Morning Markets
June S&P 500 futures (ESM22) this morning are down -1.22% at a 1-week low as they extend Wednesday’s -4% plunge. Technology stocks are falling today, led by a -10% plunge in Cisco Systems after it said Chinese lockdowns and other supply disruptions would cut into earnings. Weakness in retailer stocks also weighs on the overall market, with Kohl’s down more than -6% in pre-market trading after it reported Q1 comparable same-store sales unexpectedly declined. Stock indexes maintained their losses this morning after U.S. weekly jobless claims unexpectedly rose to a 3-1/2 month high, and the Apr Philadelphia Fed business outlook survey fell more than expected to a 2-year low.
U.S. weekly initial unemployment claims unexpectedly rose +21,000 to a 3-1/2 month high of 218,000, showing a weaker labor market than expectations of a decline to 200,000.
The U.S. May Philadelphia Fed business outlook survey fell -15.0 to a 2-year low of 2.6, weaker than expectations of 15.0.
Kansas City Fed President George said inflation is too high, and the Fed needs to bring that down. She said she is "very comfortable" with the Fed raising interest rates by 50 bp.
The Euro Stoxx 50 index this morning dropped to a 1-week low and is down -1.89%. Negative carry-over from a plunge in U.S. equity markets weighs on European shares. Losses in retailer and technology stocks are leading the overall market lower today. The slump in stocks today has boosted safe-haven demand for European government bonds and knocked the 10-year German bund yield down -9.9 bp to 0.931%.
Asian markets today settled mixed. China’s Shanghai Composite Index closed up +0.36%, and Japan’s Nikkei Stock Index closed down -1.89%. China’s Shanghai Composite Index bucked the trend of lower global equity markets and closed moderately higher. Strength in renewable energy-related companies led the overall market higher as Chinese solar and wind-turbine makers stand to benefit from the European Union’s plan to cut reliance on Russian energy. The EU Wednesday announced a 210 billion euro ($220 billion) plan to cut red tape for wind and solar farms.
Japan’s Nikkei Stock Index retreated today as global growth concerns weighed on stocks. Asian retailers slumped after earnings reports from large U.S. retailers sparked concern that high inflation is weighing on margins and spending. Weaker-than-expected Japanese trade data for April also weighed on the overall market.
Japan Mar core machine orders rose +7.1% m/m, stronger than expectations of +3.9% m/m and the biggest increase in 17 months.
Japan Apr exports rose +12.5% y/y, weaker than expectations of +13.9% y/y. Japan Apr imports rose +18.2% y/y, weaker than expectations of +35.0% y/y.
Pre-Market U.S. Stock Movers
Mega-cap technology and internet stocks are falling in pre-market trading amid concerns over an economic slowdown. Nvidia (NVDA) is down more than -2%, and Apple (AAPL), Meta Platforms (FB), Microsoft (MSFT), and Netflix (NFLX) are down more than -1%.
Cisco Systems (CSCO) tumbled -10% in pre-market trading after reporting Q3 revenue of $12.84 billion, weaker than the consensus of $13.34 billion, and lowering guidance on full-year revenue to up +2% to +3% from a prior view of up +5.5% to +6.5%, well below the consensus of +6.05%. Other networking equipment makers fell on the news, with Juniper Networks (JNPR) down more than -5% and Broadcom (AVGO) down more than -3%.
Kohl’s (KSS) dropped more than -5% in pre-market trading after reporting Q1 comparable same-store sales unexpectedly fell -5.2%, weaker than expectations of a +0.97% increase, and cut its full-year 2023 net sales forecast to 0% to up +1% from a previous view of up +2% to +3%.
Under Armour (UAA) dropped -6% in pre-market trading after analysts said the departure of CEO Frisk was a surprise and adds uncertainty to the company’s outlook.
Bath & Body Works (BBWI) fell nearly -4% in pre-market trading after lowering guidance for 2023 EPS from continuing operations to $3.80-$4.15 from a prior view of $4.30-$4.70, weaker than the consensus of $4.83.
U.S. rail stocks are under pressure today after Citigroup cut ratings and lowered 2023 earnings estimates “across the board” on the sector. Norfolk Southern (NSC), Union Pacific (UNP), and U.S. Xpress Enterprises (USX) are down more than -2% after they were downgraded to neutral from buy.
BJ’s Wholesale Club Holdings (BJ) climbed +4% in pre-market trading after reporting Q1 revenue of $4.50 billion, stronger than the consensus of $4.22 billion.
Canada Goose Holdings (GOOS) jumped +10% in pre-market trading after forecasting 2023 total revenue of C$1.30 billion to C$1.40 billion, better than the consensus of C$1.29 billion.
Synopsys (SNPS) rose nearly +4% in pre-market trading after reporting Q2 revenue of $1.28 billion, better than the consensus of $1.26 billion, and raised guidance on full-year revenue to $5.00 billion to $5.05 billion from a prior view of $4.78 billion-$4.83 billion, above the consensus of $4.8 1billion.
Today’s U.S. Earnings Reports (5/19/2022)
Advanced Drainage Systems Inc (WMS), Applied Materials Inc (AMAT), Deckers Outdoor Corp (DECK), Eagle Materials Inc (EXP), Flowers Foods Inc (FLO), Globant SA (GLOB), Kohl's Corp (KSS), Palo Alto Networks Inc (PANW), Ross Stores Inc (ROST), VF Corp (VFC).
