Stocks Climb Before the Open as Strong Big Tech Earnings Overshadow Recession Worries

June S&P 500 futures (ESM23) are up +0.40%, and June Nasdaq 100 E-Mini futures (NQM23) are up +1.27% this morning as solid earnings from a couple of U.S. tech giants boosted market sentiment.

Microsoft Corporation (MSFT) climbed over +7% in pre-market trading after the software giant reported upbeat Q3 results and suggested growing strength in its AI and cloud businesses. Also, Alphabet Inc (GOOGL) rose about +1% in pre-market trading after the company posted better-than-expected Q1 results and announced an increased buyback.

In Tuesday’s trading session, Wall Street’s major averages closed sharply lower, with the benchmark S&P 500 and blue-chip Dow notching 2-week lows and the tech-heavy Nasdaq 100 falling to a 3-1/2 week low. Weakness in regional bank stocks weighed on the broader market, with First Republic Bank (FRC) tumbling over -49% after the bank reported a bigger-than-expected decline in deposits in Q1. Cybersecurity stocks also slumped following Tenable’s (TENB) disappointing billings and guidance. In addition, United Parcel Service Inc (UPS) plunged over -9% after the company reported downbeat Q1 results and said it expects full-year revenue to be at the low end of its earlier outlook, feeding concerns over the slowing U.S. economy.

Economic data on Tuesday showed U.S. CB Consumer Confidence dipped to a 9-month low of 101.3 in April, weaker than expectations of 104.0. Also, U.S. S&P/CS HPI Composite - 20 n.s.a. stood at +0.4% y/y in February, stronger than expectations of +0.1% y/y. In addition, U.S. Richmond Manufacturing Index came in at -10 in April, weaker than expectations of -9. At the same time, U.S. March New Home Sales unexpectedly rose to a 1-year high of 683K, stronger than expectations of 630K.

On the earnings front, global companies like Meta Platforms (META), Thermo Fisher Scientific (TMO), Boeing (BA), American Tower (AMT), and ServiceNow Inc (NOW) are set to report their quarterly earnings today.

Today, all eyes are focused on U.S. Core Durable Goods Orders data in a couple of hours. Economists, on average, forecast that March Core Durable Goods Orders will stand at -0.2% m/m, compared to the previous value of 0.0% m/m.

Also, investors are likely to focus on U.S. Durable Goods Orders data, which was at -1.0% m/m in February. Economists foresee the new figure to be +0.7% m/m.

U.S. Goods Trade Balance will be reported today. Economists foresee the preliminary figure to stand at -89.00B in March, compared to the previous number of -91.63B.

U.S. Crude Oil Inventories data will be reported today as well. Economists estimate this figure to be -1.486M, compared to last week’s value of -4.581M.

In the bond markets, United States 10-Year rates are at 3.409%, up +0.32%.

The Euro Stoxx 50 futures are down -0.62% this morning, tracking overnight losses on Wall Street as investors continued to assess the impact of persistent inflation and slowing economic growth on corporate earnings. Losses in technology stocks are leading the overall market lower, with Asm International (ASM.NA) plunging more than -8% after the Dutch semiconductor equipment maker reported a drop in first-quarter orders due to softening market conditions. Luxury stocks are also under pressure today as Kering Sa (KER.P.DX) fell over -2% after Gucci sales barely rose in Q1. Meanwhile, investors await speeches from ECB policymakers Kerstin af Jochnick, Luis De Guindos, and Anneli Tuominen for more clues on the central bank’s monetary tightening path. In other earnings news, Temenos Ag (TEMN.Z.IX) climbed more than +9% after the Swiss banking software company reported better-than-expected Q1 earnings.

Germany’s GfK Consumer Climate, France’s Consumer Confidence, and U.K.’s Labour Productivity data were released today.

The German May GfK Consumer Climate has been reported at -25.7, stronger than expectations of -27.9.

The French April Consumer Confidence stood at 83, stronger than expectations of 81.

U.K. Labour Productivity came in at 0.4% in the fourth quarter, stronger than expectations of 0.3%. 

Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.02%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.71%.

China’s Shanghai Composite today closed slightly lower as geopolitical tensions continued to weigh on sentiment while market participants were cautious ahead of the upcoming Golden Week holiday. A group of nine Republican senators urged the Biden administration on Tuesday to impose sanctions and take other action against Huawei Cloud and other Chinese cloud service providers, citing national and economic security concerns. At the same time, Hong Kong-listed tech stocks climbed on Wednesday, boosted by consensus-beating results from Microsoft Corporation and Alphabet Inc. Investor attention is now on Chinese industrial profit data due on Thursday for more clues on the state of the manufacturing sector.

“We believe that the market focus will be gradually shifted from themes and geopolitics to economic data and corporate earnings as China has returned to the pre-pandemic economic growth trajectory,” said Chris Liu, a senior portfolio manager at Invesco.

At the same time, Japan’s Nikkei 225 Stock Index closed lower, retreating from an eight-month high amid renewed concerns about a global banking crisis and a possible U.S. recession. Investors were also cautious ahead of more Japanese corporate earnings and new Bank of Japan governor Kazuo Ueda’s first policy decision on Friday. Meanwhile, Mitsubishi Motors Corp. dropped over -2% after the automaker said it would take a one-time hit of about 10.5 billion yen related to slowing sales at its China unit. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down 0.31% to 16.27.

Pre-Market U.S. Stock Movers

Enphase Energy Inc (ENPH) plunged over -15% in pre-market trading after the company reported upbeat Q1 results but posted weaker-than-expected Q2 revenue guidance.

PacWest Bancorp (PACW) soared more than +17% in pre-market trading after the bank posted better-than-expected Q1 earnings and said deposits rebounded in April.

Chipotle Mexican Grill Inc (CMG) climbed over +7% in pre-market trading after the fast-casual restaurant operator reported better-than-expected Q1 results.

IONQ Inc (IONQ) gained over +4% in pre-market trading after Morgan Stanley initiated coverage of the stock with an equal weight rating.

Scotts Miracle-Gro Company (SMG) fell over -1% in pre-market trading after Barclays downgraded the stock to equal weight from overweight.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Wednesday - April 26th

Meta Platforms (META), Thermo Fisher Scientific (TMO), Boeing (BA), American Tower (AMT), ServiceNow Inc (NOW), ADP (ADP), Boston Scientific (BSX), Canadien Pacifique Kansas City (CP), CME Group (CME), Waste Management (WM), Humana (HUM), General Dynamics (GD), O’Reilly Automotive (ORLY), Edwards Lifesciences (EW), Pioneer Natural (PXD), KLA Corp (KLAC), Norfolk Southern (NSC), Amphenol (APH), Hess (HES), Aflac (AFL), TE Connectivity (TEL), Hilton Worldwide (HLT), Old Dominion Freight Line (ODFL), Waste Connections (WCN), Otis Worldwide (OTIS), Cenovus Energy Inc (CVE), American Water Works (AWK), Align (ALGN), Arch Capital (ACGL), United Rentals (URI), AvalonBay (AVB), Rogers Communications (RCI), eBay (EBAY), Fortive (FTV), Entergy (ETR), CGI Inc (GIB), Dover (DOV), Raymond James Financial (RJF), Teledyne Technologies (TDY), Rollins (ROL), Westinghouse Air Brake (WAB), Biomarin Pharma (BMRN), Mid-America Apartment (MAA), Sun (SUI), Symrise Ag PK (SYIEY), IDEX (IEX), Molina Healthcare (MOH), Tyler Technologies (TYL), Aspen (AZPN), Teradyne (TER), PTC (PTC), UDR (UDR), Avery Dennison (AVY), Graco (GGG), MarketAxesss (MKTX), Masco (MAS), EQT (EQT), CH Robinson (CHRW), Churchill Downs (CHDN), Penske Automotive (PAG), Owens Corning (OC), Allegion PLC (ALLE), WillScot A (WSC), Chemed (CHE), Morningstar (MORN), Roku (ROKU), Fortune Brands (FBIN), Robert Half (RHI), Nov (NOV), Wolfspeed (WOLF), CACI (CACI), Acadia Healthcare (ACHC), Hess Midstream Partners (HESM), Antero Resources Corp (AR), FirstService (FSV), Landstar (LSTR), Stifel (SF), STAG Industrial (STAG), Mattel (MAT), Silgans (SLGN), Wyndham Hotels (WH), Prosperity Bancshares (PB), BOK Financial (BOKF), SPS Commerce (SPSC), Evercore (EVR), Pilgrims Pride (PPC), Alamos Gold (AGI), Silicon Labs (SLAB), Alkermes Plc (ALKS), Trinet Grou (TNET), Integra (IART), Axis Capital (AXS), Antero Midstream (AM), Vertiv Holdings Co (VRT), Comfort Systems (FIX), Meritage (MTH), Insperity (NSP), Merit (MMSI), Teladoc Inc (TDOC), Taylor Morn Home (TMHC), Element Solutions (ESI), Weatherford (WFRD), Popular (BPOP), AllianceBernstein Holding LP (AB), Ryder System (R), ASGN (ASGN), Independence Realty Trust Inc (IRT), Pegasystems (PEGA), Impinj (PI), CONMED (CNMD), Essential Properties (EPRT), Kilroy (KRC), SLM (SLM), Quantumscape (QS), Mr. Cooper (COOP), EPR Properties (EPR), Travel + Leisure Co (TNL), Group 1 Automotive (GPI), Methanex (MEOH), Moelis & Co (MC), Blackstone Mortgage (BXMT), First Interstate BancSystem (FIBK), Plexus (PLXS), MaxLinear (MXL), Century Communities (CCS), Evertec Inc (EVTC), Goosehead Insurance (GSHD), Sunnova Energy (NOVA), Extreme (EXTR), Navient (NAVI), MYR Group (MYRG), Helen of Troy Ltd (HELE), Enovix (ENVX), Viking Therapeutics Inc (VKTX), Constellium Nv (CSTM), Tronox (TROX), M/I Homes (MHO), Pebblebrook Hotel (PEB), Oceaneering International (OII), Columbia Banking (COLB), Empire State Realty (ESRT), RPC (RES), Getty (GTY), Veris Residential (VRE), Celestica Inc. (CLS), Apollo Commercial RE Finance (ARI), Ultra Cleans (UCTT), PROG Holdings (PRG), Nevro Corp (NVRO).

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