Stock Index Futures Move Higher as Investors Await Fed Rate Decision, Bank and Debt Fears Return

June S&P 500 futures (ESM23) are up +0.14%, and June Nasdaq 100 E-Mini futures (NQM23) are up +0.17% this morning after three major U.S. benchmark indices finished the regular session solidly lower as renewed fears about the health of the U.S. banking sector weighed on sentiment ahead of the Federal Reserve’s interest rate decision.

In Tuesday’s trading session, energy stocks were the biggest drag on the market as the price of WTI crude dropped over -5% to a five-week low on worries about a potential U.S. debt default and weak economic data. Financial stocks also weighed on the broader market amid continued jitters over the stability of the regional banking space despite the rescue of First Republic Bank (FRC) through a takeover by JPMorgan (JPM). The KBW Nasdaq Regional Banking Index plunged over -5%, with PacWest Bancorp (PACW) tumbling over -27% and Western Alliance Bancorporation (WAL) slumping more than -15%. In addition, sentiment was weighed down by apprehensions regarding the U.S. debt ceiling, with Treasury Secretary Janet Yellen cautioning that the country could be unable to meet its financial commitments as early as June 1st.

Data on Tuesday showed U.S. JOLTs Job Openings fell to a 23-month low of 9.590M in March, weaker than expectations of 9.775M. Also, U.S. March Factory Orders came in at +0.9% m/m, weaker than expectations of +1.1% m/m.

“The Fed got some welcome news in the March JOLTS report: the number of job openings fell 384,000 to 9.59mn, the third straight large decline, bringing the number of openings to the lowest level since April 2021,” said Michael Feroli, Chief U.S. Economist at JPMorgan. 

First-quarter earnings season continues, with investors awaiting new reports from major companies, including Qualcomm (QCOM), CVS Health Corp (CVS), and Kraft Heinz (KHC). Analysts expect corporate earnings from S&P 500 companies to drop 1.4% in the first quarter from a year earlier, compared with an expected drop of 5.1% at the start of April.

Today, all eyes are focused on the U.S. Federal Reserve’s monetary policy decision later in the day. U.S. rate futures have priced in an 85.7% chance for the Fed to raise its fed funds target range by 25 basis points for a third consecutive time to 5.00-5.25%, the highest level in nearly 16 years. In addition, market participants will closely monitor Fed Chair Jerome Powell’s statement for clues on the future of monetary policy.

Also, investors will likely focus on U.S. ADP Nonfarm Employment Change data, which stood at 145K in March. Economists foresee the new figure to be 148K.

U.S. S&P Global Composite PMI will be reported today. Economists foresee this figure to come in at 53.5 in April, compared to 52.3 in March.

U.S. ISM Non-Manufacturing PMI will also be closely watched today. Economists forecast ISM Non-Manufacturing PMI to stand at 51.8 in April, compared to the previous figure of 51.2.

U.S. Services PMI will come in today. Economists expect April’s figure to be 53.7, compared to 52.6 in March.

U.S. Crude Oil Inventories data will be reported today as well. Economists estimate this figure to be -1.100M, compared to last week’s value of -5.054M.

In the bond markets, United States 10-Year rates are at 3.399%, down -1.15%.

The Euro Stoxx 50 futures are up +0.63% this morning as investors weighed more corporate earnings reports while awaiting the latest Federal Reserve monetary policy decision. Gains in food and beverage stocks are leading the overall market higher. At the same time, automobile stocks underperformed, weighed down by losses in Stellantis NV (STLAP.FP) and Porsche AG (P911.D.DX) after first-quarter reports. Meanwhile, the European Central Bank meets on Thursday and is widely expected to raise interest rates by a quarter point. In other earnings news, Unicredit Spa (UCG.M.DX) climbed over +4% after the lender posted stronger-than-expected Q1 results and raised its profit and payout targets.

Eurozone’s Unemployment Rate was released today.

Eurozone March Unemployment Rate came in at 6.5%, stronger than expectations of 6.6%. 

Markets in Japan and mainland China were closed for holidays.

Pre-Market U.S. Stock Movers

Advanced Micro Devices Inc (AMD) plunged more than -5% in pre-market trading as weaker-than-expected Q2 guidance from the semiconductor company outweighed upbeat Q1 results.

Starbucks Corporation (SBUX) slid over -4% in pre-market trading after the company reported better-than-expected Q2 results but set cautious full-year guidance.

Livent Corp (LTHM) climbed about +9% in pre-market trading after the company reported upbeat Q1 results and posted strong FY23 revenue and adjusted EBITDA guidance.

Sprout Social Inc (SPT) tumbled over -17% in pre-market trading after the company reported better-than-expected Q1 results but issued a downbeat Q2 outlook.

Western Union Co (WU) gained more than +3% in pre-market trading after the company reported upbeat Q1 results and posted a solid FY23 adjusted EPS outlook.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Wednesday - May 3rd

Qualcomm (QCOM), CVS Health Corp (CVS), Estee Lauder (EL), Equinix (EQIX), MercadoLibre (MELI), Stellantis NV (STLA), Public Storage (PSA), Kraft Heinz (KHC), Emerson (EMR), MetLife (MET), Phillips 66 (PSX), Corteva (CTVA), Trane Technologies (TT), Exelon (EXC), Realty Income (O), Yum! Brands (YUM), Williams (WMB), Barrick Gold (GOLD), Cognizant A (CTSH), Allstate (ALL), Verisk (VRSK), Eversource Energy (ES), Horizon Therapeutics (HZNP), Ingersoll Rand (IR), CDW Corp (CDW), Fortis Inc (FTS), HubSpot Inc (HUBS), Albemarle (ALB), Garmin (GRMN), Atmos Energy (ATO), Brookfield Infrastructure Partners (BIP), FleetCor (FLT), SolarEdge Technologies Inc (SEDG), Mosaic (MOS), Marathon Oil (MRO), Bunge (BG), Hyatt (H), Bio-Techne (TECH), Builders FirstSource (BLDR), Etsy Inc (ETSY), NiSource (NI), Trimble (TRMB), Host Hotels Resorts (HST), Texas Pacific Land Trust (TPL), APA Corp (APA), Globe Life (GL), Qiagen (QGEN), Zillow C (Z), Neurocrine (NBIX), Ceridian HCM (CDAY), Zillow Group Inc (ZG), Western Midstream Partners (WES), Western Midstream Partners (WES), Qorvo Inc (QRVO), Royal Gold (RGLD), Dentsply (XRAY), Axa Equitable (EQH), WWE (WWE), Clean Harbors (CLH), Procore Technologies (PCOR), Ingredion (INGR), UGI (UGI), Siteone Landscape Supply (SITE), Curtiss-Wright (CW), Generac (GNRC), Universal Display (OLED), Bausch + Lomb (BLCO), Confluent (CFLT), Confluent (CFLT), Quidel (QDEL), 10X Genomics (TXG), Wingstop Inc (WING), Selective (SIGI), Gildan Activewear (GIL), Chord Energy (CHRD), Timken (TKR), MKS Instruments (MKSI), Civitas Resources (CIVI), Euronet (EEFT), Watts Water Technologies (WTS), PDC Energy (PDCE), Murphy Oil (MUR), Spirit Realty (SRC), Ionis Pharma (IONS), Driven Brands Holdings (DRVN), Noble (NE), Terreno (TRNO), Marriot Vacations Worldwide (VAC), Maximus (MMS), Ryman Hospitality Properties (RHP), Cerevel Therapeutics Holdings (CERE), National Fuel Gas (NFG), Brookfield Infra (BIPC), Sotera Health (SHC), Rayonier (RYN), Parsons (PSN), Denbury Resources (DEN), Informatica (INFA), Louisiana-Pacific (LPX), Janus Henderson (JHG), Black Hills (BKH), MGIC Investment (MTG), Kinetik Holdings (KNTK), Sunrun Inc (RUN), Axcelis (ACLS), Enact Holdings (ACT), Evolent Health Inc (EVH), Scotts Miracle-Gro (SMG), Avnet (AVT), Radian (RDN), Allete (ALE), Blackbaud (BLKB), Synaptics (SYNA), Adient (ADNT), Avient Corp (AVNT), Spire (SR), Belden (BDC), STAAR Surgical (STAA), Inari Med (NARI), Summit Materials Inc (SUM), Advanced Energy (AEIS), Avista (AVA), Broadstone Net (BNL), Spirit Aerosystems (SPR), Plains GP Holdings (PAGP), Remitly Global (RELY), Ultrapar Participacoes (UGP), Werner (WERN)., Joby Aviation (JOBY), Kulicke&Soffa (KLIC), Outfront Media (OUT), Genworth (GNW), Ingevity (NGVT), Sabra (SBRA), Tripadvisor (TRIP), Resideo Tech (REZI), Amedisys (AMED), Tandem Diabetes Care (TNDM), Innospec (IOSP), Sitime Corp (SITM), F G Annuities Life (FG), Corcept (CORT), Kennedy-Wilson (KW), Materion (MTRN), SunPower (SPWR), Glaukos Corp (GKOS), RXO Inc (RXO), Chesapeake Utilities (CPK), AssetMark (AMK), FormFactor (FORM), Pacira (PCRX), Digitalbridge Group (DBRG), Frontier Group Holdings (ULCC), Central Garden&Pet (CENT), Nu Skin (NUS), Leslies (LESL), BGC Partners (BGCP), Callon Petroleum (CPE).

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