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Oleksandr Pylypenko

S&P Futures Tick Lower as Focus Shifts to Fed Meeting

June S&P 500 futures (ESM23) are trending down -0.16% this morning after three major U.S. benchmark indices finished the regular session lower as investors weighed First Republic rescue while bracing for central bank meetings, a deluge of quarterly earnings reports, and crucial U.S. economic data.

In Monday’s trading session, the financial sector was in focus, with shares of JPMorgan Chase & Co (JPM) rising over +2% after the big bank came on top as the winner of a weekend auction for failed regional lender First Republic Bank. JPMorgan acquired about $173 billion of First Republic’s loans, $30 billion of securities, and $92 billion of deposits. JPMorgan CEO Jamie Dimon said the deal would help stabilize the banking system. At the same time, the KBW Nasdaq Regional Banking Index dropped over -2%, with PNC Financial Services Group Inc (PNC) and Citizens Financial Group Inc (CFG) plunging over -6%.

Data on Monday showed U.S. ISM Manufacturing PMI stood at 47.1 in April, stronger than expectations of 46.8 as new orders improved marginally and employment rebounded. Also, U.S. March Construction Spending came in at +0.3% m/m, stronger than expectations of +0.1% m/m.

First-quarter earnings season heats up, with investors anticipating new reports from big-name companies, including Pfizer (PFE), AMD (AMD), Starbucks (SBUX), Uber Tech (UBER), Thomson Reuters (TRI), Marriott Int (MAR), and Ford Motor (F). Analysts expect aggregate S&P 500 earnings to notch a 1.9% year-over-year decline for the quarter, compared with an expected drop of 5.1% at the start of April.

The Federal Reserve kicks off its two-day meeting later in the day, with investors widely anticipating the Fed to raise rates by 25 basis points on Wednesday. Also, market participants will be closely watching Fed Chair Jerome Powell’s post-decision press conference for clues on the future of monetary policy. Meanwhile, the European Central Bank is expected to lift interest rates by 25 basis points on Thursday.

“We expect the Committee to signal that it anticipates pausing in June but retains a hawkish bias, stopping earlier than it initially envisioned because bank stress is likely to cause a tightening of credit,” Goldman Sachs said in a note.

Today, all eyes are focused on the U.S. JOLTs Job Openings data in a couple of hours. Economists, on average, forecast that March JOLTs Job Openings will come in at 9.775M, compared to the previous value of 9.931M.

Also, investors will likely focus on U.S. Factory Orders data, which stood at -0.7% m/m in February. Economists foresee the new figure to be +1.1% m/m.

In the bond markets, United States 10-Year rates are at 3.530%, down -1.23%.

The Euro Stoxx 50 futures are down -0.25% this morning as investors digested a slew of important regional economic data as well as corporate earnings results ahead of the start of the crucial Federal Reserve policy meeting. Meanwhile, bank and technology stocks are outperforming, with HSBC Holdings Plc (HSBA.LN) climbing over +4% after the lender reported upbeat first-quarter results and announced the reinstatement of a quarterly dividend and a $2 billion share buyback program. On the economic front, Eurozone headline inflation accelerated in April, but core inflation unexpectedly slowed for the first time in 10 months. In other earnings news, BP Plc (BP.L.EB) plunged over -4% after the energy giant topped first-quarter earnings expectations on strong oil and gas trading but pared back its share buyback program.

Germany’s Retail Sales, Spain’s Manufacturing PMI, Italy’s Manufacturing PMI, France’s Manufacturing PMI, Germany’s Manufacturing PMI, Eurozone’s Manufacturing PMI, U.K.’s Manufacturing PMI, Italy’s CPI (preliminary), Eurozone’s CPI (preliminary), and Eurozone’s Core CPI (preliminary) data were released today.

The German March Retail Sales stood at -2.4% m/m and -8.6% y/y, weaker than expectations of +0.4% m/m and -6.1% y/y.

The Spanish April Manufacturing PMI came in at 49.0, in line with expectations.

The Italian April Manufacturing PMI was at 46.8, weaker than expectations of 49.0.

The French April Manufacturing PMI stood at 45.6, stronger than expectations of 45.5.

The German April Manufacturing PMI has been reported at 44.5, stronger than expectations of 44.0.

Eurozone April Manufacturing PMI came in at 45.8, stronger than expectations of 45.5.

U.K. April Manufacturing PMI was at 47.8, stronger than expectations of 46.6.

The Italian April CPI stood at +0.5% m/m and +8.3% y/y, stronger than expectations of +0.3% m/m and +8.2% y/y.

Eurozone April CPI has been reported at +0.7% m/m and +7.0% y/y, compared to expectations of +0.9% m/m and +7.0% y/y.

Eurozone April Core CPI came in at +1.0% m/m and +5.6% y/y, weaker than expectations of +1.1% m/m and +5.7% y/y.

Japan’s Nikkei 225 Stock Index (NIK) closed up +0.12%, while the Chinese market was closed for a holiday.

Japan’s Nikkei 225 Stock Index closed higher today but well below its session highs as jitters around the U.S. banking system weighed on financial stocks. At the same time, the Japanese yen dropped to a nearly two-month low, lifting shares of export-oriented companies. Chip-related stocks also gained ground, with Renesas Electronics Corp climbing more than +3%. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up 2.63% to 15.62. Tokyo markets will be closed for the rest of the week to celebrate Japan’s Golden Week holidays.

Meanwhile, the Reserve Bank of Australia unexpectedly lifted interest rates by 25 basis points to 3.85% and flagged more potential increases as inflation remains too high. The RBA also warned that economic growth is set to slow. 

“Given the importance of returning inflation to target within a reasonable timeframe, the board judged that a further increase in interest rates was warranted today,” said Reserve Bank Governor Philip Lowe.

Pre-Market U.S. Stock Movers

Chegg Inc (CHGG) tumbled over -44% in pre-market trading after the company reported upbeat Q1 results but posted weaker-than-expected Q2 revenue guidance and warned ChatGPT was having a financial impact on its results.

NXP Semiconductors NV (NXPI) climbed more than +4% in pre-market trading after the company reported better-than-expected Q1 results and issued upbeat Q2 guidance. 

STAG Industrial Inc (STAG) gained over +6% in pre-market trading after entering S&P MidCap 400 index.

BlackBerry Ltd (BB) rose about +8% in pre-market trading after announcing that its Board of Directors will initiate a review of its portfolio of businesses and consider whether to separate one or more of them to maximize shareholder value. 

Dell Technologies Inc (DELL) gained over +2% in pre-market trading after Morgan Stanley upgraded the stock to overweight from equal weight with a price target of $55, up from $45.

Shoals Technologies Group Inc (SHLS) dropped over -3% in pre-market trading after Barclays downgraded the stock to underweight from equal weight.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Tuesday - May 2nd

Pfizer (PFE), AMD (AMD), Starbucks (SBUX), Illinois Tool Works (ITW), Eaton (ETN), Uber Tech (UBER), Thomson Reuters (TRI), Marriott Int (MAR), Ford Motor (F), Ecolab (ECL), Simon Property (SPG), IDEXX Labs (IDXX), Energy Transfer (ET), Sysco (SYY), Welltower (WELL), Cheniere Energy (LNG), MPLX LP (MPLX), AmerisourceBergen (ABC), Cummins (CMI), Ametek (AME), Restaurant Brands Int (QSR), DuPont De Nemours (DD), Public Service Enterprise (PEG), Prudential Financial (PRU), Franco-Nevada (FNV), ONEOK (OKE), Zimmer Biomet (ZBH), Edison (EIX), Yum China Holdings (YUMC), T Rowe (TROW), Gartner (IT), Extra Space Storage (EXR), Clorox (CLX), Howmet (HWM), Expeditors Washington (EXPD), Paycom Soft (PAYC), Broadridge (BR), Incyte (INCY), Zebra (ZBRA), AerCap Holdings NV (AER), Leidos (LDOS), Jack Henry&Associates (JKHY), Sarepta (SRPT), Life Storage (LSI), Penumbra Inc (PEN), American Financial (AFG), Match Group (MTCH), Caesars (CZR), Logitech (LOGI), Renaissancere (RNR), AGCO (AGCO), Repligen (RGEN), Unum (UNM), National Retail Properties (NNN), Inspire Medical Systems (INSP), Graphic Packaging (GPK), Voya Financial Inc (VOYA), Axalta Coating Systems (AXTA), Sealed Air (SEE), Assurant (AIZ), Credit Acceptance (CACC), Omega Healthcare (OHI), Evoqua Water (AQUA), ADT (ADT), Littelfuse (LFUS), Murphy USA Inc (MUSA), IPG Photonics (IPGP), Super Micro Computer (SMCI), CCC Intelligent Solutions Holdings (CCCS), Ashland Global (ASH), Ufp Industries (UFPI), Workiva Inc (WK), DT Midstream (DTM), EnLink Midstream LLC (ENLC), Triton Int (TRTN), Colliers International (CIGI), Valaris (VAL), Bright Horizons (BFAM), The Hanover Insurance (THG), Franklin Electric (FELE), Phillips Edison Co (PECO), Insight Enterprises (NSIT), Western Union (WU), Premier Inc (PINC), Freshworks (FRSH), Arrowhead Pharma (ARWR), Sunoco LP (SUN), Livent (LTHM), Grand Canyon Education (LOPE), ESAB Corp (ESAB), Federal Signal (FSS), Comstock Resources (CRK), InMode (INMD), MDC (MDC), Sage Therapeutic (SAGE), Scorpio Tankers (STNG), Omnicell (OMCL), Artisan Partners AM (APAM), LGI Homes (LGIH), Pacific Biosciences (PACB), PJT Partners Inc (PJT), Dorman (DORM), Mercury (MRCY), Sprout Social (SPT), Mister Car Wash (MCW), Alliance Resource (ARLP), Crestwood Equity Partners LP (CEQP), Douglas Emmett (DEI), CommVault (CVLT), Fannie Mae (FNMA), Arconic (ARNC), Lumen Technologies (LUMN), Perficient (PRFT), Equitrans Midstream (ETRN), Kadant (KAI), AtriCure (ATRC), Consol Energy (CEIX), USA Compression Partners LP (USAC), Viavi Solutions (VIAV), Harmony Bio (HRMY), Enpro Industries (NPO), Piper Sandler (PIPR), NMI Holdings (NMIH), Trinity Industries (TRN), Camping World Holdings (CWH), Adtalem Education (ATGE), eXp World (EXPI), Mercury General (MCY), Granite Construction (GVA), Claros Mortgage Trust (CMTG), Gulfport Energy Operating (GPOR), Equinox Gold (EQX), The Andersons (ANDE), Huron (HURN), Herbalife (HLF), Textainer (TGH).

More Stock Market News from Barchart

On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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