Stock Index Futures Move Lower Ahead of U.S. Inflation Data, Debt Ceiling Worries Weigh

June S&P 500 futures (ESM23) are down -0.20%, and June Nasdaq 100 E-Mini futures (NQM23) are down -0.23% this morning as investors looked ahead to a crucial U.S. inflation report that could provide fresh clues on the future of the Fed’s monetary policy.

In Tuesday’s trading session, PayPal Holdings Inc (PYPL) plunged over -12% and was the top percentage loser on the benchmark S&P 500 after the payment tech company lowered its 2023 operating margin outlook and saw a rating downgrade from Credit Suisse. Semiconductor stocks also weighed on the broader market following a more than -5% drop in Skyworks Solutions (SWKS) after the chipmaker delivered downbeat Q3 guidance. On the positive side, DaVita Inc (DVA) climbed over +12% after the kidney dialysis services company reported upbeat Q1 results and raised its 2023 guidance.

New York Fed President John Williams said Tuesday that he would be “particularly focused” on how tighter credit conditions weigh on the U.S. economy and left the door open to keeping interest rates on hold next month. At the same time, the top Fed official did not rule out more rate hikes, with inflation still above the central bank’s 2% target. Also, Fed Governor Philip Jefferson said Tuesday the U.S. economy has started to slow in an “orderly fashion,” allowing inflation to decline even as growth continues.

Meanwhile, President Joe Biden and top lawmakers failed to break a deadlock over increasing the U.S. debt limit, which currently stands at $31.4 trillion. However, they have committed to reconvening just weeks before the United States may be forced into an unprecedented default.

On the earnings front, Airbnb Inc (ABNB) plunged over -13% in pre-market trading after the online travel company reported better-than-expected Q1 results but issued a disappointing Q2 revenue outlook.

Today, all eyes are focused on the U.S. consumer inflation report in a couple of hours. Economists, on average, forecast that April U.S. CPI will come in at +0.4% m/m and +5.0% y/y, compared to the previous values of +0.1% m/m and +5.0% y/y.

Also, investors will likely focus on U.S. Core CPI data. Economists anticipate Core CPI to be +0.4% m/m and +5.5% y/y in April, compared to the previous figures of +0.4% m/m and +5.6% y/y.

U.S. Crude Oil Inventories data will be reported today as well. Economists estimate this figure to be -0.917M, compared to last week’s value of -1.280M.

In the bond markets, United States 10-Year rates are at 3.517%, down -0.15%.

The Euro Stoxx 50 futures are down -0.16% this morning as investors digested more corporate earnings while cautiously awaiting key U.S. inflation data. Bank stocks are outperforming today, with Credit Agricole Sa (ACA.P.DX) climbing about +5% after the French second-biggest listed bank reported upbeat first-quarter earnings. On the economic front, Germany’s inflation slowed in April as food prices eased, while core inflation held steady at a high level. In other earnings news, ABN Amro Bank NV (ABN.A.DX) rose over +1% after the Dutch bank reported a higher-than-expected profit in Q1.

Germany’s CPI and Italy’s Industrial Production data were released today.

The German April CPI has been reported at +0.4% m/m and +7.2% y/y, in line with expectations.

The Italian March Industrial Production stood at -0.6% m/m and -3.2% y/y, weaker than expectations of +0.3% m/m and -1.7% y/y.

Asian stock markets today closed in the red. China’s Shanghai Composite Index (SHCOMP) closed down -1.15%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.41%.

China’s Shanghai Composite today closed lower as investors sold off shares of state-owned enterprises after recent gains, while disappointing April trade data continued to weigh on sentiment. China’s weaker-than-expected import data held down stocks for a second successive session as investors worried that a recovery in the country was running out of steam. Also, Chinese government bond yields plunged as investors expected cuts in interest rates following disappointing economic data. Meanwhile, a report by the Institute of International Finance showed that China’s securities experienced outflows of $3.8 billion in April as the initial boost from the reopening of the economy began to decline. Investor attention is now on China’s inflation data due on Thursday.

Japan’s Nikkei 225 Stock Index closed lower today, retreating from a 16-month high as cautious investors locked in profits from previous trading sessions. Meanwhile, shares of Yokogawa Electric Corporation surged over +9% after the company reported better-than-expected corporate earnings results. At the same time, Nippon Steel Corp tumbled over -8% after Japan’s biggest steelmaker reported an 8.9% increase in net profit for the year ended in March but projected a plunge in profit for the current year. In other news, Mitsubishi Corp. rose more than +3% after announcing plans to repurchase $2.2 billion of its shares and providing a better-than-expected profit target for the fiscal year through March 2024. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down 2.65% to 15.77.

“Today, we’re seeing the retracement of some of Tuesday’s strong rise, which has created an environment that’s ripe for profit-taking,” said Maki Sawada, a strategist at Nomura Securities.

Pre-Market U.S. Stock Movers

Upstart Holdings Inc (UPST) surged over +34% in pre-market trading after the AI-powered lending platform reported upbeat Q1 results and said it expects Q2 adjusted EBITDA to break even.

Twilio Inc (TWLO) plunged more than -16% in pre-market trading after the company reported slightly better-than-expected Q1 results but posted weak Q2 sales guidance.

Rivian Automotive Inc (RIVN) gained about +6% in pre-market trading after the company posted mixed Q1 results but said the 2023 production guidance of 50K vehicles remains on track.

Syneos Health Inc (SYNH) climbed over +12% in pre-market trading after Bloomberg reported that a private equity consortium was in advanced talks to acquire the drug-research services company.

Celsius Holdings Inc (CELH) rose over +7% in pre-market trading after the Boca Raton-based beverage company reported upbeat Q1 results.

Southern Copper Corporation (SCCO) fell more than -2% in pre-market trading after Goldman Sachs downgraded the stock to sell from neutral.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Wednesday - May 10th

Walt Disney (DIS), Manulife Financial (MFC), Nutrien (NTR), The Trade Desk (TTD), Li Auto (LI), Roblox (RBLX), STERIS (STE), First Citizens BancShares (FCNCA), Icahn Enterprises (IEP), Unity Software (U), Amdocs (DOX), Ritchie Bros Auctioneers (RBA), Performance Food Group Co (PFGC), Flex (FLEX), UWM Holdings (UWMC), Jazz Pharma (JAZZ), Robinhood Markets (HOOD), Middleby Corp (MIDD), ICL Israel Chemicals (ICL), Tetra Tech (TTEK), Genpact (G), Allegro (ALGM), Stantec (STN), NewYork Times (NYT), Applovin (APP), Coherent (COHR), Valvoline (VVV), Nuvei (NVEI), Reynolds (REYN), Owl Rock Capital (ORCC), The Wendy’s Co (WEN), DoubleVerify Holdings (DV), Crane (CR), Blackstone Secured Lending Fund (BXSL), Paycor HCM (PYCR), INC Research (SYNH), Copa (CPA), Hecla Mining (HL), Amicus (FOLD), Nomad Foods (NOMD), American States Water (AWR), Vertex (VERX), Osisko Gold Ro (OR), Lifestance Health Group (LFST), Vishay Intertechnology (VSH), Brinks (BCO), Crane NXT (CXT), Sonos (SONO), Alarm.com Holdings (ALRM), Excelerate Energy (EE), NAble (NABL), NuVasive (NUVA), ACV Auctions (ACVA), Caretrust Inc (CTRE), Sovos Brands (SOVO), First Advantage (FA), Goodrx (GDRX), Catalyst Pharmaceuticals (CPRX), Crescent Energy (CRGY), Corsair (CRSR), The Cheesecake (CAKE), ODP (ODP), Profrac Holding (ACDC), Vericel Corp Ord (VCEL), Beauty Health Co (SKIN), Ballard (BLDP), Everi Holdings (EVRI), Camtek (CAMT), Wolverine (WWW), Coeur Mining (CDE), Magnite (MGNI), Perimeter Solutions (PRM), Global Net Lease (GNL), Opal Fuels (OPAL), Golden Entertainment (GDEN), European Wax Center (EWCZ), Cellebrite (CLBT), Franchise Group (FRG).

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