Morning Markets
March E-Mini S&P 500 futures (ESH24) are up +0.31% at a record nearest-futures high, and March Nasdaq 100 E-Mini futures (NQH24) are up +0.67%.Â
Stock index futures this morning are moderately higher, boosted by blowout earnings results from Amazon.com and Meta Platforms. After reporting stellar earnings, Amazon jumped more than +7% in pre-market trading, and Meta Platforms surged more than +17%. On the negative side, Apple is down more than -2% after reporting weaker-than-expected revenue growth in China.
Stock index futures fell back from their best levels after bond yields shot higher on a stronger-than-expected U.S. Jan unemployment report that showed payrolls rising by the most in a year and wages climbing more than expected. The report showed a resilient U.S. labor market and pared market expectations for Fed rate cuts.Â
U.S. Jan nonfarm payrolls jumped +353,000, much stronger than expectations of +185,000 and the biggest increase in a year. Also, Dec nonfarm payrolls were revised up sharply to +333,000 from the initially reported +216,000. The Jan unemployment rate was unchanged at 3.7%, showing a stronger labor market than expectations of an increase to 3.8%.
U.S. Jan average hourly earnings rose +0.6% m/m and +4.5% y/y, stronger than expectations of +0.3% m/m and +4.1% y/y.
The markets are discounting the chances for a -25 bp rate cut at 24% at the March 19-20 FOMC meeting and 99% for that -25 bp rate cut at the following meeting April 30-May 1.
U.S. and European government bond yields today are higher. The 10-year T-note is up +9.8 bp at 3.978%. The 10-year German bund yield is up +7.6 bp at 2.225%. The 10-year UK gilt yield is up +12.7 bp at 3.873%. Â
Overseas stock markets are mixed. The Euro Stoxx 50 is up +0.38%. China’s Shanghai Composite Index closed down -1.46%. Japan’s Nikkei Stock Index closed up +0.41%.
The Euro Stoxx 50 today is moderately higher on strength in technology stocks on better-than-expected earnings from Amazon.com and Meta Platforms. Positive earnings news also boosted European stocks, with Danske Bank A/S climbing more than +5% after announcing that it will buy back its shares for the first time since 2018. Also, Mercedes-Benz Group AG rose more than +3% after reporting better-than-expected cash flow for last year. On the negative side, Electrolux AG tumbled more than -4% after forecasting a gloomy outlook for the year.
France Dec manufacturing production rose +1.2% m/m, stronger than expectations of +0.2% m/m and the biggest increase in 7 months.
Swaps are pricing in the chances for a -25 bp rate cut by the ECB at 18% for its next meeting on March 7 and at 89% at the following meeting on April 11.
China’s Shanghai Composite Index retreated to a 3-3/4 year low and closed lower every day this week. Forced selling of stocks weighed on the overall market as leveraged shareholders who pledged stock as collateral were forced to sell their shares as stock values continued to fall. According to Bloomberg data, the number of filings announcing a firm’s shareholder is boosting the number of holdings booked as collateral for loans rose to 60 in December, the highest since April of 2022. Lenders are demanding increased collateral after an extended slump in Chinese stocks, heightening fears that a failure to meet the requirements will force liquidation and lead to more selling. Recent stimulus and pledges by Chinese authorities to keep up spending this year have proved insufficient to boost confidence in the market.Â
Japan’s Nikkei Stock Index today rose to a 1-week high and posted moderate gains.  A rally in technology stocks led the overall market higher today after strong earnings results from Amazon and Meta Platforms. A decline in government bond yields also supported stocks after the 10-year JGB bond yield fell to a 1-1/2 week low of 0.665%. Nexon surged the 20% daily limit after Chinese regulators approved the Mobile DnF game the company made in collaboration with Tencent Holdings Ltd. Blomberg Intelligence said the game contributes an estimated 25% of Nexon’s sales, and its launch in China is seen as positive for the company. On the negative side, Japan’s Aozora Bank sank again today, bringing its two-day slide to 33% after it reported a net loss for the year tied to bad loans on U.S. commercial properties.Â
Swaps are pricing in the chances for a +10 bp rate increase by the BOJ at 20% for its next meeting on March 19 and at 78% for the following meeting on April 26.
Pre-market U.S. Stock Movers
Amazon.com (AMZN) jumped more than +7% in pre-market trading after reporting Q4 net sales of $169.96 billion, stronger than the consensus of $166.21 billion. Â
Meta Platforms (META) surged more than +17% in pre-market trading after reporting Q4 revenue of $40.11 billion, above the consensus of $39.01 billion, and forecast Q1 revenue of $34.5 billion-$37 billion, better than the consensus of $33.64 billion.Â
Bristol-Myers Squibb (BMY) climbed more than +3% in pre-market trading after forecasting 2024 adjusted EPS of $7.10-$7.40, above the consensus of $7.11.Â
Cigna Group (CI) rose more than +4% in pre-market trading after reporting Q4 adjusted revenue of $51.15 billion, better than the consensus of $48.89 billion and forecasting full-year adjusted revenue of at least $235.00 billion, above the consensus of $228.24 billion.Â
Clorox (CLX) rallied more than +10% in pre-market trading after reporting Q2 adjusted EPS of $2.16, well above the consensus of $1.09, and raised its full-year adjusted EPS estimate to $5.30-$5.50 from a previous estimate of $4.30-$4.80.Â
Regeneron Pharmaceuticals (REGN) climbed more than +5% in pre-market trading after reporting Q4 adjusted EPS of $11.86, better than the consensus of $10.62.  cents, and forecast 2024 operating Ebitda of $3.5 billion-$3.7 billion, the midpoint above the consensus of $3.56 billion.Â
Deckers Outdoor (DECK) rose more than +4% in pre-market trading after reporting Q3 net sales of $1.56 billion, stronger than the consensus of $1.45 billion, and raised its full-year net sales forecast to about $4.15 billion from a prior estimate of $4.03 billion, above the consensus of $4.10 billion.Â
Exxon Mobile (XOM) rose more than +2% in pre-market trading after reporting Q4 adjusted EPS of $2.48, stronger than the consensus of $2.22.Â
Apple (AAPL) dropped more than -2% in pre-market trading despite reporting better than expected Q1 EPS after reporting Q1 greater China revenue of $20.82 billion, weaker than the consensus of $23.5 billion.Â
Microchip Technology (MCHP) fell more than -3% in pre-market trading after forecasting Q4 net sales of $1.23 billion-$1.43 billion, below the consensus of $1.67 billion.Â
Atlassian (TEAM) tumbled more than -8% in pre-market trading after reporting Q2 cloud revenue grew 26.5%, below the consensus of 26.6%.Â
Skechers USA (SKX) dropped more than -9% in pre-market trading after reporting Q4 net sales of $1.96 billion, below the consensus of $2.04 billion, and forecast full-year sales of $8.60 billion-$8.80 billion, weaker than the consensus of $8.93 billion.Â
Gen Digital (GEN) fell more than -3% in pre-market trading after reporting Q3 adjusted RPSÂ of 49 cents, below the consensus of 50 cents, and forecast full-year adjusted EPS of $1.95-$1.97, weaker than the consensus of $2.00.Â
Intel (INTC) slid more than -1% in pre-market trading after a Wall Street Journal report said the company is delaying a $20 billion chip facility planned for Ohio, sparking worries over its capital expenditure plans.Â
Earnings Reports (2/2/2024)
AbbVie Inc (ABBV), Aon PLC (AON), Archer-Daniels-Midland Co (ADM), Bristol-Myers Squibb Co (BMY), Brookfield Renewable Corp (BEPC), Cboe Global Markets Inc (CBOE), Charter Communications Inc (CHTR), Chevron Corp (CVX), Church & Dwight Co Inc (CHD), Cigna Group/The (CI), Exxon Mobil Corp (XOM), LyondellBasell Industries NV (LYB), National Fuel Gas Co (NFG), Regeneron Pharmaceuticals Inc (REGN), Saia Inc (SAIA), Southern Copper Corp (SCCO), Ubiquiti Inc (UI), WW Grainger Inc (GWW).
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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.
