Stocks Modestly Lower on Global Economic Concerns

Morning Markets

September S&P 500 futures (ESU22) this morning are down -0.17%.  Concerns about the global economy are weighing on U.S. stock indexes today after Monday’s economic data from China and the U.S point to a slowdown in growth.  Stock indexes maintained modest losses on this morning’s mixed housing data that showed U.S housing starts fell more than expected, but building permits fell less than expected.

Strength in big-box retailers in pre-market trading is limiting the downside in stock index futures after Walmart rose more than +3% after reporting better-than-expected Q2 EPS and modestly improved its full-year sales forecast.

U.S. housing data today was mixed.  On the negative side, July housing starts fell -9.6% m/m to a 17-month low of 1.446 million, weaker than expectations of 1.527 million.  Conversely, July building permits, a proxy for future construction, fell -1.3% m/m to 1.674 million, stronger than expectations of 1.640 million.

The Euro Stoxx 50 today is up +0.33%.  The Euro Stoxx 50 climbed to a 2-1/4 month high today and is slightly higher.   Strength in basic resource stocks, miners, and telecommunication companies are leading the overall market higher today.  European stocks fell back from their best levels today after a gauge of German investor confidence unexpectedly fell to a 13-year low.

The German Aug ZEW survey expectations of economic growth unexpectedly fell -1.5 to a 13-year low of -55.3, weaker than expectations of an increase to -52.7.

Asian markets today settled mixed.  China’s Shanghai Composite index today climbed to a 2-1/2 week high and closed up +0.05%.  Japan’s Nikkei index fell back from a 7-1/2 month high and closed down -0.01%. Chinese property stocks rallied today to lead gainers in the overall market after news that Chinese authorities plan to help raise fresh financing for property developers.  State-owned credit support provider China Bond Insurance Co. will give full guarantees to several property developers for some of their upcoming onshore bond offerings.  Chinese stocks gave up nearly all of their advance after Tencent Holding said it plans to sell all or most of its $24 billion stake in food-delivery company Meituan to appease Chinese regulators.

Japan’s Nikkei Stock Index fell from a new 7-1/4 month high today and closed slightly lower.  Concerns about a slowdown in global economic growth weighed on Japanese stocks after Monday’s economic data from China and the U.S. disappointed. Also, weak Japanese economic data weighed on equities after the Japan June tertiary industry activity index unexpectedly fell -0.2% m/m, weaker than expectations of +0.4% m/m.

Pre-Market U.S. Stock Movers

Zoom Video Communications (ZM) dropped -3% in pre-market trading after Citigroup downgraded the stock to sell from neutral, saying it sees “new hurdles to sustaining growth.” 

U.S.-listed Chinese stocks are moving lower in pre-market trading after Tencent Holdings said it plans to sell most of its stake in food delivery company Meituan in an effort to appease Chinese regulators.  Pinduoduo (PDD) is down more than -3%.  Also, JD.com (JD) and Alibaba Group Holding (BABA) are down more than -2%.  In addition, Baidu (BIDU) and NetEase (NTES) are down more than -1%. 

Snowflake (SNOW) slid more than -3% in pre-market trading after a 13D filing showed that Tiger Global Management cut its position in the stock for the first time in eight quarters.

Coupang (CPNG) fell -1% in pre-market trading after CSLA downgraded the stock to sell from outperform.

Home Depot (HD) fell -0.5% in pre-market trading after reporting Q2 customer transactions fell -3% following an -8% drop in Q1.

Walmart (WMT) climbed more than +3% in pre-market trading after reporting Q2 adjusted EPS of $1.77, above the consensus of $1.63, and raising its full-year adjusted EPS estimate to down -9% to -11% from a previous estimate of down -11% to -13%.  Target (TGT) and Costco Wholesale (COST) both rose +1% in pre-market trading on the Walmart news.

On Holding (ONON) rose more than +2% in pre-market trading after reporting Q2 net sales of $291.7 million Canadian dollars, better than the consensus of $239.8 million. 

Nubank (NU) jumped more than +12% in pre-market trading after reporting Q2 total revenue of $1.16 billion, above the consensus of $1.01 billion. 

Ginkgo Bioworks (DNA) surged more than +20% in pre-market trading after reporting Q2 total revenue of $144.6 million, well above the consensus of $77.6 million.

Today’s U.S. Earnings Reports (8/16/2022)

Agilent Technologies Inc (A), Home Depot Inc/The (HD), Jack Henry & Associates Inc (JKHY), Walmart Inc (WMT).

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