Morning Markets
June E-Mini S&P 500 futures (ESM23) this morning are up +0.47%, and June Nasdaq 100 E-Mini futures (NQM23) are up +0.87%.
U.S. stock index futures this morning are moderately higher. Strength in technology stocks is lifting the overall market this morning, with Meta Platforms up more than +10% in pre-market trading after reporting better-than-expected Q1 revenue and forecasting Q2 revenue above consensus. Also, U.S. banking concerns eased, with First Republic Bank up more than +9%, recovering a bit after the -80% plunge in its stock price seen over the past two sessions.
However, stock indexes fell back from their best levels after this morning’s news that the U.S. economy grew less than expected in Q1. Also, bond yields jumped after weekly U.S. jobless claims unexpectedly fell, and the U.S. Q1 core PCE deflator rose more than expected.
U.S. Q1 GDP rose +1.1% (q/q annualized), weaker than expectations of +1.9%. Q1 personal consumption rose +3.7%, weaker than expectations of +4.0%. The Q1 core PCE deflator rose +4.9% (q/q annualized), stronger than expectations of +4.7%.
U.S. weekly initial unemployment claims unexpectedly fell -16,000 to 230,000, showing a stronger labor market than expectations of an increase to 248,000. Weekly continuing claims unexpectedly fell -3,000 to 1.858 million, showing a stronger labor market than expectations of an increase to 1.870 million.
The markets are showing an 86% chance of a 25 bp rate hike by the Federal Reserve at the May 2-3 FOMC meeting and have fully priced in a 25 bp rate hike by the ECB at its May 4 ECB meeting.
Global bond yields are higher. The 10-year T-note yield is up +3.8 bp at 3.486%. The 10-year German bund yield is up +2.9 bp at 2.426%. The 10-year UK gilt yield is up +1.1 bp at 3.740%.
On the bullish side for stocks, Meta Platforms is up more than +10% in pre-market trading after reporting stronger-than-expected Q1 revenue and forecasting Q2 revenue above consensus. Also, Eli Lilly is up more than +4% after reporting better-than-expected Q1 revenue and raising its full-year revenue forecast. In addition, Comcast is up more than +3% after reporting better-than-expected Q1 adjusted EPS.
On the bearish side, Tractor Supply is down more than -4% in pre-market trading after reporting weaker-than-expected Q1 comparable sales. Also, Southwest Airlines is down more than -4% after reporting Q1 operating revenue below consensus. In addition, Vornado Realty is down more than -13% after it said it would postpone dividends on its common shares until the end of 2023.
Overseas stock markets are higher. The Euro Stoxx 50 is up +0.32%. China’s Shanghai Composite closed up +0.67%, and Japan’s Nikkei Stock Index closed up +0.15%.
The Euro Stoxx 50 index today recovered from early losses and is moderately lower. Strength in drugmakers and pharmaceutical companies is leading the overall market higher today, following better-than-expected quarterly earnings results from Sanofi and AstraZeneca. Bank stocks also overcame early losses and moved higher after Barclays Plc climbed more than +2% after it unexpectedly reported a +9% increase in Q1 fixed-income trading revenue versus expectations of an -11% decline.
European bank stocks today initially moved lower after Deutsche Bank AG fell when it reported Q1 FIC sales and trading revenue of 2.36 billion euros, below the consensus of 2.53 billion euros. However, Deutsche Bank recovered from its losses and moved up nearly +2% after it announced it was cutting about 800 senior back-office staff.
Eurozone Apr economic confidence rose +0.1 to 99.3, weaker than expectations of 99.9.
China’s Shanghai Composite Stock Index today closed moderately higher. Chinese financial stocks led the overall market higher on strong Q1 earnings results from Ping An Insurance, as China’s rebound helped demand and investment returns. Utilities and healthcare stocks also moved higher as the recent pullback in Chinese equity markets has prompted investors to shift into more defensive stocks. However, weakness in Chinese bank stocks limited the upside in the overall market after China Merchants Bank fell nearly -4% after reporting weaker-than-expected Q1 earnings results. Some analysts said the weak earnings momentum may continue into the second half of this year due to rising property-related non-performing loans.
China Mar industrial profits fell -21.4% year-to-date y/y, slightly improving from Feb when profits fell -22.9%.
Japan’s Nikkei Stock Index today recovered from a 2-week low and closed slightly higher. Japanese technology stocks recovered from early losses and moved higher on positive comments from Samsung Electronics, which posted a record -$3.4 billion loss at its memory chip division in Q1. However, tech stocks rebounded when Samsung said it expects the global technology industry to begin emerging from its downturn later this year.
The markets are looking ahead to the results of the BOJ policy meeting that ends Friday, the first meeting with BOJ Governor Ueda at the helm. Market expectations are for no changes to monetary policy or the BOJ’s yield curve control. Earlier this month, BOJ Governor Ueda said the Japanese economy still needed stimulus, cooling any speculation of changes to BOJ policy in the near term.
The Japan Feb leading index CI was revised upward by +0.3 to a 4-month high of 98.0 from the initially reported 97.7.
Pre-Market U.S. Stock Movers
Meta Platforms (META) surged more than +10% in pre-market trading after reporting Q1 revenue of $28.65 billion, better than expectations of $27.67 billion and forecast Q2 revenue of $29.5 billion-$32 billion, stronger than the consensus of $29.48 billion.
First Republic Bank (FRC) jumped more than +8% in pre-market trading as the focus remains on whether it can find a buyer to shore up its finances.
Ebay (EBAY) climbed more than +3% in pre-market trading after it reported Q1 net revenue of $2.51 billion, better than the consensus of $2.48 billion, and forecasting Q2 net revenue of $2.47 billion-$2.54 billion, stronger than the consensus of $2.43 billion.
Comcast (CMCSA) rose more than +3% in pre-market trading after reporting Q1 adjusted EPS of 92 cents, above the consensus of 83 cents.
Northrop Gruman (NOC) gained more than +1% in pre-market trading after reporting Q1 sales of $9.30 billion, above the consensus of $9.19 billion.
Eli Lilly (LLY) climbed more than +4% in pre-market trading after reporting Q1 revenue of $6.96 billion, stronger than the consensus of $6.87 billion, and raised its full-year revenue forecast to $31.2 billion-$31.7 billion from a previous forecast of $30.3 billion-$30.8 billion, above the consensus of $30.62 billion.
Fidelity National Information Services (FIS) rose more than +3% in pre-market trading after reporting Q1 adjusted EPS of $1.29, better the consensus of $1.21, and raised its full-year adjusted EPS forecast to $5.76-$6.06 from a prior view of $5.70-$6.00, the midpoint above the consensus of $5.88.
Southwest Airlines (LUV) dropped more than -4% in pre-market trading after reporting Q1 operating revenue of $5.71 billion, weaker than the consensus of $5.73 billion.
Mobileye (MBLY) plunged more than -17% in pre-market trading after cutting guidance on full-year revenue to $2.07 billion-$2.11 billion from a previous estimate of $2.19 billion-$2.28 billion, well below the consensus of $2.25 billion.
Vornado Realty (VNO) sank more than -13% in pre-market trading after it said it would postpone dividends on its common shares until the end of 2023.
United Rentals (URI) tumbled more than -4% in pre-market trading after reporting Q1 adjusted EPS of $7.95, below the consensus of $8.04.
Tractor Supply (TSCO) fell more than -4% in pre-market trading after reporting Q1 comparable sales rose +2.1%, weaker than the consensus of +4.31%.
Wolfspeed (WOLF) sank more than -14% in pre-market trading after forecasting Q4 revenue of $212 million-$232 million, weaker than the consensus of $235.3 million.
Today’s U.S. Earnings Reports (4/27/2023)
A O Smith Corp (AOS), AbbVie Inc (ABBV), Altria Group Inc (MO), Amazon.com Inc (AMZN), American Airlines Group Inc (AAL), Amgen Inc (AMGN), Arthur J Gallagher & Co (AJG), Baxter International Inc (BAX), Bristol-Myers Squibb Co (BMY), Camden Property Trust (CPT), Capital One Financial Corp (COF), Caterpillar Inc (CAT), CBRE Group Inc (CBRE), CenterPoint Energy Inc (CNP), Church & Dwight Co Inc (CHD), Cincinnati Financial Corp (CINF), CMS Energy Corp (CMS),Comcast Corp (CMCSA), Dexcom Inc (DXCM), Digital Realty Trust Inc (DLR), Domino's Pizza Inc (DPZ), DTE Energy Co (DTE), Eastman Chemical Co (EMN), Eli Lilly & Co (LLY), Essex Property Trust Inc (ESS), Fair Isaac Corp (FICO), Fidelity National Information (FIS), First Solar Inc (FSLR), FirstEnergy Corp (FE), Gilead Sciences Inc (GILD), Hartford Financial Services Gr (HIG), Hasbro Inc (HAS), Healthpeak Properties Inc (PEAK), Hershey Co/The (HSY), Honeywell International Inc (HON), Intel Corp (INTC), International Paper Co (IP), Interpublic Group of Cos Inc/T (IPG), IQVIA Holdings Inc (IQV), Keurig Dr Pepper Inc (KDP), Kimco Realty Corp (KIM), L3Harris Technologies Inc (LHX), Linde PLC (LIN), LKQ Corp (LKQ), Mastercard Inc (MA), Merck & Co Inc (MRK), Mohawk Industries Inc (MHK), Mondelez International Inc (MDLZ), Newmont Corp (NEM), Northrop Grumman Corp (NOC), Pentair PLC (PNR), Principal Financial Group Inc (PFG), Quest Diagnostics Inc (DGX), Republic Services Inc (RSG), ResMed Inc (RMD), Rockwell Automation Inc (ROK), Roper Technologies Inc (ROP), S&P Global Inc (SPGI), Southern Co/The (SO), Southwest Airlines Co (LUV), Textron Inc (TXT), T-Mobile US Inc (TMUS), Tractor Supply Co (TSCO), Valero Energy Corp (VLO), VeriSign Inc (VRSN), West Pharmaceutical Services I (WST), Weyerhaeuser Co (WY), Willis Towers Watson PLC (WTW), WW Grainger Inc (GWW), Xcel Energy Inc (XEL).
On the date of publication, Rich Asplund 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.
