earnings Season

Option Volatility And Earnings Report For April 17 - 21

• Option Volatility And Earnings Report For April 17 - 21
• Stocks Set to Open Higher as Investors Brace for Earnings Season
• Earnings, PMI and Other Key Themes to Watch This Week
• Stocks Settle Moderately Lower as the Fed Remains Hawkish