Stocks Climb on Lower T-Note Yields

Morning Markets

September S&P 500 futures (ESU22) this morning are up by +0.34%.  A decline in T-note yields today is supporting gains in U.S. stock indexes.  The 10-year T-note yield fell to a 1-1/2 week low today of 3.083%.  Also, a decline in inflation expectations is bullish for stocks after the 10-year breakeven inflation rate dropped to a 4-month low today at 2.470%.  

Economic concerns are limiting gains in stocks after Fed Chair Powell on Wednesday said that the task of engineering a soft economic landing is “very challenging.”  Stock indexes fell back from their best levels this morning after weekly jobless claims fell less than expected, and the Q1 current account deficit widened to a record.

U.S. weekly initial unemployment claims fell -2,000 to 229,000, showing a slightly weaker labor market than expectations of 226,000.

The U.S.Q1 current account deficit was a record -$291.4 billion, wider than expectations of -$275.0 billion.

The Euro Stoxx 50 today is up by +0.09%.  European stocks recovered from early losses and are slightly higher as the Euro Stoxx 50 rebounded from a 3-1/2 month low.  A sharp drop in government bond yields sparked short-covering in stocks after the 10-year German bund yield dropped to a 1-1/2 week low today at 1.429%.  European stocks today initially posted moderate losses on signs of slowing economic activity after the Eurozone Jun S&P Global manufacturing PMI fell to a 1-3/4 year low, and the composite PMI fell to a 16-month low. 

The Eurozone Jun S&P Global manufacturing PMI fell -2.6 to a 1-3/4 year low of 52.0, weaker than expectations of 53.8.  Also, the Eurozone Jun S&P Global composite PMI fell -2.9 to a 16-month low of 51.9, weaker than expectations of 54.0.

Asian markets today closed higher.  China’s Shanghai Composite Index closed up by +1.62%, and Japan’s Nikkei stock index closed up by +0.08%. 

Chinese stocks rallied today after Chinese President Xi Jinping pledged to meet economic targets for this year, saying China will “strengthen macro-policy adjustment and adopt more effective measures to strive to meet the social and economic development targets for 2022 and minimize the impacts of Covid-19.”  Electric-vehicle makers rallied today after Chinese state television reported that the government might extend tax exemptions on electric-car purchases. 

Japanese stocks closed slightly higher today as economic concerns limited gains.  Comments from Fed Chair Powell Wednesday weighed on Japanese equities when he said that a U.S. recession is “certainly a possibility.” Transportation stocks moved higher today after the price of crude oil tumbled to a 6-week low.  However, the Nikkei Stock Index gave up most of its gains after a gauge of Japanese manufacturing activity fell to a 9-month low.

The Japan Jun Jibun Bank manufacturing PMI fell -0.6 to a 9-month low of 52.7.

Pre-Market U.S. Stock Movers

KB Home (KBH) jumped more than +4% in pre-market trading after reporting Q2 revenue of $1.72 billion, above the consensus of $1.65 billion. 

Occidental Petroleum (OXY) rose more than +3% in pre-market trading after a regulatory filing showed Berkshire Hathaway bought 9.55 million shares of the stock from June 17 to June 22.  

Cryptocurrency-exposed stocks are climbing in pre-market trading, with the price of Bitcoin up more than +3% over $20,000.  Marathon Digital (MARA) is up more than +4%, and Coinbase Global (COIN) and Riot Blockchain (RIOT) are up more than +3%. 

U.S.-listed shares of Chinese electric-vehicle makers rallied in pre-market trading after Chinese state television reported that the government might extend tax exemptions on electric-car purchases.  Li Auto (LI) is up +6%, Xpeng (XPEV) is up more than +5%, and Nio (NIO) is up more than +2%.   

Snowflake (SNOW) is up +4% in pre-market trading after JPMorgan Chase raised its recommendation on the stock to overweight from neutral.

Symbotic (SYM) climbed more than +3% in pre-market trading after Baird initiated coverage of the stock with a recommendation of outperform and a price target of $18.

Energy stocks and energy service providers are weaker in pre-market trading, with the price of crude oil down -0.2%.  ConocoPhillips (COP), Schlumberger (SLB), Devon Energy (DVN), Exxon Mobil (XOM), Phillips 66 (PSX), and Chevron (CVX) are all down more than -1%.

EBay (EBAY) fell more than -2% in pre-market trading after Morgan Stanley assumed coverage of the stock with a recommendation of underweight and a price target of $36

Accenture (ACN) tumbled nearly -4% in pre-market trading after forecasting Q4 revenue of $15.0 billion to $15.5 billion, weaker than the consensus of $15.82 billion.

Abbott Laboratories (ABT) slid more than -1% in pre-market trading after the U.S. Food and Drug Administration said they are investigating the death of another infant who was given formula made by Abbott.

Today’s U.S. Earnings Reports (6/23/2022)

Accenture PLC (ACN), Darden Restaurants Inc (DRI), FactSet Research Systems Inc (FDS), FedEx Corp (FDX).

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