Stocks Climb Ahead of Mega-Cap Tech Quarterly Earnings

Morning Markets

September S&P 500 futures (ESU22) this morning are up +0.32%.  U.S. stock index futures this morning are moderately higher as corporate earnings’ optimism outweighs concerns about a possible recession. The market is focused on earnings results this week from the mega-tech companies of Alphabet, Apple, and Microsoft. Stock indexes fell back from their best levels after this morning’s data showed the June Chicago Fed national activity index was unchanged at a 16-month low.

Stocks this week will also be focused on the 2-day FOMC meeting beginning Tuesday.  Expectations are for the Fed to remain aggressive and raise the fed funds target range by 75 bp.  The post-FOMC meeting comments from Fed Chair Powell on Wednesday will be scoured for clues about future Fed policy intentions. 

The Euro Stoxx 50 is up +0.57% today and just below last Friday’s 6-week high.  European stocks recovered from early losses today and are moderately higher.   Optimism about Q2 earnings results from European companies is supporting equities today.  European stocks initially moved lower today after a gauge of German investor confidence dropped more than expected to a 2-year low.

ECB Governing Council member Kazaks said the ECB's 50-bp rate hike last week was not just front loading and that the expected September interest rate increase should be "quite significant" as well.  He added that "we do not target the exchange rate, but the exchange rate is an important element driving inflation.  A too weak euro is a problem."

The German July IFO business climate fell -3.6 to a 2-year low of 88.6, weaker than expectations of 90.1.

China’s Shanghai Composite Index today closed down by -0.60%.  Weakness in energy companies and industrial stocks led the overall market lower today.  However, losses were limited after the pace of Chinese Covid infections fell today to a 1-week low.  Also, property stocks caught a bid after Bloomberg reported that the Chinese government would establish a fund to support property developers. 

Japan’s Nikkei Stock Index closed down by -0.77%.  Japanese stocks fell today on carry-over weakness from Friday’s slide in U.S. stocks. Also, Japanese stocks were under pressure after the Cabinet Office cut its 2022 Japan GDP forecast.  A positive factor for Japanese stocks today was the sharp decline in government bond yields after the 10-year JGB bond yield slid to a 4-1/2 month low of 0.177%.

Japan's Cabinet Office today cut its Japan 2022 GDP forecast to 2.0% from a January estimate of 3.2%, saying private consumption was likely to be weaker than previously forecast due to the resurgence of Covid cases and rising prices inflated by the war in Ukraine.

Pre-Market U.S. Stock Movers

Tesla (TSLA) is up more than +1% in pre-market trading after the company said it plans to spend $6 billion to $8 billion of capital expenditures this year and in each of the next two years. 

Vaccine and antiviral stocks are climbing in pre-market trading after the World Health Organization (WHO) said the monkeypox outbreak is a public health emergency of international concern.  Chimerix (CMRX) is up +30%, and Tonix Pharmaceuticals Holding (TNXP) is up +24%.  Also, SIGA Technologies (SIGA) is up more than +22%, and Inovio Pharmaceuticals (INO) is up nearly +10%. 

Integral LifeSciences Holdings (IART) is up more than +1% in pre-market trading after Morgan Stanley initiated coverage of the stock with a recommendation of equal weight.

Ivanhoe Electric (IE) rose +3% in pre-market trading after BMO Capital Markets initiated coverage of the stock with an outperform rating.

MP Materials (MP) jumped +7% in pre-market trading after it was announced the company will replace Sanderson Farms in the S&P MidCap 400 prior to the opening of trading on July 27. 

Infrastructure and Energy Alternatives (IEA) surged +25% in pre-market trading after MasTec said it would acquire all of the company's outstanding shares in a cash-and-stock transaction valued at $14 per share. 

Snap Inc (SNAP) dropped nearly -2% in pre-market trading after Morgan Stanley downgraded the stock to underweight from overweight.

Cryptocurrency-exposed stocks are falling in pre-market trading, with the price of Bitcoin down nearly -3%.  Marathon Digital (MARA) is down more than -5%.  Also, Riot Blockchain (RIOT) is down more than -3%, and Coinbase Global (COIN) and MicroStrategy (MSTR) are down more than -2%. 

Phillips (PHG) tumbled -10% in pre-market trading after reporting Q2 comparable sales fell -6.6%, weaker than the consensus of -4.1%, and cut its full-year comparable sales estimate to up +1% to +3% from a prior view of up +3% to +5%.

Newmont (NEM) fell nearly -4% in pre-market trading after reporting Q2 adjusted EPS of 46 cents, weaker than the consensus of 65 cents. 

Lam Research (LRCX) slid more than -1% in pre-market trading after Barclays downgraded the stock to equal-weight from overweight.

Today’s U.S. Earnings Reports (7/25/2022)

Alexandria Real Estate Equities (ARE), Brown & Brown Inc (BRO), Cadence Design Systems Inc (CDNS), 

F5 Inc (FFIV), Newmont Corp (NEM), NXP Semiconductors NV (NXPI), Packaging Corp of America (PKG), Universal Health Services Inc (UHS), Whirlpool Corp (WHR).

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