June S&P 500 E-Mini futures (ESM24) are trending up +0.39% this morning as market participants moved past hawkish comments from Federal Reserve Chair Jerome Powell and looked ahead to the next round of corporate earnings.
In yesterday’s trading session, Wall Street’s major indices ended mixed. Live Nation Entertainment (LYV) plunged over -7% and was the top percentage loser on the S&P 500 following a report from Bloomberg indicating that the Department of Justice is preparing to file an antitrust lawsuit against the concert promoter over its Ticketmaster business. Also, Bank of America (BAC) slid more than -3% after the lender reported higher-than-expected Q1 net charge-offs. In addition, Johnson & Johnson (JNJ) fell over -2% and was the top percentage loser on the Dow after reporting weaker-than-expected Q1 sales. On the bullish side, Super Micro Computer (SMCI) surged over +10% and was the top percentage gainer on the S&P 500 after Loop Capital Markets raised its price target on the stock to $1,500 from $600. Also, UnitedHealth Group (UNH) advanced more than +5% and was the top percentage gainer on the Dow after the health insurer reported better-than-expected Q1 results.
Economic data on Tuesday showed that U.S. building permits, a proxy for future construction, fell -4.3% m/m to an 8-month low of 1.458M in March, weaker than expectations of 1.514M. Also, U.S. March housing starts fell -14.7% m/m to a 7-month low of 1.321M, weaker than expectations of 1.480M. At the same time, U.S. industrial production rose +0.4% m/m in March, in line with expectations.
Federal Reserve Chair Jerome Powell said Tuesday that recent inflation data have indicated it will likely take more time for the central bank to gain the confidence needed to reduce interest rates. Powell said that if price pressures persist, the U.S. central bank can keep rates at their current level for “as long as needed.” “Given the strength of the labor market and progress on inflation so far, it is appropriate to allow restrictive policy further time to work and let the data and the evolving outlook guide us,” he said. Also, Fed Vice Chair Philip Jefferson stated his anticipation that inflation will continue to cool with interest rates at their current level. However, he noted that persistent price pressures would warrant keeping borrowing costs elevated for an extended period. “Of course, the outlook is still quite uncertain, and if incoming data suggest that inflation is more persistent than I currently expect it to be, it will be appropriate to hold in place the current restrictive stance of policy for longer,” Jefferson said.
U.S. rate futures have priced in a 2.0% chance of a 25 basis point rate cut at the next central bank meeting in May and a 14.9% probability of a 25 basis point rate cut at the June meeting.
Meanwhile, tensions in the Middle East persist. Israel is considering how to respond to what was the first attack on the Jewish state from Iranian territory. Saudi Arabia and the United Arab Emirates on Wednesday urged for maximum “self-restraint” in the Middle East to spare the region “from the dangers of war and its dire consequences.”
First-quarter earnings season is gathering pace, with investors awaiting fresh reports from notable companies today, including Abbott Laboratories (ABT), U.S. Bancorp (USB), Kinder Morgan (KMI), Las Vegas Sands (LVS), and CSX (CSX).
On the economic data front, investors will likely focus on U.S. Crude Oil Inventories data due later in the day. Economists estimate this figure to be 1.600M, compared to last week’s value of 5.841M.
In addition, market participants will be looking toward speeches from Cleveland Fed President Loretta Mester and Fed Governor Michelle Bowman.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.647%, down -0.28%.
The Euro Stoxx 50 futures are up +0.70% this morning as investors digested Eurozone inflation data and positive corporate earnings reports from some of the region’s biggest companies. Mining stocks outperformed on Wednesday, while technology stocks lost ground. Eurostat said Wednesday that the Eurozone’s annual inflation rate eased to 2.4% in March from 2.6% in February, confirming preliminary data. Separately, the Office for National Statistics said Wednesday that the U.K.’s annual inflation rate slowed less than expected in March. Meanwhile, the International Monetary Fund revised its economic growth estimates for the euro area on Tuesday, lowering them to 0.8% and 1.5% for 2024 and 2025, respectively, down from the previous projections of 0.9% in 2024 and 1.7% in 2025. In corporate news, Asml Holding (ASML.NA) slumped over -4% after reporting weaker-than-expected Q1 new orders. At the same time, Adidas Ag (ADS.D.DX) climbed more than +6% after the German sportswear giant raised its full-year guidance. Also, Volvo Ab (VOLVB.S.DX) rose over +2% after the company posted robust Q1 earnings.
U.K.’s CPI, U.K.’s Core CPI, Eurozone’s CPI, and Eurozone’s Core CPI data were released today.
U.K. March CPI has been reported at +3.2% y/y, stronger than expectations of +3.1% y/y.
U.K. March Core CPI stood at +4.2% y/y, stronger than expectations of +4.1% y/y.
Eurozone March CPI arrived at +0.8% m/m and +2.4% y/y, in line with expectations.
Eurozone March Core CPI came in at +1.1% m/m and +2.9% y/y, in line with expectations.
Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed up +2.14%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -1.32%.
China’s Shanghai Composite Index closed sharply higher today after the country’s top securities regulator provided clarification on the new stock exchange rules in the wake of a sell-off in small-cap shares. Technology and semiconductor stocks led the gains on Wednesday. Small-cap stocks also surged. The China Securities Regulatory Commission said Tuesday that the latest delisting rules target so-called “zombie” companies or “bad actors” in the market but not small-cap stocks. Guo Ruiming, a China Securities Regulatory Commission director said in a Q&A statement that the changes “won’t likely impact the market in the near term.” The watchdog added that the changes in regulations would only result in the potential delisting of slightly over 100 firms by 2025. Meanwhile, UBS revised upward its forecast for China’s 2024 real GDP growth to 4.9% from 4.6% on Wednesday, citing improved first-quarter economic data and a stronger export outlook. In corporate news, Youon Technology climbed about +10% after unveiling a buyback scheme plan valued between 10 million yuan and 20 million yuan.
Japan’s Nikkei 225 Stock Index closed lower today, falling below the 38,000 level for the first time in two months as hawkish comments from Fed Chair Jerome Powell and tensions in the Middle East weighed on sentiment. Chip-related stocks underperformed on Wednesday after ASML Holding posted Q1 new orders that fell short of analyst expectations. Data from the Ministry of Finance Wednesday indicated that Japan’s trade deficit more than halved in March, as exports grew more than expected for the fourth consecutive month. Meanwhile, in a statement issued on Wednesday, South Korea’s finance ministry conveyed that the finance ministers of Japan and South Korea expressed “serious concerns” regarding the recent depreciation of their local currencies and cautioned about taking appropriate steps to address any drastic volatility. In corporate news, Resonac Holdings gained about +12% after the chemical company boosted its full-year revenue guidance. Also, Japan Display climbed +10% after a Tokyo Stock Exchange filing indicated that the company is ramping up the production of its eLEAP organic light-emitting diode technology ahead of its December launch. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +3.08% to 22.77.
The Japanese March Trade Balance has been reported at 366.5B yen, stronger than expectations of 299.9B yen.
The Japanese March Exports stood at +7.3% y/y, stronger than expectations of +7.0% y/y.
The Japanese March Imports arrived at -4.9% y/y, weaker than expectations of -4.7% y/y.
Pre-Market U.S. Stock Movers
United Airlines (UAL) climbed over +4% in pre-market trading after the airline company reported better-than-expected Q1 results.
JB Hunt Transport Services (JBHT) slumped more than -7% in pre-market trading after the trucking company reported weaker-than-expected Q1 results.
Ontrak (OTRK) plunged over -15% in pre-market trading after reporting downbeat Q4 results and offering below-consensus Q1 revenue guidance.
Urban Outfitters (URBN) slid more than -3% in pre-market trading after Jefferies downgraded the stock to Underperform from Hold with a price target of $32.
Medical Properties Trust (MPW) gained over +1% in pre-market trading after Deutsche Bank upgraded the stock to Hold from Sell with a $5 price target.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Wednesday - April 17th
Abbott Labs (ABT), Prologis (PLD), CSX (CSX), U.S. Bancorp (USB), Travelers (TRV), Crown Castle (CCI), Kinder Morgan (KMI), Las Vegas Sands (LVS), Discover (DFS), Equifax (EFX), Citizens Financial Group Inc (CFG), Rexford Inl Rty (REXR), First Horizon National (FHN), First Industrial RT (FR), Alcoa (AA), Wintrust (WTFC), Synovus (SNV), Bank Ozk (OZK), FNB (FNB), Liberty Oilfield (LBRT), SL Green (SLG), Cohen Steers (CNS), BankUnited (BKU), Triumph Bancorp (TFIN), Banner (BANR), Monarch (MCRI), Brandywine (BDN).
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On the date of publication, Oleksandr Pylypenko 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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