June S&P 500 futures (ESM23) are trending up +0.34% this morning after three major U.S. benchmark indices ended the regular session higher as market participants digested the latest batch of corporate earnings while seeking more clarity on the Federal Reserve’s monetary policy stance.
In Monday’s trading session, Wall Street’s major averages posted modest gains, helped in part by financial and industrial stocks, with Charles Schwab Corp (SCHW) climbing more than +3% after the financial services provider topped analysts’ expectations on Q1 profit. In addition, Prometheus Biosciences Inc (RXDX) surged over +69% after Merck agreed to acquire the company in a $10.8B deal. At the same time, State Street (STT) plunged more than -9% and was the top percentage loser on the S&P 500 after the custodian bank reported weaker-than-expected Q1 results. Also, Alphabet Inc (GOOGL) fell over -2% following a report that Microsoft’s Bing might replace Alphabet’s Google as the default search engine on Samsung smartphones.
Data on Monday showed the U.S. NY Empire State Manufacturing index rose to a 9-month high of 10.80, stronger than expectations of -18.00, supporting the case for the U.S. central bank to hike interest rates in May. Also, U.S. NAHB Housing Market Index rose to a 7-month high of 45, slightly above expectations of 44.
Richmond Fed President Thomas Barkin said Monday that he wants to see more evidence that U.S. inflation is settling back to the central bank’s 2% target.
U.S. rate futures have priced in an 85.4% chance of a 25 basis point rate increase and a 14.6% chance of no hike at the May FOMC meeting.
Meanwhile, global companies like J&J (JNJ), Bank of America (BAC), Netflix (NFLX), Lockheed Martin (LMT), and Goldman Sachs (GS) are slated to release their quarterly results today. Analysts expect aggregate S&P 500 earnings to notch a 4.8% year-over-year decline for the quarter, a modest improvement from last week’s forecast of a 5.2% drop.
Today, all eyes are focused on the U.S. Building Permits preliminary data in a couple of hours. Economists, on average, forecast that March Building Permits will stand at 1.450M, compared to the previous value of 1.550M.
Also, investors are likely to focus on U.S. Housing Starts data, which was at 1.450M in February. Economists foresee the new figure to be 1.400M.
In addition, investors will likely focus on a speech from Federal Reserve Governor Michelle Bowman for fresh clues on the outlook for rates.
In the bond markets, United States 10-Year rates are at 3.600%, up +0.26%.
The Euro Stoxx 50 futures are up +0.49% this morning as investors digested Chinese economic data that pointed to an uneven rebound while awaiting more U.S. bank earnings to assess the sector’s health. Meanwhile, strength in travel, bank, and luxury stocks is lending support to the overall market. In corporate news, shares of Telefonaktiebolaget Lm Ericsson (ERICB.S.DX) plunged over -6% after the company reported better-than-expected Q1 results but warned that a pullback in 5G spending in some of its more mature markets was set to continue.
U.K.’s Average Earnings Index +Bonus, U.K.’s Claimant Count Change, U.K.’s Employment Change 3M/3M, U.K.’s Unemployment Rate, Germany’s ZEW Current Conditions, Germany’s ZEW Economic Sentiment, and Eurozone’s ZEW Economic Sentiment data were released today.
U.K. February Average Earnings Index +Bonus has been reported at 5.9%, stronger than expectations of 5.1%.
U.K. March Claimant Count Change stood at 28.2K, weaker than expectations of 10.2K.
U.K. February Employment Change 3M/3M came in at 169K, stronger than expectations of 50K.
U.K. February Unemployment Rate was at 3.8%, weaker than expectations of 3.7%.
The German April ZEW Current Conditions stood at -32.5, stronger than expectations of -40.0.
The German April ZEW Economic Sentiment came in at 4.1, weaker than expectations of 15.3.
Eurozone April ZEW Economic Sentiment was at 6.4, weaker than expectations of 13.0.
Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.23%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.51%.
China’s Shanghai Composite today closed slightly higher as optimism over stronger-than-expected economic growth was largely offset by some disappointing sub-data, including property investment and industrial output. China’s economy grew by +4.5% y/y in the first quarter of 2023, marking the highest growth since the first quarter of last year as consumers ramped up spending. Also, the Chinese March retail sales showed the biggest bounce since June 2021, indicating that a consumption-driven recovery in the country’s economy is mainly on track. At the same time, China’s industrial production missed estimates for a second straight month in March, pointing to an uneven recovery trend. In addition, property investment declined -5.8% in January-March from a year earlier, after a -5.7% drop in the first two months.
“The better-than-expected economic data shatters worries for a weak recovery, but it’s not showing a strong recovery either. Consumption is strong, which shows demand is picking up, but we are also seeing structural problems persisting in the youth unemployment rate, property investment, and confidence in the private sector,” said Tao Chuan, a chief macro analyst at Soochow Securities.
The Chinese GDP has been reported at +2.2% q/q and +4.5% y/y in the first quarter, compared to expectations of +2.2% q/q and +4.0% y/y.
The Chinese March Industrial Production stood at +3.9% y/y, weaker than expectations of +4.0% y/y.
The Chinese March Retail Sales came in at +10.6% y/y, stronger than expectations of +7.4% y/y.
The Chinese March Unemployment Rate was 5.3%, stronger than expectations of 5.5%.
At the same time, Japan’s Nikkei 225 Stock Index closed higher for an eighth straight session, marking its longest winning streak since March 2022 as a weaker yen lifted export-oriented stocks, while bank stocks extended gains on positive earnings surprises from their U.S. peers. Meanwhile, Chiba Bank Ltd led gains on the Nikkei, climbing more than +3%, while Resona Holdings Inc rose about +2%. Also, Mazda Motor Corp rose over +1% after the Japanese yen hit its weakest level in a month. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down 1.45% and hit a new 1-month low of 16.36.
Pre-Market U.S. Stock Movers
Avenue Therapeutics Inc (ATXI) soared about +17% in pre-market trading after the company provided an update from a Type C meeting with the FDA for Tramadol.
NVIDIA Corporation (NVDA) climbed more than +2% in pre-market trading after HSBC upgraded the stock to buy from reduce.
CVS Health Corp (CVS) gained over +1% in pre-market trading after announcing that Brian Kane will join the company as president of its Aetna business, effective September 1st.
Tyler Technologies Inc (TYL) rose about +1% in pre-market trading after Goldman Sachs upgraded the stock to buy from neutral.
Enovix Corp (ENVX) slid over -2% in pre-market trading after the company announced its intent to offer a $150M aggregate principal amount of Convertible Senior Notes due 2028.
Toronto Dominion Bank (TD) rose over +1% in pre-market trading after CIBC upgraded the stock to outperformer from neutral.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Tuesday - April 18th
J&J (JNJ), Bank of America (BAC), Netflix (NFLX), Lockheed Martin (LMT), Goldman Sachs (GS), Prologis (PLD), Intuitive Surgical (ISRG), Bank of NY Mellon (BK), Interactive Brokers (IBKR), Omnicom (OMC), United Airlines Holdings (UAL), First Horizon National (FHN), Commerce Bancshares (CBSH), Mueller Industries (MLI), Western Alliance (WAL), Hancock Whitney (HWC), United Community Banks (UCBI), Fulton (FULT), Nicolet Bankshares (NIC), Preferred Bank (PFBC), Bank First National (BFC), Foreign Trade Bank of Latin America (BLX), PAM (PTSI), Mercantile (MBWM), Equity Bancshares Inc (EQBK), Metropolitan Bank (MCB), Parke (PKBK), Orrstown (ORRF), Heartland Banccorp (HLAN), Ellsworth Convertible Growth (ECF).
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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.
