Stocks Slightly Higher Ahead of an Expected 50 bp Rate Hike Today

Morning Markets

June S&P 500 futures this morning are up by +0.25%.  A +7% jump in Advanced Micro Devices in pre-market trading is leading technology stocks higher after it reported stronger-than-expected Q1 revenue. Better-than-expected quarterly earnings results from Starbucks and CVS Health are also supporting the overall market. 

However, stock indexes fell back from their best levels this morning on disappointing U.S. economic data, including the ADP and trade deficit reports.

The markets are expecting the FOMC today to announce a 50 bp rate hike in its federal funds target range. In addition, the markets are looking to see when the Fed may begin taking liquidity out of the market as it may also announce when it will begin shrinking its balance sheet.

The U.S. Apr ADP employment change rose +247,000, weaker than expectations of +383,000 and the smallest increase in 2 years.

The U.S. Mar trade deficit was a record -$109.8 billion (data from 1992), wider than expectations of -$107.1 billion, which had negative GDP implications.

The Euro Stoxx 50 index this morning is down -0.12%.  European stocks are slightly lower today as losses in retail and real estate stocks outweighed gains in energy stocks.  A jump in the 10-year German bund yield to a 6-3/4 year high of 1.031% today weighed on the overall market.  However, energy stocks gained after crude prices jumped more than +3% today after a report said the European Union is close to imposing an embargo on Russian oil imports. 

Today’s Eurozone economic data was bearish for stocks.  Eurozone Mar retail sales fell -0.4% m/m, weaker than expectations of -0.3% m/m. Also, German Mar exports fell -3.3% m/m, weaker than expectations of -2.1% m/m and the biggest decline in nearly two years.

ECB Governing Council member Muller said the ECB should consider raising interest rates as soon as July as inflation accelerates.

Asian markets today were lower, with Hong Kong’s Hang Seng Index closing down -1.10%.  Markets in China and Japan were closed for holidays. Weakness in Chinese technology stocks led the Hang Seng Index lower today on a report the U.S. Securities and Exchange Commission is investigating Didi Global’s 2021 IPO last summer. 

Asian markets were also under pressure today after the Reserve Bank of India (RBI) unexpectedly raised its repurchase rate by 40 bp to 4.40%, citing persistent inflation pressures. The RBI also increased the cash reserve ratio for banks by 50 bp to 4.50%, which will drain 870 billion rupees ($11.4 billion) of liquidity from the banking system. 

Pre-Market U.S. Stock Movers

Airbnb (ABNB) climbed more than +4% in pre-market trading after reporting Q1 revenue of $1.51 billion, better than the consensus of $1.45 billion, and forecast Q2 revenue of $2,03 billion-$2.13 billion, above the consensus of $1.97 billion. 

Advanced Micro Devices (AMD) jumped more than +7% in pre-market trading this morning after reporting Q1 revenue of $5.89 billion, above the consensus of $5.30 billion, and raised its full-year revenue forecast to $26.3 billion from a prior view of $21.5 billion, well above the consensus of $24.08 billion.

Starbucks (SBUX) rose more than +6% in pre-market trading after reporting Q2 net revenue of $7.64 billion, better than the consensus of $7.62 billion. 

Marriott International (MAR) climbed nearly +3% in pre-market trading after reporting Q1 international revenue of $4.20 billion, stronger than the consensus of $4.17 billion.

CVS Health Corp (CVS) gained +2% in pre-market trading after reporting Q1 adjusted EPS of $2.22 better than the consensus of $2.15, and raised its full-year adjusted EPS estimate to $8.20-$8.40 from a prior view of $8.10-$8.30, above the consensus of $8.27.

Generac (GNRC) rallied more than +7% in pre-market trading after reporting Q1 net sales of $1.14 billion, stronger than the consensus of $1.09 billion. 

Lyft (LYFT) plunged -25% in pre-market trading after reporting Q1 active riders of 17.8 million, below the consensus of 18.0 million, and forecast Q2 revenue of $950 million to $1 billion, below the consensus of $1.02 billion.

Carvana (CVNA) fell -3% in pre-market trading after Morgan Stanley downgraded the stock to equal weight from overweight. 

Skyworks Solutions (SWKS) dropped -3% in pre-market trading after forecasting Q3 revenue of $1.20 billion-$1.26 billion, below the consensus of $1.30 billion.

Johnson Controls (JCI) sank more than -7% in pre-market trading after reporting Q2 adjusted net sales of $6.10 billion, weaker than the consensus of $6.16 billion, and forecast an unexpected Q3 adjusted loss per share from continuing operations of -82 cents to -87 cents, well below expectations of a profit of $1.02 EPS.

Idexx Labs (IDXX) tumbled by more than -10% in pre-market trading after forecasting full-year EPS of $8.11-$8.35, well below the consensus of $9.46. 

Today’s U.S. Earnings Reports (5/4/2022)

Albemarle Corp (ALB), Allstate Corp/The (ALL), AmerisourceBergen Corp (ABC), ANSYS Inc (ANSS), 

APA Corp (APA), Atmos Energy Corp (ATO), Bio-Techne Corp (TECH), Booking Holdings Inc (BKNG), 

BorgWarner Inc (BWA), CDW Corp/DE (CDW), Ceridian HCM Holding Inc (CDAY), CF Industries Holdings Inc (CF), Charles River Laboratories Int (CRL), Cognizant Technology Solutions (CTSH), Corteva Inc (CTVA), 

CVS Health Corp (CVS), eBay Inc (EBAY), Emerson Electric Co (EMR), Etsy Inc (ETSY), Eversource Energy (ES), Fortinet Inc (FTNT), Generac Holdings Inc (GNRC), Host Hotels & Resorts Inc (HST), IDEXX Laboratories Inc (IDXX), Ingersoll Rand Inc (IR), Johnson Controls International (JCI), Lincoln National Corp (LNC), Lumen Technologies Inc (LUMN), Marathon Oil Corp (MRO), Marriott International Inc/MD (MAR), MetLife Inc (MET), Moderna Inc (MRNA), NiSource Inc (NI), Pinnacle West Capital Corp (PNW), Pioneer Natural Resources Co (PXD), Qorvo Inc (QRVO), Realty Income Corp (O), Regeneron Pharmaceuticals Inc (REGN), Trane Technologies PLC (TT), Vulcan Materials Co (VMC), Xylem Inc/NY (XYL), Yum!  Brands Inc (YUM).