U.S. Stocks See Support as T-note Yield Eases

Morning Markets

September S&P 500 futures (ESU22) this morning are up +0.53%.  Stocks are seeing support from strong overseas stock markets and today’s -3.3 bp decline in the 10-year T-note yield to 2.794%.  The 10-year T-note yield this morning is easing a bit after last Friday’s +14 bp surge to a 2-week high of 2.827% on the stronger-than-expected U.S. payroll report.

Taiwan tensions continue after China’s military today announced new military exercises around Taiwan focused on antisubmarine and air-to-sea strikes.  The previous 4-day set of exercises ended Sunday.  China is keeping up the pressure on Taiwan after House Speaker Pelosi’s visit to Taiwan last week.  However, Reuters reports that China today did not announce specific locations for its new exercises and there were no “new notices to airmen” (NOTAM) from China. Reuters reports that civilian air traffic around Taiwan is slowly returning to normal despite the new Chinese drills. Bloomberg reports that shipping around Taiwan is also returning to normal.

The Senate on Sunday passed the $430 billion Inflation Reduction Act, which is focused on climate change and health care spending, and also contains a reduction in the federal budget deficit.  The House is expected to pass the bill within the next two weeks and send it to President Biden for his signature.

The markets are watching the situation in Ukraine as warnings grow about a potential nuclear disaster after Russia launched shells near Ukraine’s Zaporizhzhia nuclear power plant.  The power plant is occupied by Russian troops and run by Ukrainian technicians, but the Russian military reportedly shelled a nearby area and may have damaged electrical cables that supply electricity to the nuclear power plant.

The markets are looking ahead to Wednesday’s U.S. CPI report for indications of whether inflation is peaking.  A stronger-than-expected CPI report on Wednesday could solidify expectations for another large Fed rate hike at its next meeting in September, which were sparked by last Friday’s much stronger-than-expected U.S. July payroll report of +528,000 (vs expectations of +250,000).   The consensus is for Wednesday’s July CPI report to show an increase of +0.2% m/m and +8.7% y/y, down from June’s report of +1.3% m/m and +9.1% y /y.  The July core CPI is expected at +0.5% m/m and +6.1%, compared with June’s report of +0.7% m/m and +5.9% y/y.

The Euro Stoxx 50 today is up +1.04%.  China’s Shanghai Composite index today closed up +0.31%.  Japan’s Nikkei index today closed up +0.26%.

Pre-Market U.S. Stock Movers

Renewable energy stocks are seeing support today after the Senate on Sunday passed the bill with $369 billion in new climate spending.  Tesla (TSLA) is up +2.2% in pre-market trading. Other electric vehicle makers such as Rivian Automotive (RIVN) and Lucid Group (LCID) are trading at least 1% higher.  Hydrogen and fuel cell company Plug Power (PLUG)  is up +4.9%.

Solar companies are higher in pre-market trading.  First Solar (FSLR) is up +6.3% in pre-market trading, and Sunrun (RUN) is up +5.0%.  Array Technologies (ARRY) is up +2.8%, Enphase Energy (ENPH) is up +2.0%, and SolarEdge Technologies (SEDG) is up +2.3%. 

Crypto stocks seeing support this morning as Bitcoin (^BTCUSD) is up +3.6%, reaching a 2-month high and rising above $24,000.  Coinbase (COIN) is sharply higher by +8.2% in pre-market trading.  Marathon Digital (MARA) is up +8.8%, Riot Blockchain (RIOT) is up +7.3%.

Palantir (PLTR) is down more than -14% in pre-market trading after its revenue guidance missed the consensus.

Carvana (CVNA) is down -2.8% in pre-market trading after a ratings cut to Underweight by JPMorgan, which said it views the risk-reward as “unattractive” due to full valuation and limited growth visibility.

BioNTech (BNTX) is down -8.4%% in pre-market trading after an earnings miss.

Today’s U.S. Earnings Reports (8/8/2022)

American International Group (AIG), Dominion Energy Inc (D), International Flavors & Fragrance (IFF), 

News Corp (NWSA), ONEOK Inc (OKE), Principal Financial Group Inc (PFG), Take-Two Interactive Software (TTWO), Tyson Foods Inc (TSN), Viatris Inc (VTRS).

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