Markets Today: Stock Index Futures Slide as Regional Bank Stocks Fall

Morning Markets

June S&P 500 futures (ESM23) this morning are down -0.43%, and June Nasdaq 100 E-Mini futures (NQM23) are down -0.40%, both at 1-1/2 week lows.

U.S. stock index futures this morning are sliding on weakness in regional bank stocks after First Republic Bank reported smaller-than-expected Q1 deposits.  Also, cybersecurity stocks are falling after Tenable Holdings cut its full-year revenue forecast.  The markets are awaiting quarterly earnings results from mega-cap technology stocks Alphabet and Microsoft later today. 

Lower T-note yields this morning are providing underlying support to stocks.  The markets are showing an 88% chance of a 25 bp rate hike by the Federal Reserve at the May 2-3 FOMC meeting and have fully priced in a 25 bp rate hike by the ECB at its May 4 ECB meeting.

Global bond yields are lower.  The 10-year T-note yield fell to a 1-week low of 3.420% and is down -6.8 bp at 3.422%. The 10-year German bund yield is down -6.9 bp at 2.439%.  The 10-year UK gilt yield is down -6.2 bp at 3.718%.

On the bearish side for stocks, regional bank stocks are falling in pre-market trading, with First Republic Bank down more than -20% after reporting smaller-than-expected deposits at the end of Q1.  Also, cybersecurity stocks are under pressure after Tenable Holdings dropped more than -16% when it cut its full-year revenue forecast.  In addition, United Parcel Service is down more than -4% after reporting weaker-than-expected Q1 revenue and forecasting full-year revenue below consensus.

On the positive side, General Motors is up more than +3% in pre-market trading after reporting Q1 adjusted EPS above consensus.  Also, Tenet Healthcare is up more than +3% after raising its guidance for full-year Ebitda.  In addition, Spotify is up more than +4% after reporting a larger-than-expected increase in Q1 monthly active users.

Overseas stock markets are mixed.  The Euro Stoxx 50 is down -0.51%.  China’s Shanghai Composite closed down -0.32%, and Japan’s Nikkei Stock Index closed up +0.09%. 

The Euro Stoxx 50 index today slid to a 1-week low and is moderately lower.  Weakness in European bank stocks is weighing on the overall market, with UBS Group AG down more than -5% after reporting Q1 net income of $1.04 billion, below the consensus of $1.86 billion and the weakest quarterly profit in three years. Also, Banco Santander tumbled more than -4% as concern over deposit outflows offset a Q1 earnings beat. Mining stocks retreated after Boliden AB dropped more than -5% after disruptions and rising costs at its mines unit weighed on earnings.  Losses in the overall market were limited as Nestle SA and Novartis AG advanced after reporting better-than-expected Q1 profits. 

Today's hawkish comments from ECB Chief Economist Lane weighed on stocks when he said "The current data indicate that the ECB should raise interest rates again" next week.  Whether it's a 25 bp or 50 bp hike hinges now on inflation and bank lending data due two days before the decision.

China’s Shanghai Composite Stock Index today fell to a 3-1/2 week low and closed moderately lower.  The Shanghai Stock Index moved lower for the fifth consecutive session as the selloff deepened.  Recent comments from Chinese President Xi Jinping and other top leaders highlighted several risks the Chinese economy still faces, repeating the need for more self-reliance in key areas like technology in the face of growing competition from the U.S.  Chinese pharmaceutical stocks tumbled today, led by an -8% plunge in Wuxi AppTec after its Q1 earnings suggested a slowdown in the global funding environment, fueling broader weakness in the sector.  However, the Shanghai Composite recovered from its worst levels as bank stocks moved higher after a media report said one of China’s big four state lenders planned to reduce some personal and corporate deposit rates next week.  Also, tourism and travel stocks climbed after China said it would no longer require travelers to the country to provide a negative PCR test result.

Japan’s Nikkei Stock Index today rallied to an 8-month high and closed slightly higher. Better-than-expected quarterly earnings results lifted the overall market today.  Nidec gained more than +1% after the company’s full-year profit forecast was above consensus, and Daiwa House Industry jumped more than 2% after boosting full-year operating income guidance.  Also, Mitsubishi Electric gained more than +3% after it said it would spin off its automotive-equipment business to improve efficiency.  However, Japanese stocks fell back from their best levels as exporter stocks retreated after the yen rose when the 10-year JGB bond yield climbed to a 6-week high today at 0.491%.

Japan Mar PPI services prices eased to +1.6% y/y from +1.7% y/y in Feb, a slower pace of increase than expectations of +1.7% y/y.

The markets are looking ahead to the Thu/Fri BOJ meeting, which will be the first policy meeting chaired by new BOJ Governor Ueda. The Shankei newspaper reported Sunday that the BOJ is planning to review and inspect policies taken over the past decade.  The consensus is for no changes to policy, although the BOJ may lay out plans to adjust its yield curve control (YCC) program at its June meeting.

Pre-Market U.S. Stock Movers

First Republic Bank (FRC) plunged more than -20% in pre-market trading after reporting deposits at the end of Q1 were $104.47 billion, well below the consensus of $136.67 billion.  Other regional banks fell on the news with PacWest Bancorp (PACW) and Western Alliance Bancorp (WAL) down more than -2% and Zions Bancorp (ZION), US Bancorp (USB), Comerica (CMA), KeyCorp (KEY), and Truist Financial (TFC) down more than -1%. 

Cybersecurity stocks are moving lower in pre-market trading after Tenable Holdings (TENB) dropped more than -16% when it cut its full-year revenue forecast to $775 million-$785 million from an earlier forecast of $800 million-$810 million, weaker than the consensus of $805.4 million.  As a result, Fortinet (FTNT), Zscaler (ZS), Crowdstrike Holdings (CRWD), SentinelOne (S), CyberArk Software (CYBR), Okta (OKTA), and Palo Alto Networks (PANW) are down -1% or more. 

United Parcel Service (UPS) tumbled more than -4% in pre-market trading after reporting Q1 revenue of $22.9 billion, below the consensus of $23.0 billion and forecasting full-year revenue in the lower end of $97.0 billion to $99.4 billion, weaker than the consensus of $98.08 billion.

Biogen (BIIB) dropped more than -2% in pre-market trading after forecasting full-year adjusted EPS of $15 to $16, the midpoint below the consensus of $15.55.

Danaher (DHR) sank more than -6% in pre-market trading after cutting guidance on full-year non-GAAP base business core revenue growth to up mid-single digits year-over-year from a prior forecast of core revenue up high-single digits. 

Cadence Design Systems (CDNS) tumbled more than -5% in pre-market trading after forecasting Q2 adjusted EPS of $1.15-$1.19, weaker than the consensus of $1.25.

GE Healthcare (GEHC) fell more than -2% in pre-market trading after forecasting full-year adjusted EPS of $3.60-$3.75, the midpoint below the consensus of $3.72. 

Range Resources (RRC) climbed more than +4% in pre-market trading after reporting Q1 adjusted EPS of 99 cents, higher than the consensus of 80 cents.

Tenet Healthcare (THC) rose more than +3% in pre-market trading after raising guidance for full-year Ebitda to $3.21 billion-$3.41 billion from a prior view of $3.16 billion-$3.36 billion, stronger than the consensus of $3.27 billion.

General Motors (GM) is up more than +3% in pre-market trading after reporting Q1 adjusted EPS of $2.21, well above the consensus of $1.72. 

Spotify (SPOT) jumped more than +4% in pre-market trading after reporting Q1 monthly active users of 515.0 million, above the consensus of 501.6 million.  Loop Capital Markets upgraded the stock to buy from hold with a price target of $64.

General Electric (GE) rose more than +1% in pre-market trading after raising the lower end of its full-year adjusted free cash flow estimate to $3.6 billion-$4.2 billion from a prior view of $3.4 billion-$4.2 billion, above the consensus of $3.97 billion.

PepsiCo (PEP) rose more than +1% in pre-market trading after raising its full-year core EPS estimate to $7.27 from a prior estimate of $7.20, above the consensus of $7.24.

Kimberly Clark (KMB) gained more than +1% in pre-market trading after reporting Q1 organic sales rose +5.0%, stronger than the consensus of +3.8%.

Today’s U.S. Earnings Reports (4/25/2023)

3M Co (MMM), Alphabet Inc (GOOGL), Archer-Daniels-Midland Co (ADM), Biogen Inc (BIIB), Boston Properties Inc BXP), Centene Corp (CNC), Chipotle Mexican Grill Inc (CMG), Chubb Ltd (CB), Corning Inc (GLW), CoStar Group Inc (CSGP), Danaher Corp (DHR), Dow Inc (DOW), Enphase Energy Inc (ENPH), Equity Residential (EQR), Fiserv Inc (FISV), GE HealthCare Technologies Inc (GEHC), General Electric Co (GE), General Motors Co (GM), Halliburton Co (HAL), Illumina Inc (ILMN), Invesco Ltd (IVZ), Juniper Networks Inc (JNPR), Kimberly-Clark Corp (KMB), Laboratory Corp of America Hol (LH), McDonald's Corp (MCD), Microsoft Corp (MSFT), Moody's Corp (MCO), MSCI Inc (MSCI), NextEra Energy Inc (NEE), 

Northern Trust Corp (NTRS), NVR Inc (NVR), PACCAR Inc (PCAR), PepsiCo Inc (PEP), PulteGroup Inc (PHM), Raytheon Technologies Corp (RTX), Sherwin-Williams Co/The (SHW), Texas Instruments Inc (TXN), United Parcel Service Inc (UPS), Universal Health Services Inc (UHS), Verizon Communications Inc (VZ), Visa Inc (V).

• 2 Companies Poised to Break Out This Week - And One to Potentially Avoid (For Now)
• Long Straddle Screener Results For April 25th
• Stock Index Futures Move Lower Ahead of Big Tech Earnings
• Stocks Settle Mixed Ahead of Mega-Cap Tech Earnings