Markets Today: Stocks Moderately Lower

Morning Markets

The S&P 500 Index ($SPX) (SPY) is down -0.16%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.05%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.59%.

The markets are awaiting Thursday’s U.S. consumer price report for market direction.  The Jul CPI is expected to increase to +3.3% y/y from +3.0% y/y in June, although July CPI ex-food and energy is expected to ease to +4.7% y/y from +4.8% y/y in June. 

The markets are discounting the odds at 12% for a +25 bp rate hike at the September 20 FOMC meeting and 34% for that +25 bp rate hike at the November 1 FOMC meeting. 

Global bond yields are mixed.  The 10-year T-note yield is down -0.4 bp at 4.018%.  The 10-year German bund yield is up +2.5 bp at 2.494%.  The 10-year UK gilt yield is up +0.5 bp at 4.391%.  

Overseas stock markets are mixed.  The Euro Stoxx 50 is up +1.01%.  China’s Shanghai Composite Index today closed down -0.49%.  Japan’s Nikkei Stock Index closed down -0.53%.

The Euro Stoxx 50 today is moderately higher.  A rally in Italian bank stocks is leading European banks and the overall market higher as market sentiment improved after the Italian government issued a clarification on its new tax on bank windfall profits, saying the tax will be capped and won’t exceed 0.1% of a company’s assets.  Also, Continental AG climbed more than +1% after reporting stronger-than-expected Q2 sales.  On the negative side, ABN Amro Bank NV slid more than -2% after warning costs will be higher next year than previously expected. 

China’s Shanghai Composite today dropped to a 1-1/2 week low and closed moderately lower.  Deflation concerns weighed on Chinese stocks after China's July consumer prices fell by the most in 2-1/2 years, and Jump producer prices fell more than expected.  Losses were limited as property stocks rebounded after the Economic Observer reported local government officials from Beijing, Shanghai, Guangzhou, and Shenzhen will hold a meeting this month to discuss property easing measures.  Chinese property stocks this week have taken a beating over a potential default at Country Garden Holdings.

China Jul CPI fell -0.3% y/y, the weakest report in 2-1/2 years but less than expectations of -0.4% y/y.  Jul PPI fell -4.4% y/y, weaker than expectations of -4.0% y/y.

Japan’s Nikkei Stock Index today closed moderately lower.  Japanese bank stocks today followed their U.S. peers lower after Moody’s Investors Service on Tuesday cut credit ratings for several small and midsize banks in the U.S. and said it may downgrade some major banks.  Disappointing quarterly earnings results from Softbank Group, Kirin, Nikon, and Sysmex also weighed on the overall market.  On the positive side, Japanese tourism stocks moved higher today after NTV reported China’s travel agencies are preparing visa applications on speculation the Chinese government may lift its ban on group tours to Japan as early as this week. 

Japan machine tool orders fell 19.8% y/y, the seventh consecutive monthly decline.

Data from Japan’s Ministry of Finance shows profit taking by foreign investors has been pressuring Japanese stocks.  Foreign investors sold a net 257 billion yen ($1.8 billion) of Japanese shares and futures in the week to July 28, after purchasing a net 9.49 trillion yen in the April-June period, a record amount for a quarter. 

Pre-Market U.S. Stock Movers

Rivian Automotive (RIVN) climbed more than +2% in pre-market trading after reporting Q2 revenue of $1.12 billion, above the consensus of $1.01 billion, and raising its annual production estimate to 52,000 vehicles from 50,000. 

Twilio (TWLO) jumped more than +7% in pre-market trading after reporting Q2 revenue of $1.04 billion, stronger than the consensus of $985.9 million.

Penn Entertainment (PENN) rallied more than +9% in pre-market trading after announcing a long-term exclusive partnership with Disney’s ESPN.

Coupang (CPNG) climbed more than +3% in pre-market trading after reporting Q2 net revenue of $5.84 billion, better than the consensus of $5.70 billion.

Array Technologies (ARRY) jumped more than +13% in pre-market trading after reporting Q2 adjusted EPS of 47 cents, well above the consensus of 18 cents, and raising its full-year adjusted EPS estimate to $1.00-$1.07 from a prior view of 75 cents-85 cents. 

Toast Inc (TOST) jumped more than +12% in pre-market trading after reporting Q2 revenue of $978 million, well above the consensus of $947.3 million, and raising its full-year revenue forecast to $3.81 billion-$3.87 billion from a previous forecast of $3.71 billion-$3.80 billion, stronger than the consensus of $3.78 billion.

Axon Enterprise (AXON) rallied more than +12% in pre-market trading after reporting Q2 net sales of $374.6 million, stronger than the consensus of $350.7 million.

Celsius Holdings (CELH) surged more than +15% in pre-market trading after reporting Q2 revenue of $326 million, well above the consensus of $277.2 million.

Lyft (LYFT) dropped more than -5% in pre-market trading after reporting Q2 revenue per active rider of $47.51, below the consensus of $48.52. 

Super Micro Computer (SMCI) sank more than -14% in pre-market trading after forecasting Q1 adjusted EPS of net revenue of $2.75-$3.50, the midpoint below the consensus of $3.14.  

Doximity (DOCS) plunged more than -20% in pre-market trading after cutting its 2024 adjusted Ebitda forecast to $193 million-$209 million from a previous forecast of $216 million-$222 million, well below the consensus of $217.8 million. 

PubMatic (PUBM) sank by more than -20% in pre-market trading after reporting Q2 adjusted Ebitda of $12 million, weaker than the consensus of $14 million. 

IAC Inc (IAC) tumbled more than -6% in pre-market trading after reporting Q2 revenue of $1.11 billion, weaker than the consensus of $1.12 billion.

ZipRecruiter (ZIP) tumbled more than -14% in pre-market trading after forecasting Q3 revenue of $147 million-$153 million, weaker than the consensus of $170.7 million, and withdrawing its full-year Ebitda guidance due to the “rapidity and inconsistency of the cooling hiring environment.” 

United Parcel Service (UPS) slid more than -1% in pre-market trading after UBS downgraded the stock to neutral from buy. 

Datadog (DDOG) fell more than -1% in pre-market trading after Stifel downgraded the stock to hold from buy.

Today’s U.S. Earnings Reports (8/9/2023)

Charles River Laboratories Int (CRL), Illumina Inc (ILMN), Walt Disney Co/The (DIS), Wynn Resorts Ltd (WYNN).

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