Markets Today: Stocks Fall on Disappointing Earnings Results

Morning Markets

September E-Mini S&P 500 futures (ESU23) this morning are down -0.43%, and Sep Nasdaq 100 E-Mini futures (NQU23) are down -0.59%.

Stock indexes this morning are under pressure as some disappointing quarterly earnings results weighed on market sentiment.  ZoomInfo Technologies sank more than -18% in pre-market trading after reporting weaker-than-expected Q2 revenue, and Zebra Technologies is down more than -12% after reporting disappointing Q2 net sales. 

U.S. stocks have some negative carryover from a fall in European stocks as BMW AG dropped more than -6% after warning about higher costs, and DHL Group tumbled more than -3% after giving weak profit guidance.  Also, concern about China’s economy dampened global growth prospects after China's Jul new home sales fell by the most in a year and after the Caixin Jul manufacturing PMI contracted by the most in 6 months.

The markets are discounting the odds at 20% for a +25 bp rate hike at the September 20 FOMC meeting. 

Global bond yields are higher.  The 10-year T-note yield is up +6.0 bp at 4.019%.  The 10-year German bund yield is up +4.9 bp at 2.541%.  The 10-year UK Gilt yield is up +6.3 bp at 4.372%.  

Overseas stock markets are mixed.  The Euro Stoxx 50 is down -0.94%.  China’s Shanghai Composite Index today closed unchanged.  Japan’s Nikkei Stock Index closed up +0.92%.

The Euro Stoxx 50 today is moderately lower.  Negative corporate earnings results are weighing on European stocks today.  BMW AG is down more than -6% to lead European automakers lower after the company warned that higher supply-chain costs would weigh on its free cash flow this year.  Also, Man Group Plc tumbled more than -8% after reporting weaker-than-expected first-half core revenue.  In addition, DHL Group dropped more than -3% after providing full-year guidance that fell short of expectations.  On the positive side, HSBC Holdings Plc and BP Plc rose after both companies announced new share repurchase programs. 

The Eurozone Jun unemployment rate was unchanged at a record low 6.4%, showing a stronger labor market than expectations of an increase to 6.5%.

The German Jul unemployment change unexpectedly fell -4,000, showing a stronger labor market than expectations of an increase of +20,000.  The Jul unemployment rate unexpectedly fell -0.1 to 5.6%, showing a stronger labor market than expectations of no change at 5.7%.

China’s Shanghai Composite today gave up an early advance and settled little changed.  Economic concerns weighed on Chinese stocks today after reports showed China Jul new home sales fell by the most in a year and after a gauge of manufacturing activity unexpectedly contracted by the most in 6 months. Property stocks also retreated after Country Garden canceled a primary share placement amid mounting liquidity woes. The developer faces $2.9 billion in debt payments for the rest of this year.  Chinese stocks today initially moved higher after China Central Television reported that China’s State Council called on cities to introduce policies to ensure the healthy development of their property markets.   

The China Jul Caixin manufacturing PMI fell -1.3 to a 6-month low of 49.2, weaker than expectations of 50.1.

China Jul new home sales from the biggest 100 real estate developers fell -33.1% y/y, the largest decline in a year.

Japan’s Nikkei Stock Index today climbed to a 4-week high and closed moderately higher.  A decline in the yen today to a 3-week low against the dollar sparked a rally in Japanese exporter stocks.  Also, stronger-than-expected economic data today gave Japanese stocks a boost after the Japan Jul Jibun Bank manufacturing PMI was revised upward and after the Japan Jun jobless rate unexpectedly declined.  In addition, Japanese automakers rallied today, led by a +2% gain in Toyota Motor to a record high after it reported better-than-expected Q1 earnings.

The Japan Jun jobless rate unexpectedly fell -0.1 to 2.5%, showing a stronger labor market than expectations of no change at 2.6%.

The Japan Jul Jibun Bank manufacturing PMI was revised upward by +0.2 to 49.6 from the initially reported 49.4.

Pre-Market U.S. Stock Movers

ZoomInfo Technologies (ZI) sank more than -18% in pre-market trading after reporting Q2 revenue of $308.6 million, below the consensus of $310.8 million, and cutting its full-year revenue forecast to $1.225 billion-$1.235 billion from a prior forecast of $1.275 billion-$1.285 billion, weaker than the consensus of $1.280 billion. 

Zebra Technologies (ZBRA) dropped more than -12% in pre-market trading after reporting Q2 net sales of $1.21 billion, weaker than the consensus of $1.31 billion and forecasted Q3 adjusted EPS of 60 cents to $1.00, well below the consensus of $3.78. 

Rambus (RMBS) tumbled more than -8% in pre-market trading after reporting guidance that missed estimates, with Jefferies noting that the company expects headwinds for its DDR$ buffer chipset inventory to continue for the rest of the year.

Rockwell Automation (ROK) fell more than -6% in pre-market trading after reporting Q3 adjusted EPS of $3.01, weaker than the consensus of $3.18. 

Sofi Technologies (SOFI) dropped more than -3% in pre-market trading after Keefe, Bruyette & Woods downgraded the stock to underperform from market perform. 

Estee Lauder (EL) slid more than -1% in pre-market trading after Citigroup downgraded the stock to neutral from buy. 

Rivian Automotive (RIVN) fell more than -2% in pre-market trading after Cantor Fitzgerald downgraded the stock to neutral from overweight.

Western Digital (WDC) dropped more than -2% in pre-market trading after forecasting a Q1 adjusted loss of -$1.80 to -$2.10 a share, wider than the consensus of -$1.34. 

Harmonic (HLIT) slumped more than -10% in pre-market trading after reporting Q2 net revenue of $156.0 million, weaker than the consensus of $167.5 million, and cutting its full-year net revenue estimate to $620 million-$660 million from a previous estimate of $705 million-$740 million, well below the consensus of $724 million. 

Varonis Systems (VRNS) rallied more than +11% in pre-market trading after raising its full-year total annual recurring revenue estimate to $529 million-$535 million from a previous estimate of $520 million-$528 million, stronger than the consensus of $524.6 million.

Merck & Co (MRK) gained more than +1% in pre-market trading after reporting Q2 sales of $15.04 billion, above the consensus of $14.45 billion, and raising its full-year sales forecast to $58.6 billion-$58.6 billion from a prior view of $57.7 billion-$58.9 billion, stronger than the consensus of $58.64 billion.

ResMed (RMD) rose more than +2% in pre-market trading after RBC Capital Markets upgraded the stock to outperform from sector perform. 

Arista Networks (ANET) surged more than +14% in pre-market trading after reporting Q2 revenue of $1.46 billion, well above the consensus of $1.38 billion.

Uber Technologies (UBER) climbed more than +3% in pre-market trading after forecasting Q3 adjusted Ebitda of $975 million to $1.03 billion, well above the consensus of $919 million.

Global Payments (GPN) jumped more than +6% in pre-market trading after reporting Q2 adjusted net revenue of $2.20 billion, above the consensus of $2.19 billion, and raised its full-year adjusted revenue forecast to $8.66 billion-$8.74 billion from a prior estimate of $8.64 billion-$8.74 billion, the midpoint above the consensus of $8.65 billion.

Today’s U.S. Earnings Reports (8/1/2023)

Advanced Micro Devices Inc (AMD), Aflac Inc (AFL), Allstate Corp/The (ALL), Altria Group Inc (MO), American International Group Inc (AIG), AMETEK Inc (AME), Assurant Inc (AIZ), Boston Properties Inc (BXP), Caesars Entertainment Inc (CZR), Caterpillar Inc (CAT), Devon Energy Corp (DVN), Eaton Corp PLC (ETN), Ecolab Inc (ECL), Electronic Arts Inc (EA), FirstEnergy Corp (FE), Gartner Inc (IT), Global Payments Inc (GPN), Howmet Aerospace Inc (HWM), IDEXX Laboratories Inc (IDXX), Illinois Tool Works Inc (ITW), Incyte Corp (INCY), IQVIA Holdings Inc (IQV), Leidos Holdings Inc (LDOS), Marathon Petroleum Corp (MPC), Marriott International Inc/MD (MAR), Match Group Inc (MTCH), Merck & Co Inc (MRK), Molson Coors Beverage Co (TAP), Mosaic Co/The (MOS), Norwegian Cruise Line Holdings (NCLH), Paycom Software Inc (PAYC), Pfizer Inc (PFE), Pioneer Natural Resources Co (PXD), Prudential Financial Inc (PRU), Public Service Enterprise Group (PEG), Revvity Inc (RVTY), Rockwell Automation Inc (ROK), SolarEdge Technologies Inc (SEDG), Stanley Black & Decker Inc (SWK), Starbucks Corp (SBUX), STERIS PLC (STE), Sysco Corp (SYY), Vertex Pharmaceuticals Inc (VRTX), VF Corp (VFC), WEC Energy Group Inc (WEC), Zebra Technologies Corp (ZBRA), Zimmer Biomet Holdings Inc (ZBH).

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