The S&P 500 Index ($SPX) (SPY) is down -0.49%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.94%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.1%.
U.S. stock indexes this morning are lower. U.S. weekly initial unemployment claims rose more than expected to a 1-1/2 year high, and April producer prices eased to a 2-year low.
Concerns about the health of U.S. regional banks are limiting gains in the overall market. PacWest Bancorp is down more than -30% and dragging regional bank stocks lower after it said deposits fell -9.5% last week, citing a news report that it was in talks with potential investors.
U.S. weekly initial unemployment claims rose +22,000 to a 1-1/2 year high of 264,000, showing a weaker labor market than expectations of 245,000.
The U.S. Apr final-demand PPI eased to a 2-year low of +2.3% y/y from +2.7% in March, weaker than expectations of +2.5% y/y. The Apr PPI ex-food and energy eased to a 2-year low of +3.2% y/y from +3.4% y/y in March, weaker than expectations of +3.3% y/y.
The Bank of England (BOE), as expected, raised its official bank rate by +25 bp to 4.50% and said inflation persistence would require further tightening. BOE Governor Bailey said, "Inflation remains too high," and the BOE "has to stay the course" to cut CPI to 2%.
U.S. debt ceiling talks Tuesday yielded little results, but White House officials and Republican leaders pledged additional negotiations. On Friday, President Biden will meet again with congressional leaders, including House Speaker McCarthy. Treasury Secretary Yellen said that the Treasury Department may run out of cash to pay its bills as soon as June 1 unless the debt ceiling is raised.
Global bond yields are lower. The 10-year T-note yield is down -8.4 bp at 3.358%. The 10-year German bund yield is down -8.5 bp at 2.203%, and the UK 10-year gilt yield is down -6.5 bp at 3.735%.
On the bullish side for stocks, Alphabet rose more than +1% in pre-market trading after it unveiled its latest artificial intelligence tools and launched the hardware at its annual developer conference. Also, AppLovin is up more than +15% after forecasting Q2 revenue above consensus. In addition, Unity Software is up more than +8% after reporting Q1 revenue stronger than consensus and raising guidance on the lower end of its full-year revenue forecast.
On the bearish side, Walt Disney tumbled more than -5% in pre-market trading after reporting fewer-than-expected Disney+ subscribers in Q2 and predicted the loss for streaming would increase by $100 million this quarter. Also, Sonos is down more than -23% after cutting its full-year revenue guidance. In addition, PacWest Bancorp is down more than -20% after it said deposits fell -9.5% last week.
Overseas stock markets are mixed. The Euro Stoxx 50 is up +0.11%. China’s Shanghai Composite closed down -0.29%, and Japan’s Nikkei Stock Index closed up +0.02%.
The Euro Stoxx 50 index today is moderately higher. Gains in travel and healthcare stocks are leading the overall market higher. On the negative side, Bayer AG is down more than -6% after reporting Q1 adjusted Ebitda of 4.47 billion euros, below the consensus of 4.49 billion euros, citing weakness in its pharmaceutical division. Another negative factor for stocks was the ECB’s monthly survey that showed consumer expectations for Eurozone inflation "rose significantly in March. The jump in inflation expectations may prompt the ECB to keep raising interest rates.
The ECB said consumer expectations for Eurozone inflation "rose significantly” in March. Expectations for inflation in the next 12 months increased to 5.0% from 4.6% in February, and inflation expectations for three years ahead climbed to 2.9% from 2.4% in February.
China’s Shanghai Composite Stock Index today posted moderate losses. Signs of an uneven economic recovery weighed on Chinese stocks. Today’s consumer and producer price reports were weaker than expected, adding to evidence that China’s recovery is waning. Also, credit growth slowed more than expected last month as consumers and businesses curbed their borrowing.
On the positive side, Chinese bank stocks rose after Reuters reported that China’s interest rate self-disciplinary mechanism told the country’s four biggest banks to cut ceilings on some personal and corporate deposits by 30 basis points from May 15. Chinese media and entertainment companies also rose after Wanlian Securities said demand for entertainment is showing signs of picking up as China’s economic recovery progresses.
China's Apr CPI rose +0.1% y/y, weaker than expectations of +0.3% y/y and the smallest pace of increase in more than two years. China Apr PPI fell -3.6% y/y, weaker than expectations of -3.3% y/y and the biggest decline in nearly three years.
China Apr aggregate financing, the broadest measure of credit growth, rose +1.22 trillion yuan, weaker than expectations of +2.0 trillion yuan and the smallest pace of increase in 6 months. Apr new yuan loans rose 718.8 billion yuan, weaker than expectations of +1.40 trillion yuan.
Japan’s Nikkei Stock Index today closed slightly higher. Japanese stocks garnered carry-over support from Wednesday’s rally in U.S. stocks after consumer prices rose less than expected last month. Also, Japanese tech stocks related to artificial intelligence (AI) moved higher after SoftBank said it is building a Japanese version of ChatGPT. However, Japanese stocks gave up most of their gains on some weak corporate earnings results as Kao fell more than -5% after reporting Q1 operating income that was below expectations, and SoftBank fell more than -1% after forecasting full-year operating income that was below consensus.
Today’s economic news was supportive for Japanese stocks after the Japan Apr eco watchers survey outlook rose +1.6 to a 1-1/2 year high of 55.7, stronger than expectations of 55.1.
Pre-Market U.S. Stock Movers
Alphabet (GOOGL) rose more than +1% in pre-market trading after it unveiled its latest artificial intelligence tools and launched the hardware at its annual developer conference.
AppLovin (APP) soared more than +15% in pre-market trading after forecasting Q2 revenue of $710 million-$730 million, well above the consensus of $694 million.
Unity Software (U) jumped more than +8% in pre-market trading after reporting Q1 revenue of $500.4 million, stronger than the consensus of $477.7 million, and raised guidance on the lower end of its full-year revenue forecast to $2.08 billion-$2.20 billion from a previous estimate of $2.05 billion-$2.20 billion, the midpoint above the consensus of $2.11 billion.
Trade Desk (TTD) climbed more than +3% in pre-market trading after forecasting Q2 revenue of at least $452 million, above the consensus of $445.6 million.
Norfolk Southern (NSC) gained nearly +2% in pre-market trading after JPMorgan Chase upgraded the stock to overweight from neutral with a price target of $250.
Alcoa (AA) rose more than +1% in pre-market trading after Credit Suisse upgraded the stock to outperform from neutral with a price target of $50.
Walt Disney (DIS) tumbled more than -5% in pre-market trading after reporting 158.8 million Disney+ subscribers in Q2, below the consensus of 163.1 million, and predicted the loss for streaming would increase by $100 million this quarter.
Sonos (SONO) plunged more than -23% in pre-market trading after cutting its full-year revenue guidance to $1.63 billion-$1.68 billion from a prior estimate of $1.70 billion-$1.80 billion, well below the consensus of $1.72 billion.
PacWest Bancorp (PACW) sank more than -20% in pre-market trading after it said deposits fell -9.5% last week.
Twilio (TWLO) fell more than -2% in pre-market trading after Goldman Sachs downgraded the stock to neutral from overweight.
Pfizer (PFE) fell more than -1% in pre-market trading after Daiwa Securities downgraded the stock t neutral from outperform.
Rexford Industrial Realty (REXR) slid more than -1% in pre-market trading after it launched a 13.5 share offering via Wells Fargo Securities, Goldman Sachs, JPMorgan Chase, Scotiabank, and Truist Securities.
Today’s U.S. Earnings Reports (5/11/2023)
Charles River Laboratories Int (CRL), Entegris Inc (ENTG), Gen Digital Inc (GEN), News Corp (NWSA), PerkinElmer Inc (PKI), Tapestry Inc (TPR), US Foods Holding Corp (USFD), YETI Holdings Inc (YETI).
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On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
