Morning Markets
June E-Mini S&P 500 futures (ESM23) this morning are down -0.26%, and June Nasdaq 100 E-Mini futures (NQM23) are down -0.21%.
U.S. stock index futures this morning are moderately lower as the markets await any new developments on the debt ceiling stalemate. President Biden will meet with House Speaker McCarthy later today after staff-level talks were held over the weekend.
Stock index futures maintained moderate losses after this morning’s news showed that U.S. Apr retail sales rose +0.4% m/m, weaker than expectations of +0.8% m/m. However, Apr retail sales ex-autos rose +0.4% m/m, right on expectations.
Global bond yields are mixed. The 10-year T-note yield is up +2.1 bp at 3.523%. The 10-year German bund yield is down -1.0 bp at 2.299%, and the UK 10-year gilt yield is down -3.6 bp at 3.780%.
On the bearish side for stocks, Home Depot dropped more than -2% in pre-market trading after reporting Q1 net sales that were below consensus and lowering guidance on its full-year comparable sales forecast. Also, Horizon Therapeutics is down more than -17% after Bloomberg reported that federal regulators would challenge the company’s sale to Amgen. RH is down more than -4% after a 13F filing showed Berkshire Hathaway exited its position in the stock in Q1.
On the bullish side, Beam Global surged more than +19% after reporting Q1 revenue that was well above consensus. Also, Capital One Financial is up more than +6% after a 13F filing showed Berkshire Hathaway added the stock to its portfolio in Q1. In addition, Gilead Sciences, Novocure, and Williams Cos were up +1% or more after being upgraded.
Overseas stock markets are mixed. The Euro Stoxx 50 is up +0.15%. China’s Shanghai Composite closed down -0.60%, and Japan’s Nikkei Stock Index closed up +0.73%.
The Euro Stoxx 50 index today is slightly higher. Strength in technology stocks is leading the overall market higher, sparked by a decline in European government bond yields. The upside is limited due to a bigger-than-expected decline in German investor sentiment after the German May ZEW survey expectations of economic growth index fell to a 5-month low. Also, weakness in telecom stocks weighed on the overall market, led by a -4% drop in Vodafone after it reported fiscal 2024 guidance for profits and free cash flow that was below estimates. In addition, Telecom Italia SpA was down more than -5% after a Bloomberg report said Cassa Depositi e Prestiti SpA and Macquarie Asset Management had pulled out of the bidding war for the company.
The German May ZEW survey expectations of economic growth index fell -14.8 to a 5-month low of -10.7, weaker than expectations of -5.0.
China’s Shanghai Composite Stock Index today closed moderately higher. Signs of a waning economic recovery weighed on Chinese stocks after today’s economic news on Apr industrial production and Apr retail sales rose less than expected. The news was disappointing even though the low comparison base was from last year when most of China was locked down. Also, Chinese property investment contracted -16.2% in April from a year earlier, even though home sales rose as construction of new homes continues to decline. Today’s weaker-than-expected economic news is fueling speculation that the PBOC may cut the reserve requirement ratio for banks or even cut interest rates as soon as next month.
China Apr industrial production rose +5.6% y/y, the biggest increase in 7 months but weaker than expectations of +10.9% y/y.
China Apr retail sales rose +18.4% y/y, the biggest increase in 2 years but still weaker than expectations of +21.4% y/y.
Japan’s Nikkei Stock Index today rallied to a 1-1/2 year high and closed moderately higher. Market sentiment toward Japanese stocks has improved. Goldman Sachs and Macquarie Group Ltd say the case for a bull run in Japanese stocks is solid, with easy monetary policy and corporate governance reforms set to boost valuation. Nikko Asset Management said, “Domestic and foreign investors are positive about Japan relative to the U.S. and Europe, as it does not face an imminent recession and has very low valuations.” In addition, a renewed push by Japanese companies to increase buybacks and focus on returns has boosted market sentiment.
Japanese utility stocks rallied today after the Japanese government said it would allow seven major power companies to raise household electricity prices from June. On the negative side, automakers declined, led by a -5% fall in Suzuki Motor after it forecasted operating profit below market consensus.
Pre-Market U.S. Stock Movers
Home Depot (HD) dropped more than -2% in pre-market trading after reporting Q1 net sales of $37.26 billion, below the consensus of $38.34 billion, and lowered guidance on its full-year comparable sales estimate to down -2% to -5% from a previous forecast of flat.
Horizon Therapeutics (HZNP) plunged more than -17% in pre-market trading after Bloomberg reported that the company’s sale to Amgen will be challenged by federal regulators.
Rumble (RUM) tumbled more than -7% in pre-market trading after reporting a Q1 loss per share of -14 cents versus a -2 cent loss per share last year.
First Watch Restaurant Group (FWRG) slid more than -2% in pre-market trading after funds managed by Advent International offered 3.5 million shares of the stock via Jeffries.
RH (RH) dropped more than -4% in pre-market trading after a 13F filing showed Berkshire Hathaway exited its position in the stock in Q1.
Duocommun (DCO) sank more than -10% in pre-market trading after offering 2 million shares via Goldman Sachs, Citigroup, RBC Capital Markets and B. Riley Securities.
Capital One Financial (COF) jumped more than +6% in pre-market trading after a 13F filing showed Berkshire Hathaway added the stock to its portfolio in Q1.
Beam Global (BEEM) surged more than +19% in pre-market trading after reporting Q1 revenue of $13 million, well above the consensus of $8.34 million.
Gilead Sciences (GILD) rose more than +1% in pre-market trading after BMO Capital Markets upgraded the stock to outperform from market perform.
Novocure (NVCR) jumped more than +4% in pre-market trading after Wells Fargo Securities upgraded the stock to overweight from equal weight with a price target of $104.
Amdocs Ltd (DOX) rose more than +2% in pre-market trading after Barclays upgraded the stock to overweight from equal weight with a price target of $115.
Williams Cos (WMB) gained more than -1% in pre-market trading after Citigroup upgraded the stock to buy from neutral.
Today’s U.S. Earnings Reports (5/16/2023)
Doximity Inc (DOCS), Home Depot Inc/The (HD), Keysight Technologies Inc (KEYS), Kyndryl Holdings Inc (KD).
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.
