Stocks Fall on Concern Fed Rate Hikes will Derail the Economy

Morning Markets

September S&P 500 futures (ESU22) this morning down by -1.64%.  Concern that Fed rate hikes will derail the economy are weighing on stocks today.  Also, negative carry-over from selloff in the Euro Stoxx 50 to a 3-1/2 month low today is undercutting U.S. stock indexes. 

A decline in mega-cap technology stocks in pre-market trading is weighing on the overall market. Also, energy stocks and commodity producers are falling today, with crude oil slumping more than -5% to a 6-week low and copper prices tumbling more than -3% to a 3-1/2 month low.   

The Euro Stoxx 50 today tumbled to a 3-1/2 month low and is down by -1.90% on recession fears and inflation worries.  Losses in mining companies and metals producers are leading the overall market lower after the price of copper tumbled to a 3-1/2 month low.  Also, inflation concerns are weighing on stocks after today’s data showed that the UK May CPI rose +9.1% y/y, the most in 40 years.

ECB Vice President Guindos said Eurozone consumer price growth will remain above 8% in the coming months and only start to slow after the summer.

Asian markets today closed lower.  China’s Shanghai Composite Index closed down by -1.20%, and Japan’s Nikkei stock index closed down by -0.37%. 

Shares of China’s online drug sellers and technology companies led losses in the overall market today.  Drug sellers fell after the state-run 21st Century Business Herald reported that the Chinese government may ban third-party platforms from selling medicines over the internet.  Also, Chinese live-streaming platform operators sold off today after the government published a new document to tighten regulations in the sector. 

Japanese stocks posted moderate losses today on carry-over weakness from a slide in Chinese technology stocks.  Losses in Japanese stocks were limited as Japanese exporter stocks rallied after the yen tumbled to a new 24-year low against the dollar.  A weaker yen boosts the earnings prospects of Japanese exporters.   Japanese stocks also found support from the minutes of the BOJ’s April meeting that said the yen’s depreciation has had a “positive impact” on Japan’s economy.

The minutes of the BOJ’s April policy meeting said that speculation about 10-year JGB yields has arisen, and policy makers must communicate the aim of policy clearly.  Also, policymakers said the yen’s depreciation has had a “positive impact” on Japan’s economy.

Pre-Market U.S. Stock Movers

Mega-cap technology stocks are weaker in pre-market trading after Tuesday’s sharp rally.  Nvidia (NVDA) is down nearly -4%, and Apple (AAPL), Alphabet (GOOGL), Amazon.com (AMZN), and Microsoft (MSFT) are all down more than -2%. 

Ormat Technologies (ORA) fell more than -4% in pre-market trading after it said it will offer $350 million of Green Convertible Senior Notes due 2027 in a private offering to institutional investors. 

Scotts Miracle-Gro (SMG) dropped more than -3% in pre-market trading after Wells Fargo downgraded the stock to equal-weight from overweight.

Energy stocks and energy service providers are falling in pre-market trading with the price of crude oil down more than -4%.  Diamondback Energy (FANG), Haliburton (HAL), ConocoPhillips (COP), Schlumberger (SLB), Devon Energy (DVN), and Occidental Petroleum (OXY) are down more than -4%. Also, Exxon Mobil (XOM), Phillips 66 (PSX), and Chevron (CVX) are down more than -3%.

ArcelorMittal SA (MT) tumbled more than -6% in pre-market trading after JPMorgan Chase downgraded the stock to neutral from overweight.

Pure Storage (PSTG) dropped more than -4% in pre-market trading after a holder offered a block of 1.3 million shares of the stocks after Tuesday’s close at $25.69 a share.

La-Z-Boy (LZB) jumped nearly +9% in pre-market trading after it reported Q4 sales of $684.6 million, stronger than the consensus of $669 million.

Today’s U.S. Earnings Reports (6/22/2022)

HB Fuller Co (FUL), KB Home (KBH), Korn Ferry (KFY), National Energy Services Reuni (NESR), 

NewAge Inc (NBEV), Quotient Ltd (QTNT), Steelcase Inc (SCS), Winnebago Industries Inc (WGO), 

Worthington Industries Inc (WOR).

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