Stock Index Futures Climb Ahead of Key U.S. Payrolls Data, Apple Results Boost Sentiment

June S&P 500 futures (ESM23) are up +0.49%, and June Nasdaq 100 E-Mini futures (NQM23) are up +0.59% this morning after three major U.S. benchmark indices finished the regular session in the red as fresh banking sector concerns weighed on sentiment while investors looked ahead to a crucial U.S. nonfarm payrolls report.

In Thursday’s trading session, the benchmark S&P 500 and blue-chip Dow notched 5-week lows, and the tech-heavy Nasdaq 100 fell to a 1-week low. PacWest Bancorp (PACW) tumbled over -50% after the lender confirmed it was discussing strategic options, including a potential sale or capital raise. Also, Western Alliance Bancorporation (WAL) plunged over -38% after the Financial Times reported that the lender was exploring a potential sale. However, the Arizona-based bank described the report as “categorically false in all respects.” In addition, Goldman Sachs (GS) dropped over -2% and was among the top percentage losers on the Dow after the Wall Street titan disclosed that it was under review by U.S. governmental agencies for its role in Silicon Valley Bank’s failed attempts to raise funds. 

“Regional banks and tightening credit conditions are weighing on the market as investors try to recalibrate on where we are in terms of credit cycles and bank lending standards and when a potential recession may hit,” said Zhe Shen, a managing director of diversifying strategies at TIFF Investment Management.   

The Labor Department’s report on Thursday showed claims for state unemployment benefits rose +13K to a seasonally adjusted 242K last week, higher than the expected figure of 240K. At the same time, U.S. nonfarm productivity came in at -2.7% q/q in the first quarter, weaker than expectations of -1.8% q/q. Also, U.S. Q1 unit labor costs stood at +6.3% q/q, stronger than expectations of +5.5% q/q. 

On the earnings front, shares of Apple Inc (AAPL) rose over +2% in pre-market trading after the company reported upbeat Q2 results, driven by stronger-than-expected iPhone sales. The tech giant also raised its dividend and announced a $90 billion share buyback program. 

Today, all eyes are focused on U.S. Nonfarm Payrolls data in a couple of hours. Economists, on average, forecast that April Nonfarm Payrolls will come in at 180K, compared to the previous value of 236K.

Also, investors will likely focus on U.S. Private Nonfarm Payrolls data, which stood at 189K in March. Economists foresee the new figure to be 160K.

U.S. Average Hourly Earnings data will also be closely watched today. Economists expect April’s figures to be +0.3% m/m and +4.2% y/y, compared to the previous numbers of +0.3% m/m and +4.2% y/y.

U.S. Unemployment Rate will be reported today as well. Economists foresee this figure to stand at 3.6% in April, compared to the previous value of 3.5%.

In the bond markets, United States 10-Year rates are at 3.395%, up +1.30%.

The Euro Stoxx 50 futures are up +0.40% this morning as market participants weighed the European Central Bank’s monetary policy decision against a deluge of corporate earnings. The European Central Bank hiked interest rates by 25 basis points to 3.25% on Thursday and signaled that more tightening would be needed to curb inflation. Meanwhile, gains in bank and energy stocks are leading the overall market higher. In corporate news, shares of International Consolidated Airlines Group S.A. (IAG.LN) rose over +3% after the airline company reported a surprise profit in the typically weak first quarter and boosted its full-year earnings outlook. In other earnings news, Adidas Ag (ADS.D.DX) climbed over +7% after the sportswear company reported upbeat Q1 results.

Germany’s Factory Orders, France’s Industrial Production, France’s Non-Farm Payrolls (preliminary), Spain’s Industrial Production, Italy’s Retail Sales, U.K.’s Construction PMI, and Eurozone’s Retail Sales data were released today.

The German March Factory Orders stood at -10.7% m/m, weaker than expectations of -2.2% m/m.

The French March Industrial Production has been reported at -1.1% m/m, weaker than expectations of -0.3% m/m.  

The French Non-Farm Payrolls came in at +0.2% q/q in the first quarter, in line with expectations.

The Spanish March Industrial Production was at +4.5% y/y, stronger than expectations of -0.1% y/y.

The Italian March Retail Sales stood at 0.0% m/m and +5.8% y/y, compared to expectations of 0.0% m/m and +4.4% y/y.

U.K. April Construction PMI has been reported at 51.1, stronger than expectations of 51.0.

Eurozone March Retail Sales came in at -1.2% m/m and -3.8% y/y, weaker than expectations of -0.1% m/m and -3.1% y/y.

China’s Shanghai Composite Index (SHCOMP) closed down -0.48%, while the Japanese market was closed for a holiday.

China’s Shanghai Composite today closed lower, weighed down by losses in communications equipment and artificial intelligence stocks. A private-sector survey showed on Friday that the country’s service activity grew for a fourth consecutive month in April as businesses continued to benefit from China’s reopening, although expansion slowed slightly. At the same time, analysts cautioned that the momentum could further slow as domestic consumption has yet to rebound fully. Meanwhile, Chinese property developer stocks gained ground amid expectations of more policy support after data showed the country’s average daily home sales by floor area fell 22% compared with the May Day holiday period before COVID-19. Also, Hong Kong-listed tech stocks advanced on Friday, with Alibaba Group Holding Ltd rising over +1% after Bloomberg News reported that the company’s global e-commerce arm was exploring a U.S. listing.

“As China’s economic recovery continues, we expect investor sentiment to gradually improve towards China equity. Admittedly, there are still several uncertainties, such as U.S.-China tensions and geopolitical concerns,” said Jian Shi Cortesi, an investment director for China at GAM Investments. 

The Chinese April Caixin Services PMI stood at 56.4, weaker than expectations of 57.3.

Pre-Market U.S. Stock Movers

LYFT Inc (LYFT) plunged over -16% in pre-market trading after the rideshare company reported lighter-than-expected rider growth in Q1 and posted soft Q2 guidance.

Carvana Co (CVNA) soared about +34% in pre-market trading after the Phoenix-based e-commerce company reported a smaller-than-expected Q1 earnings loss and said it expects to achieve positive adjusted EBITDA in Q2.

DraftKings Inc (DKNG) gained more than +10% in pre-market trading after the sports betting giant reported upbeat Q1 results and raised its FY23 revenue guidance. 

Trupanion Inc (TRUP) tumbled over -45% in pre-market trading after the company reported mixed Q1 results.

DoorDash Inc (DASH) rose more than +3% in pre-market trading after the company posted stronger-than-expected Q1 results and raised its FY23 adjusted EBITDA forecast.

Icahn Enterprises LP (IEP) climbed over +11% in pre-market trading after the company said that the market disruption caused by the Hindenburg short report doesn’t affect its liquidity.

Kellogg Company (K) rose about +1% in pre-market trading after JPMorgan upgraded the stock to neutral from underweight.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Friday - May 5th

Enbridge (ENB), Cigna (CI), Dominion Energy (D), Johnson Controls (JCI), Mettler-Toledo (MTD), Warner Bros Discovery (WBD), CNH Industrial NV (CNHI), EPAM Systems (EPAM), Cboe Global (CBOE), Magna Intl (MGA), Evergy (EVRG), Brookfield Renewable (BEP), Brookfield Renewable (BEPC), Credicorp (BAP), Plains All American Pipeline (PAA), Frontier Communications Parent (FYBR), Huntsman (HUN), Essent Group Ltd (ESNT), PNM Resources (PNM), PBF Energy (PBF), Fluor (FLR), Brookfield Business (BBU), AMC Entertainment (AMC), Atlantica Sustainable Infrastructure (AY), TransAlta Corp (TAC), Sunstone Hotel Investors (SHO), Cinemark (CNK), International Seaways (INSW), Globalstar Inc (GSAT), Newmark Group (NMRK), Calumet (CLMT), Construction Partners (ROAD), Marcus & Millichap (MMI), Owens&Minor (OMI), Global Partners (GLP), AdvanSix (ASIX).

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