Morning Markets
September S&P 500 futures (ESU22) this morning are down -0.98%. Stock index futures are falling this morning on concern the Fed will maintain its aggressive rate-hake path. Comments Thursday from St. Louis Fed President Bullard and Kansas City Fed President George, two voting FOMC members, emphasized the Fed will continue to raise interest rates until inflation eases back to the Fed’s 2% target. The 10-year T-note yield jumped to a 4-week high today at 2.972%.
A more than -5% drop in Deere & Co in pre-market trading today is also weighing on the overall market after the company trimmed its annual profit forecast. Also, Ross Stores is down more than -1% in pre-market trading after reporting weaker-than-expected Q2 sales, and Meta Platforms is down more than -2% after Morgan Stanley cut their price target on the stock.
The Euro Stoxx 50 today fell to a 1-week low and is down -0.62%. Real estate and travel and leisure stocks led losses in the overall market today as bond yields jumped. Rising German producer prices boosted European government bond yields today and undercut stocks. German July PPI surged to a record +37.2% y/y, which hammered government bond prices and pushed the 10-year German bund up to a 4-week high of 1.237%. Also, the UK 10-year gilt yield climbed to a 1-1/2 month high today at 2.457%.
German July PPI rose a record +37.2% y/y, stronger than expectations of +31.8% y/y.
Asian markets today closed lower. China’s Shanghai Composite index today closed down -0.59%, and Japan’s Nikkei index closed down -0.04%.
Chinese stocks were under pressure today on economic concerns after Goldman Sachs and Nomura Holdings this week both downgraded their China growth forecasts for this year. Also, the yuan fell to a 1-3/4 year today at 6.8183 yuan/USD on Chinese economic concerns and central bank divergence as the PBOC continues to cut interest rates while the Fed and ECB are raising rates. In addition, long liquidation pressures weighed on Chinese stocks ahead of next week’s heavy slate of earnings announcements from more than 300 companies, including tech giants Meituan and JD.com.
Japan’s Nikkei Stock Index posted modest losses today. Stocks fell back today on concerns the U.S. economy will slow after hawkish Fed comments Thursday signaled the Fed may continue its aggressive rate-hike path. Strength in chip-related stocks limited losses in the overall market after Applied Materials gave an upbeat sales forecast, saying it can weather the economic slowdown afflicting the industry. Japanese exports also gained today after the yen fell to a 3-week low against the dollar, boosting exporters’ earnings prospects.
Japan's July national CPI ex-fresh food and energy rose +1.2% y/y, stronger than expectations of +1.1% y/y and the fastest pace of increase in 6-1/2 years.
Pre-Market U.S. Stock Movers
Meta Platforms (META) fell nearly -2% in pre-market trading after Morgan Stanley cut their price target on the stock to $225 from $280, saying the company’s shift toward Reels and declining user engagement pose a risk to its revenue growth.
Deere & Co (DE) tumbled more than -5% in pre-market trading after narrowing its net income forecast for the full year to $7.0 billion-$7.2 billion from a prior forecast of $7 billion-$7.4 billion.
Ross Stores (ROST) slipped -1% in pre-market trading after reporting Q2 sales of $4.58 billion, weaker than the consensus of $4.63 billion, and cutting its 2023 EPS forecast to $3.84-$4.12 from a prior forecast of $4.34-$4.48, below the consensus of $4.36.
Cryptocurrency-exposed stocks tumbled in pre-market trading, with the price of Bitcoin plunging more than -8% to a 3-week low. Marathon Digital (MARA) is down more than -11%. Riot Blockchain (RIOT) is down more than -9%. Coinbase Global (COIN) is down more than -7%, and Hut 8 Mining (HUT) is down more than -4%.
HP Inc (HPQ) dropped more than -3% in pre-market trading after Wells Fargo Securities downgraded the stock to underweight from equal weight.
Bed Bath & Beyond (BBBY) plummeted more than -40% in pre-market trading, adding to Thursday’s -19% plunge after RC Ventures disclosed in a regulatory filing that it sold its stake in the company. RC Ventures is the second-largest holder of Bed Bath & Beyond stock.
Foot Locker (FL) surged +20% in pre-market trading after reporting Q2 adjusted EPS of $1.10, well above the consensus of 80 cents, and raised its forecast for full-year gross margins to 31.1%-31.2%, higher than a previous estimate of 30.1%-30.3%.
Applied Materials (AMAT) rose more than +1% in pre-market trading after reporting Q3 net sales of $6.52 billion, stronger than the consensus of $6.26 billion.
Bill.com (BILL) jumped more than +15% in pre-market trading after reporting Q4 total revenue of $200.2 million, better than the consensus of $183.6 million, and forecast full-year total revenue of $955.5 million to $973.5 million, well above the consensus of $892.6 million.
Today’s U.S. Earnings Reports (8/19/2022)
Bowlero Corp (BOWL), Buckle Inc/The (BKE), Deere & Co (DE), Foot Locker Inc (FL), Madison Square Garden Entertainment (MSGE), P3 Health Partners Inc (PIII), Republic First Bancorp Inc (FRBK).
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