Stocks Gain on Hopes for Less- Aggressive Fed

Morning Markets

September S&P 500 futures (ESU22) this morning are up by +0.74% at a 1-week high on positive carry-over from last Friday on hopes that inflation and aggressive Fed rate hikes may be close to peaking.  A gauge of long-term U.S. inflation expectations from the University of Michigan declined last Friday, which prompted several Fed policymakers to push back against raising rates by more than 75 bp.   

Corporate Q2 earnings reports are also being watched for market direction.  Goldman Sachs is up nearly +4% in pre-market trading today after reporting better-than-expected Q2 trading revenue.  Also, Tesla is up more than +2% in pre-market trading after Deutsche Bank added the stock to its short-term Catalyst Call Buy List.

The Euro Stoxx 50 is up +1.38% today and posted a 2-1/2 week high.  European stocks are climbing today as the market scales back expectations of more aggressive Fed rate hikes.  Comments last Friday from St. Louis Fed President Bullard and Atlanta Fed President Bostic reduced speculation that the Fed may hike interest rates by 100 bp later this month.  European stocks are moving higher today despite political turmoil in Italy, with Prime Minster Draghi being asked to reverse his pledge to resign as soon as this week.  Italian President Mattarella last Friday asked Prime Minister Draghi to remain in his position in order to avert a political crisis after Italy’s Five Star Movement boycotted a confidence vote in the Senate last Thursday, prompting Draghi to offer his resignation. 

China’s Shanghai Composite Index today closed up by +1.55%.  Chinese stocks moved higher today on hopes for additional stimulus after PBOC Governor Yi Gang said that China’s central bank would step up efforts to provide stronger economic support amid the pandemic and external headwinds.  Also, property stocks and real estate companies rallied today after China’s Banking, and Insurance Regulatory Commission asked lenders to provide credit to eligible developers so they can complete unfinished residential properties.  The move by China’s banking regulator comes after regulators met with banks last week to discuss the growing number of consumers who have decided to quit paying their mortgages. 

Japan’s markets were closed today for the Marine Day holiday.  Hong Kong’s Hang Seng Index today snapped a five-day loss and closed up +2.7% as gains in recently beaten-down property and technology stocks led the overall market higher.

Pre-Market U.S. Stock Movers

Goldman Sachs (GS) jumped nearly +4% in pre-market trading after reporting Q2 trading revenue of $6.47 billion, well above the consensus of $5.82 billion.

JPMorgan Chase (JPM) climbed nearly +1% in pre-market trading after Berenberg raised its recommendation on the stock to hold, saying the downside risks to the stocks “are now more limited.” 

Tesla (TSLA) is up +2% in pre-market trading after Deutsche Bank added the stock to its short-term Catalyst Call Buy List ahead of the company’s Q2 earnings report expected after the close this Wednesday.

Boeing (BA) climbed more than +4% in pre-market trading after it announced that Delta Air Lines ordered 100 of its 737 Max jets. 

Nvidia (NVDA) rose nearly +3% in pre-market trading after TF Securities initiated coverage of the stock with a buy rating.

Cryptocurrency-exposed stocks are moving higher in pre-market trading, with the price of Bitcoin up more than +5% at a 1-month high.  Marathon Digital (MARA) is up more than +8%.  Also, Riot Blockchain (RIOT) is up more than +7%, and Coinbase Global (COIN) and MicroStrategy (MSTR) are up more than +5%.   

Bank of America (BAC) fell -1% in pre-market trading after reporting Q2 EPS of 73 cents, below the consensus of 75 cents.

International Paper (IP) slid more than -1% in pre-market trading after Wells Fargo cut its recommendation on the stock to equal weight from overweight.

Paramount Global (PARA) slid -2% in pre-market trading after Morgan Stanley cut its recommendation on the stock to underweight from equal-weight.

Hologic (HOLX) fell -1% in pre-market trading after BIG LLC cut its recommendation on the stock to neutral from buy.

Today’s U.S. Earnings Reports (7/18/2022)

Bank of America Corp (BAC), Charles Schwab Corp/The (SCHW), Goldman Sachs Group Inc/The (GS), 

International Business Machine (IBM), Nordea Bank Abp (NDA), Prologis Inc (PLD), Synchrony Financial (SYF).

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