S&P Futures Tick Lower as Investors Await Earnings Reports and Fed Speak

June S&P 500 E-Mini futures (ESM24) are trending down -0.11% this morning as market participants geared up for the next round of quarterly results and awaited more comments from Federal Reserve officials.

In yesterday’s trading session, Wall Street’s major indexes ended mixed, with the benchmark S&P 500 notching a 3-week high and the blue-chip Dow posting a 4-week high. FMC Corp. (FMC) climbed over +9% and was the top percentage gainer on the S&P 500 after the company reported better-than-expected Q1 adjusted EPS and maintained its full-year revenue outlook of $4.50 billion to $4.70 billion, with the midpoint above the consensus of $4.53 billion. Also, GlobalFoundries (GFS) advanced more than +7% and was the top percentage gainer on the Nasdaq 100 after reporting upbeat Q1 results and offering solid Q2 guidance. In addition, Peloton Interactive (PTON) surged over +15% following a CNBC report indicating that several private equity firms have been contemplating a buyout of the connected fitness company. On the bearish side, Builders FirstSource (BLDR) tumbled about -19% and was the top percentage loser on the S&P 500 after the company provided a weaker-than-expected FY24 adjusted EBITDA forecast. Also, Walt Disney (DIS) slumped more than -9% and was the top percentage loser on the Dow after the entertainment giant reported Q2 Disney+ subscriber figures that narrowly missed estimates, gave a tepid Q3 streaming subscriber growth forecast, and anticipated a moderation in visits to parks from peak post-Covid levels.

Economic data on Tuesday showed that U.S. consumer credit increased by +$6.27B in March, weaker than expectations of +$14.80B.

Minneapolis Fed President Neel Kashkari stated on Tuesday that it’s probable the central bank will keep interest rates at their current levels “for an extended period of time” until officials are confident that inflation is moving toward their target. “Or if we get convinced eventually that inflation is embedded or entrenched now at 3% and that we need to go higher, we would do that if we needed to,” he said at the Milken Institute Global Conference. Kashkari mentioned that this isn’t his most likely scenario and the bar for raising rates is considerably high, yet he wouldn’t rule it out. In an essay released earlier on Tuesday, the Minneapolis Fed chief noted that recent inflation data raise queries about whether monetary policy is sufficiently restrictive to fully return price growth to 2%.

Meanwhile, U.S. rate futures have priced in an 8.9% probability of a 25 basis point rate cut at the June FOMC meeting and a 27.6% chance of a 25 basis point rate cut at July’s monetary policy meeting.

On the earnings front, notable companies like Uber Technologies (UBER), Airbnb (ABNB), Shopify (SHOP), Arm (ARM), Energy Transfer (ET), and Trade Desk (TTD) are set to report their quarterly figures today.

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 -1.430M, compared to last week’s value of 7.265M.

U.S. Wholesale Inventories data will be reported today as well. Economists foresee this figure to stand at -0.4% m/m in March, compared to the previous number of +0.5% m/m.

In addition, market participants will be anticipating speeches from Fed officials Jefferson, Collins, and Cook.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.472%, up +0.29%.

The Euro Stoxx 50 futures are up +0.44% this morning as investors digested generally positive corporate earnings reports. Food and beverage stocks gained ground on Wednesday, while mining and automobile stocks underperformed. Data released by the German statistics office Destatis on Wednesday revealed that Germany’s industrial production in March experienced a month-on-month decline for the first time this year. Meanwhile, German economic institute IW remarked that despite a stronger-than-expected start to the year, Germany’s economy is projected to stagnate in 2024 and will continue to lag behind European peers. In corporate news, Siemens Energy Ag (ENR.D.DX) surged over +11% after the power equipment maker reported upbeat Q2 results and boosted its 2024 guidance for sales, operating profit, and free cash flow. Also, Anheuser-Busch Inbev Sa/Nv (ABI.B.DX) gained more than +4% after the world’s largest brewer reported better-than-expected North American sales in the first quarter. At the same time, Bayerische Motoren Werke Ag (BMW.D.DX) slid about -3% after the automaker projected a slight decrease in pre-tax profit for this year.

Germany’s Industrial Production and Italy’s Retail Sales data were released today.

The German March Industrial Production arrived at -0.4% m/m, stronger than expectations of -0.6% m/m.

The Italian March Retail Sales came in at 0.0% m/m, weaker than expectations of +0.2% m/m.

Asian stock markets today closed in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.61% and Japan’s Nikkei 225 Stock Index (NIK) closed down -1.63%.

China’s Shanghai Composite Index closed lower today. Losses in software technology and property stocks led the overall market lower on Wednesday. Meanwhile, Bloomberg reported that the U.S. has revoked licenses permitting Huawei Technologies Co. to purchase semiconductors from Qualcomm Inc. and Intel Corp. The U.S. Commerce Department confirmed the withdrawal of “certain licenses” for exports to Huawei but refrained from providing specific details. “We continuously assess how our controls can best protect our national security and foreign policy interests,” the agency said in a statement Tuesday. In other news, Morgan Stanley strategists, led by Laura Wang and Jonathan Garner, stated in a note on Tuesday that the momentum driving one of the world’s most significant stock rallies in China is likely to diminish. In corporate news, Tech-bank Food fell over -3% after reporting a drop in pig sales revenue to 655.9 million yuan in April. Investor attention continued to center on further economic indicators from Asia’s largest economy, with trade data for April scheduled for release on Thursday.

Japan’s Nikkei 225 Stock Index closed sharply lower today, retreating from a 3-week high as investors took profits following an over 1% surge in the previous session and sought new hints on the timing of the much-awaited rate cuts in the U.S. Electronics and brokerage stocks led the declines on Wednesday. Meanwhile, the yen extended losses on Wednesday despite warnings from the Bank of Japan Governor. BOJ chief Kazuo Ueda stated that the central bank might contemplate a monetary policy response should the recent yen depreciation affect prices. “Foreign exchange rates make a significant impact on the economy and inflation. Depending on those moves, a monetary policy response might be needed,” Ueda said in response to questions in parliament. Separately, Japanese Finance Minister Shunichi Suzuki said on Wednesday that authorities are prepared to take all necessary measures as needed. In corporate news, Nintendo slumped over -5% after the gaming company warned of a significant drop in operating income for the year and signaled that a next-generation Switch wouldn’t be released until 2025. Also, Sony Group slid about -5% amid potential regulatory concerns regarding its bid to acquire Paramount Global. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +8.07% to 20.75.

Pre-Market U.S. Stock Movers

Reddit (RDDT) surged over +15% in pre-market trading after the social media company reported better-than-expected Q1 revenue and provided above-consensus Q2 revenue guidance.

Dutch Bros (BROS) climbed more than +8% in pre-market trading after reporting upbeat Q1 results and raising its FY24 revenue forecast.

DoubleVerify Holdings (DV) plummeted about -38% in pre-market trading after the company offered soft Q2 revenue guidance and cut its FY24 revenue forecast.

Upstart Holdings (UPST) plunged more than -11% in pre-market trading after the company issued below-consensus Q2 revenue guidance.

Twilio (TWLO) slumped over -8% in pre-market trading after the cloud communications developer gave weak revenue guidance for the current quarter.

Electronic Arts (EA) fell more than -3% in pre-market trading after reporting Q4 bookings that fell below Wall Street analysts’ projections and providing below-consensus annual net bookings guidance.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Wednesday - May 8th

Uber Tech (UBER), Arm (ARM), Airbnb (ABNB), Shopify Inc (SHOP), Emerson (EMR), Energy Transfer (ET), The Trade Desk (TTD), Manulife Financial (MFC), HubSpot Inc (HUBS), Vistra Energy (VST), Nutrien (NTR), Applovin (APP), Broadridge (BR), Celanese (CE), Atmos Energy (ATO), Brazilian Electric Power DRC (EBR), TPG Inc (TPG), Robinhood Markets (HOOD), Fox Corp (FOX), Fidelity Financial (FNF), News Corp (NWS), News Corp A (NWSA), Texas Pacific (TPL), NiSource (NI), EXACT Sciences (EXAS), Affirm Holdings (AFRM), HF Sinclair (DINO), Performance Food Group Co (PFGC), Duolingo (DUOL), Amdocs (DOX), Instacart (CART), Stantec (STN), Houlihan Lokey Inc (HLI), Light Wonder (LNW), MKS Instruments (MKSI), Royal Gold (RGLD), Ingredion (INGR), NewYork Times (NYT), Middleby Corp (MIDD), Watts Water Technologies (WTS), Cytokinetics Inc (CYTK), Azek Company (AZEK), Revolution Med (RVMD), Owl Rock Capital (OBDC), Starwood Property (STWD), Klaviyo (KVYO), Choice Hotels (CHH), Kinetik Holdings (KNTK), Reynolds (REYN), Valvoline (VVV), Ultrapar Participacoes (UGP), Jackson Financial (JXN), Southwest Gas Hold (SWX), New Fortress Energy (NFE), Alight (ALIT), R1 RCM (RCM), F G Annuities Life (FG), Maximus (MMS), Aurora Innovation (AUR), Vertex (VERX), EchoStar (SATS), Ormat (ORA), Enerplus (ERF), Brinks (BCO), CleanSpark (CLSK), Black Hills (BKH), Fluence Energy (FLNC), Millicom (TIGO), Tripadvisor (TRIP), Crane NXT (CXT), Griffon (GFF), Sabra (SBRA), SolarEdge Technologies (SEDG), Euronav (EURN), Vishay Intertechnology (VSH), Innovative Industrial Properties (IIPR), United Parks Resorts (PRKS), Braskem (BAK), Azenta (AZTA), Hecla Mining (HL), Callaway Golf (MODG), ACV Auctions (ACVA), Quidel (QDEL), Osisko Gold Ro (OR), Instructure Holdings (INST), International Seaways (INSW), LCI Industries (LCII), Central Garden&Pet (CENT), Clear Secure (YOU), Sunrun Inc (RUN), Primoris (PRIM), Tegna (TGNA), Ziff Davis (ZD), AvidXchange Holdings (AVDX), INTL FCStone (SNEX), Chesapeake Utilities (CPK), Globalstar Inc (GSAT), Kodiak Gas Services (KGS), Sitime Corp (SITM), Maravai Lifesciences (MRVI), Equinox Gold (EQX), Amphastar (AMPH), Vista Outdoor Inc (VSTO), Vizio Holding (VZIO), Enlight Energy (ENLT), Syndax Pharmaceuticals (SNDX), Vital Energy (VTLE), Kennametal (KMT), Excelerate Energy (EE), ODP (ODP).

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