Stocks Market Down on Economic Growth Concerns

Morning Markets

June S&P 500 futures this morning are down by -0.61%.  Weakness in e-commerce stocks is weighing on the overall market, with eBay and Etsy falling in pre-marketing trading after reporting disappointing quarterly earnings results.  Also, weak economic data from Europe and China today are signaling a slowdown in global growth after German Mar factory orders posted their biggest decline in 5 months, and a gauge of China’s Apr services activity contracted at the fastest pace since the pandemic began.  U.S. stock indexes maintained moderate losses on this morning’s weaker-than-expected U.S. economic data on weekly jobless claims and Q1 nonfarm productivity.

U.S. weekly initial unemployment claims unexpectedly rose +19,000 to 200.000, showing a weaker labor market than expectations of no change at 180,000.

U.S. Q1 nonfarm productivity fell -7.5% q/q, weaker than expectations of -5.3% and the steepest decline since 1947.  Q1 unit labor costs rose +11.6% q/q, stronger than expectations of +10.0%.

The Euro Stoxx 50 index this morning is up +1.65%.  European stocks are moderately higher today on relief that Fed Chair Powell was less aggressive on monetary policy when he pushed back against a 75 bp rate hike. European energy stocks rallied after Shell Plc posted its highest quarterly earnings on record.  Also, UniCredit SA and Airbus SE rallied today after reporting higher-than-expected revenue and lower operating costs. European stocks rallied today even after the BOE raised its key rate by 25 bp to 1.00% and warned the UK risks recession alongside double-digit inflation. 

Today’s Eurozone economic data was bearish for stocks.  German Mar factory orders fell -4.7% m/m, weaker than expectations of -1.1% m/m and the biggest decline in 5 months.  Also, the German Apr S&P Global construction PMI fell -4.9 to 46.0, the weakest level in 8 months.  In addition, France Mar manufacturing production unexpectedly fell -0.3% m/m, weaker than expectations of +0.3% m/m.

ECB Executive Board member Panetta said the Eurozone economy "is de facto stagnating" as the economic expansion has almost ground to a halt and faces further "high costs."

Asian markets today were mixed, with China’s Shanghai Composite Index closing up +0.68% and Hong Kong’s Hang Seng Index closing down -0.36%.  Markets in Japan were closed for holidays.  China’s Shanghai Composite Index reopened after being closed since last Friday for the Labor Day holidays and rallied to a 1-1/2 week high. Stocks rallied today after state media reported the government would soon roll out more measures to spur economic growth. 

The China Apr Caixin services PMI fell -4.8 to 36.2, weaker than expectations of 40.0 and the steepest pace of contraction in 2 years.

Pre-Market U.S. Stock Movers

eBay (EBAY) tumbled nearly -7% in pre-market trading after lowering guidance on full-year adjusted EPS from continuing operations to $3.90-$4.10 from a prior view of $4.20-$4.40, weaker than the consensus of $4.35. 

Qorvo (QRVO) dropped -5% in pre-market trading this morning after forecasting Q1 adjusted EPS of $2.00-$2.25, well below the consensus of $2.74.

U.S.-listed Chinese stocks fell in pre-market trading on reports the U.S. was expanding its list of Chinese stocks that face potential security delistings.  Bilibili (BILI) is down -5%, Pinduoduo (PDD) is down more than -3%, and JD.com (JD), Alibaba Group Holding (BABA), and Baidu (BIDU) are down more than -2%. 

Cardinal Health (CAH) dropped -6% in pre-market trading after reporting Q3 adjusted EPS of $1.45, below the consensus of $1.52, and lowered its full-year adjusted EPS forecast to $5.15-$5.25 from a prior view of $5.15-$5.50, weaker than the consensus of $5.29. 

Etsy (ETSY) sank -10% in pre-market trading after forecasting Q2 revenue of $540 million-$590 million, well below the consensus of $628.8 million.

Sally Beauty Holdings (SBH) plunged -15% in pre-market trading after reporting Q2 net sales of $911.4 million, weaker than the consensus of $951 million. 

Cognizant (CTSH) fell -4% in pre-market trading after cutting its full-year adjusted EPS outlook to $4.45-$4.55 from a prior view of $4.46-$4.60, weaker than the consensus of $4.55.

Albemarle (ALB) rallied +14% in pre-market trading after reporting Q1 net sales of $1.13 billion, stronger than the consensus of $1.03 billion, and raised its full-year net sales forecast to $5.2 billion-$5.6 billion from a prior view of $4.2 billion-$4.5 billion, better than the consensus of $4.4 billion. 

Booking Holdings (BKNG) jumped +10% in pre-market trading after reporting Q1 revenue of $2.70 billion, stronger than the consensus of $2.54 billion.

Sunrun (RUN) climbed +13% in pre-market trading after reporting Q1 revenue of $495.8 million, well above the consensus of $398.4 million.

Fortinet (FTNT) rose +7% in pre-market trading after reporting Q1 revenue of $954.8 million, above the consensus of $886.1 million, and raised guidance on its full-year revenue forecast to $4.35 billion-$4.40 billion from a prior view of $4.28 billion-$4.33 billion, stronger than the consensus of $4.3 billion. 

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

AES Corp/The (AES), Air Products and Chemicals Inc (APD), Ameren Corp (AEE), Aptiv PLC (APTV), Ball Corp (BLL), Becton Dickinson and Co (BDX), Cardinal Health Inc (CAH), CBRE Group Inc (CBRE), ConocoPhillips (COP), Consolidated Edison Inc (ED), DaVita Inc (DVA), Dominion Energy Inc (D), EOG Resources Inc (EOG), EPAM Systems Inc (EPAM), Evergy Inc (EVRG), Federal Realty Investment Trus (FRT), FleetCor Technologies Inc (FLT), Huntington Ingalls Industries (HII), Illumina Inc (ILMN), Intercontinental Exchange Inc (ICE), Kellogg Co (K), Live Nation Entertainment Inc (LYV), McKesson Corp (MCK), Mettler-Toledo International I (MTD), Monster Beverage Corp (MNST), News Corp (NWSA), NortonLifeLock Inc (NLOK), Organon & Co (OGN), Parker-Hannifin Corp (PH), Penn National Gaming Inc (PENN), PPL Corp (PPL), Quanta Services Inc (PWR), Republic Services Inc (RSG), Royal Caribbean Cruises Ltd (RCL), Sempra Energy (SRE), Trimble Inc (TRMB), Ventas Inc (VTR), Vertex Pharmaceuticals Inc (VRTX), Westrock Co (WRK), Zoetis Inc (ZTS).