Morning Markets
September E-Mini S&P 500 futures (ESU23) this morning are up +0.52%, and Sep Nasdaq 100 E-Mini futures (NQU23) are up +0.54%, both at 4-week highs.
Stock indexes this morning are moderately higher and extended overnight gains as bond yields fell after this morning’s monthly U.S. payrolls report fueled speculation the Fed will pause its rate hike campaign. Although monthly nonfarm payrolls rose slightly more than forecast, the August unemployment rate unexpectedly jumped to a 1-1/2 year high, and hourly earnings eased.Â
U.S. Aug nonfarm payrolls rose +187,000, stronger than expectations of +170,000. However, the August unemployment rate unexpectedly rose +0.3 to a 1-1/2 year high of 3.8%, showing a weaker labor market than expectations of no change at 3.5%.
U.S. Aug average hourly earnings eased to +4.3% y/y from +4.4% y/y in July, right on expectations.
A negative for stocks was today’s warning from Atlanta Fed President Bostic that the U.S. economy faces a period of some disruption as debts are refinanced at significantly higher interest rates, putting some pressure on both financial institutions and the government.
The markets are discounting the odds at only 7% for a +25 bp rate hike at the September 20 FOMC meeting and 38% for that +25 bp rate hike at the November 1 FOMC meeting.Â
Global bond yields are mixed. The 10-year T-note yield fell to a 3-week low of 4.054% and is down -2.5 bp at 4.083%. The 10-year German bund yield is up +0.3 bp at 2.469%. The 10-year UK gilt yield fell to a 3-week low of 4.334% and is down -0.9 bp at 4.351%. Â
Overseas stock markets are higher. The Euro Stoxx 50 is up +0.27%. China’s Shanghai Composite Index closed up +0.43%. Japan’s Nikkei Stock Index closed up +0.28%.
The Euro Stoxx 50 recovered from early losses and is moderately higher. Strength in energy stocks is leading the overall market higher, with crude prices climbing to a 3-1/2 week high.  Also, an easing of producer price pressures in Europe is supportive for stocks after Italy July PPI fell by a record -13.8% y/y. The Euro Stoxx 50 today initially opened lower on weakness in automakers, with Renault SA and Volkswagen AG down more than -3% after being downgraded to sell by UBS Group AG on increasing competition from Asia. A downward revision to the Eurozone Aug S&P manufacturing PMI index was also bearish for stocks.
ECB Governing Council member Villeroy said we are close or very close to an interest rate peak, and keeping rates high for long enough matters more.
The Eurozone Aug S&P manufacturing PMI was revised lower by -0.2 to 43.5 from the initially reported 43.7.
Italy's July PPI eased to -13.8% y/y from -8.2% y/y in June, the fastest pace of decline since the data began in 2001.
China’s Shanghai Composite Index closed moderately higher as the government continues to boost efforts to revive economic growth. Chinese authorities will allow the country’s largest cities to cut down payments for home buyers and encourage lenders to lower rates on existing mortgages. Stocks also found support after today's economic news showed a gauge of Chinese manufacturing activity that unexpectedly expanded last month. In addition, the PBOC reduced the foreign exchange reserve requirements for financial institutions in a bid to support the yuan.
The China Aug Caixin manufacturing PMI unexpectedly rose +1.8 to 51.0, stronger than expectations of a decline to 49.0 and the fastest pace of expansion in 6 months.
The People’s Bank of China (PBOC) cut the amount of foreign exchange deposits banks are required to hold as reserves to 4% from 6%, beginning Sep 15.Â
Japan’s Nikkei Stock Index closed slightly higher. Japanese stocks found support from today’s actions by China to boost stimulus measures. Also, today’s news that Japan’s Q2 company profits unexpectedly rose was positive for stocks.  Gains in equities were limited after news that Japan's Q2 capital spending rose less than expected and after the August Jibun bank manufacturing PMI was revised lower. Also, exporter stocks retreated today after the yen climbed to a 1-week high against the dollar.
Japan Q2 company profits unexpectedly rose +11.6% y/y, stronger than expectations of a -0.1% y/y decline.
Japan Q2 capital spending rose +4.5% y/y, weaker than expectations of +8.3% y/y. Q2 capital spending ex-software roe +4.4% y/y, weaker than expectations of +7.5% y/y.
The Japan Aug Jibun bank manufacturing PMI was revised lower by -0.1 to 49.6 from the initially reported 49.7.
Pre-Market U.S. Stock Movers
Dell Technologies (DELL) jumped more than +9% in pre-market trading after reporting Q2 total net revenue of $22.93 billion, well above the consensus of $20.84 billion.Â
Lululemon Athletica (LULU) climbed more than +3% in pre-market trading after reporting Q2 net revenue of $2.21 billion, better than the consensus of $2.17 billion, and raising its 2024 net revenue forecast to $9.51 billion-$9.57 billion from a prior forecast of $9.44 billion-$9.51 billion, stronger than the consensus of $9.50 billion.
Elastic NV (ESTC) surged more than +16% in pre-market trading after reporting Q1 adjusted EPS of 25 cents, well above the consensus of 11 cents, and raising its 2024 adjusted EPS estimate to $1.01-$1.11 from a prior estimate of 94 cents-$1.06, better than the consensus of $1.01.
MongoDB (MDB) jumped more than +6% in pre-market trading after reporting Q2 adjusted EPS of 93 cents, more than double the consensus of 46 cents, and raising its 2024 adjusted EPS forecast to $2.27-$2.35 from a previous estimate of $1.42-$1.56, well above the consensus of $1.53.
Nutanix (NTNX) soared more than +18% in pre-market trading after reporting Q4 subscription revenue of $459.5 million, stronger than the consensus of $426.5 million, and forecasting 2024 annual contract billings of $1.08 billion-$1.10 billion, better than the consensus of $1.07 billion.
SentinelOne (S) climbed more than +2% in pre-market trading after reporting Q2 revenue of $149.4 million, better than the consensus of $141.1 million, and raising its 2024 revenue forecast to $605 million from a previous forecast of $590 million-$600 million, above the consensus of $594.9 million.
Aramark (ARMK) rose more than +2% in pre-market trading after Citigroup upgraded the stock to buy from neutral with a price target of $47.
Broadcom (AVGO) tumbled more than -4% in pre-market trading after forecasting Q4 revenue of $9.27 billion, below the consensus of $9.28 billion.
Tesla (TSLA) is down nearly -1% in pre-market trading after cutting prices on several of its vehicle models in China.
Dollar General (DG) fell more than -1% in pre-market trading after Evercore ISI downgraded the stock to inline from outperform.
Paramount Global (PARA) slid nearly -1% in pre-market trading after Moody’s Investors Service cut its senior debt rating to Baa3 from Baa2, one level above junk.
VMware (VMW) fell more than -1% in pre-market trading after reporting Q2 revenue of $3.41 billion, below the consensus of $3.46 billion.
HashiCorp (HCP) tumbled more than -4% in pre-market trading after forecasting Q3 adjusted loss per share of -3 cents to -5 cents, the midpoint weaker than the consensus of -3.9 cents.Â
Earnings Reports (9/1/2023)
Veradigm Inc (MDRX).
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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.
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