Morning Markets
June E-Mini S&P 500 futures (ESM23) this morning are up +0.03%, and June Nasdaq 100 E-Mini futures (NQM23) are up +0.16%.
U.S. stock index futures this morning recovered from overnight losses and posted modest gains after bond yields fell when weekly U.S. jobless claims jumped to a 19-month high. Market expectations for the Fed to raise the fed funds target range by +25 bp at next week’s FOMC meeting are 33%.
Stocks had initially moved lower this morning as technology stocks with elevated valuations were under pressure on Fed policy concerns after this week’s surprise interest rate increases from the Reserve Bank of Australia and Bank of Canada bolstered uncertainty about the Fed’s interest rate outlook.
U.S. weekly initial unemployment claims rose +28,000 to a 19-month high of 261,000, showing a weaker labor market than expectations of 235,000.
Global bond yields are mixed. The 10-year T-note yield fell back from a 1-1/2 week high of 3.819% and is down -1.7 bp at 3.778%. The 10-year German bund yield is down -1.2 bp at 2.444%, and the UK 10-year gilt yield rose to a 1-week high of 4.298% and is up +2.6 bp at 4.277%.
On the bullish side for stocks, Semtech surged more than +26% in pre-market trading after reporting stronger-than-expected Q1 net sales and forecasting Q2 net sales above consensus. Also, International Game Technology is up more than +3% after its board said it is evaluating potential options for its Global Gaming and PlayDigital segments, including a sale, merger, or spin-off. In addition, Adobe is up more than +2% after it said it is launching subscriptions for new generative AI features that will include copyright protection.
On the bearish side, Signet Jewelers tumbled more than -8% in pre-market trading after cutting its 2024 sales outlook. Also, Oxford Industries is down more than -6% after cutting its full-year sales forecast. In addition, Smartsheet is down more than -17% after forecasting 2024 revenue below consensus.
Overseas stock markets are mixed. The Euro Stoxx 50 is up +0.21%. China’s Shanghai Composite closed up +0.49%, and Japan’s Nikkei Stock Index closed down -0.85%.
The Euro Stoxx 50 index today is slightly higher. Gains in automakers and banking stocks offset losses in technology stocks, which are under pressure from elevated interest rates. Airlines are also climbing today, led by a +2% increase in Wizz Air Holdings Plc after it said it would return to profit this year as the peak summer travel season gets underway. In addition, mining stocks are moving higher on the strength in iron ore prices, which have rallied more than 13% over the past two weeks. On the negative side, Eurozone Q1 GDP was revised lower, while the 10-year German bund yield today rose to a 1-1/2 week high of 2.482%.
Eurozone Q1 GDP was revised downward to -0.1% q/q and +1.0% y/y from the previously reported unchanged q/q and +1.2% y/y.
China’s Shanghai Composite Stock Index today recovered from a 1-1/2 week low and closed moderately higher. Chinese financial stocks moved higher today as regulators vowed to push for more open markets and to guide more equity allocation. Also, Chinese bank stocks rallied after the country’s four largest lenders cut their yuan deposit rates. Goldman Sachs estimates the cuts, along with an earlier policy to reduce rates for agreement and call deposits, will help lower Chinese banks’ total funding costs by a total of 13 basis points in 6-9 months. Chinese automakers moved higher today after China’s passenger vehicle sales rose +7.3% m/m and +28.6% y/y to 1.74 million units. Also, China’s Commerce Ministry said it would launch nationwide promotions to boost vehicle sales in cities and new-energy vehicle sales in rural areas. The government will encourage financial institutions to roll out credit support measures for auto purchases and improve charging facilities for electric vehicles in rural areas.
Japan’s Nikkei Stock Index today moved lower for a second day and posted moderate losses. Profit-taking weighed on the Nikkei Stock Index for a second session after their sharp rally over the past 2-1/2 months to Wednesday’s 32-year high. Stocks were under pressure on concerns that this week’s action by the Reserve Bank of Australia and Bank of Canada to raise interest rates could potentially lead the Fed to continue its monetary tightening. Also, strength in the yen today weighed on exporter stocks. Rising bond yields were another bearish factor for stocks today after an upward revision to Japan’s Q1 GDP pushed the 10-year JGB bond yield up to a 1-1/2 week high of 0.445%.
Japanese economic news today was mixed for stocks. On the negative side, the May eco watchers survey outlook unexpectedly fell -1.2 to 54.4, weaker than expectations of an increase to 56.1. Conversely, Japan's Q1 GDP was revised upward to +2.7% (q/q annualized) from the previously reported +1.9%,
Pre-Market U.S. Stock Movers
Semtech (SMTC) surged more than +26% in pre-market trading after reporting Q1 net sales of $236.5 million, better than the consensus of $234.5 million, and forecasting Q2 net sales of $233 million-$243 million, the midpoint above the consensus of $237.4 million.
Adobe (ADBE) rose more than +2% in pre-market trading after it said it is launching subscriptions for new generative AI features that will include copyright protection.
Autoliv (ALV) climbed more than +3% in pre-market trading after it said it is accelerating its global cost reductions, including reducing its global direct headcount by around 6,000 positions.
International Game Technology (IGT) rose more than +3% in pre-market trading after its board said it is evaluating potential options for its Global Gaming and PlayDigital segments, including a sale, merger, or spin-off.
REV Group (REVG) surged more than +15% in pre-market trading after reporting Q2 net sales of $681.2 million, well above the consensus of $580.6 million, and raised its full-year sales forecast to $2.45 billion-$2.55 billion from a previous forecast of $2.30 billion-$2.50 billion, stronger than the consensus of $2.41 billion.
Trip.com (TCOM) advanced more than +3% in pre-market trading after reporting Q1 revenue of 9.21 billion yuan, above the consensus of 8.05 billion yuan.
4D Molecular Therapeutics (FDMT) soared more than +20% in pre-market trading after reporting participants in a Phase 1/2 clinical trial of an experimental gene therapy for treating cystic fibrosis showed meaningful improvement in cystic fibrosis-related quality of life.
Signet Jewelers (SIG) tumbled more than -8% in pre-market trading after cutting its 2024 sales outlook to $7.10 billion-$7.30 billion from a previous forecast of $7.67 billion-$7.84 billion, well below the consensus of $7.72 billion.
Oxford Industries (OXM) dropped more than -6% in pre-market trading after cutting its full-year sales forecast to $1.59 billion-$1.63 billion from a previous forecast of $1.62 billion-$1.66 billion, below the consensus of $1.64 billion.
Smartsheet (SMAR) sank more than -17% in pre-market trading after forecasting 2024 revenue of $943 million-$948 million, the midpoint below the consensus of $945.9 million.
HashiCorp (HCP) plunged more than -23% in pre-market trading after cutting its 2024 revenue forecast to $564 million-$570 million from a previous forecast of $59 1million-$595 million, well below the consensus of $593.4 million.
Wynn Resorts (WYNN) and Las Vegas Sands (LVS) fell more than -1% in pre-market trading after Jeffries downgraded both stocks to hold from buy.
Carrier Global (CARR) tumbled more than -3% in pre-market trading after Morgan Stanley downgraded the stock to equal weight from overweight.
Today’s U.S. Earnings Reports (6/8/2023)
American Software Inc/GA (AMSWA), Argan Inc (AGX), Arrow Financial Corp (AROW), Comtech Telecommunications Cor (CMTL), Concrete Pumping Holdings Inc (BBCP), Designer Brands Inc (DBI), DocuSign Inc (DOCU), Duckhorn Portfolio Inc/The (NAPA), F45 Training Holdings Inc (FXLV), FuelCell Energy Inc (FCEL), Hyzon Motors Inc (HYZN), Mission Produce Inc (AVO), Planet Labs PBC (PL), REV Group Inc (REVG), SecureWorks Corp (SCWX), Signet Jewelers Ltd (SIG), Toro Co/The (TTC), Transphorm Inc (TGAN), Urstadt Biddle Properties Inc (UBA), Vail Resorts Inc (MTN), Veradigm Inc (MDRX).
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.
