Morning Markets
December E-Mini S&P 500 futures (ESZ23) are down -0.21%, and Dec Nasdaq 100 E-Mini futures (NQZ23) are down -0.27%.
Stock index futures this morning are moderately lower. Stocks are also under pressure this morning after Moody’s Investors Service late Friday cut its outlook on the U.S. credit rating to negative from stable, citing wider budget deficits and political polarization. U.S. lawmakers have until Friday night to pass a stopgap spending bill before funding runs out and the government shuts down.
The markets are awaiting Tuesday’s U.S. consumer price report for October for market direction. The consensus is for Oct CPI to ease to 3.3% y/y from +3.7% y/y in Sep.
On the negative side for stocks, Tyson Foods is down more than -3% in pre-market trading after reporting Q4 sales below consensus. Also, Henry Schein is down more than -4% after reporting Q3 sales below consensus, while Tower Semiconductor Ltd is down more than -7% after reporting weaker-than-expected Q3 revenue and forecasting Q4 revenue below consensus.
On the positive side, Monday.com is up more than +8% after reporting Q3 adjusted EPS above consensus. Also, Boeing is up more than +3% after China said it was considering ending a freeze on its purchases of Boeing’s airliners. In addition, HP Inc and Crowdstrike Holdings are up more than +1% after being upgraded to buy.
The markets are discounting a 14% chance for a +25 bp rate hike at the next FOMC meeting on Dec 12-13 FOMC and a 39% chance for that +25 bp rate hike at the following FOMC meeting on Jan 30-31, 2024. The markets are then expecting the FOMC to begin cutting rates later in 2024 in response to an expected slowdown in the U.S. economy.
U.S. and European government bond yields today are mixed. The 10-year T-note yield is up +0.6 bp at 4.660%. The 10-year German bund yield is down -1.2 bp at 2.705%. The 10-year UK gilt yield is down -0.5 bp at 4.331%.
Overseas stock markets are higher. The Euro Stoxx 50 is up +0.50%. China’s Shanghai Composite Index closed up +0.25%. Japan’s Nikkei Stock Index closed up +0.05%.
The Euro Stoxx 50 today climbed to a 1-1/2 month high and is moderately higher. Strength in pharmaceutical stocks is leading the overall market higher, with Novo-Nordisk A/S/ up more than +3% after a study backed the use of its weight-loss drug Wegovy to reduce the risks of heart attacks and deaths in obese patients. A decline in European government bond yields today is also supportive of equities.
ECB Vice President Guindos said it is "premature" to discuss interest rate cuts as "we expect a temporary rebound in inflation in the coming months as the base effects from the sharp increase in energy and food prices in autumn 2022 drop out."
China’s Shanghai Composite today closed moderately higher. Chinese e-commerce internet stocks led gains in the overall market today amid sales growth seen during the Singles’ Day shopping festival. Technology stocks also rose, led by a more than +4% gain in Taiwan Semiconductor Manufacturing Co after the chipmaker reported a +15.7% increase in October revenue, the first monthly increase since February and a sign that chip demand is recovering. On the negative side, China's Oct aggregate financing, the broadest measure of credit growth, rose less than expected. Also, Goldman Sachs downgraded Chinese stocks listed in Hong Kong due to modest earnings growth, and Morgan Stanley said debt and deflation challenges will persist for Chinese stocks.
China Oct new yuan loans rose 738.4 billion yuan, stronger than expectations of 655.0 billion yuan. Oct aggregate financing, the broadest measure of credit growth, rose +1.85 trillion yuan, weaker than expectations of 1.95 trillion yuan.
Japan’s Nikkei Stock Index rose to a 1-1/2 month high and closed slightly higher. A decline in the yen to a 1-year low against the dollar today improves the earnings prospects of Japanese exporting stocks and pushed them higher to lead gainers in the overall market. Stocks also found support on concerns that deflation risks may prompt the BOJ to maintain QE and negative interest rates after Japan’s Oct producer prices rose +0.8% y/y, the smallest year-on-year increase in 2-1/2 years. Japanese stock gave up most of their gains on economic concerns after Japan’s Oct machine tool orders fell for the tenth consecutive month. Also, cosmetics makers declined, led by a -12% plunge in Shiseido Co after it cut its full-year profit forecast on slower demand from Chinese customers following the release of treated radioactive wastewater at the Fukushima nuclear plant in August.
Japan Oct machine tool orders fell -20.6% y/y, the biggest decline in 4 months, and the tenth consecutive month orders have declined.
Japan's Oct PPI fell -0.4% m/m and rose +0.8% y/y, weaker than expectations of unch m/m and +0.9% y/y, with the +08% y/y increase the smallest year-on-year increase in 2-1/2 years.
Pre-Market U.S. Stock Movers
Tyson Foods (TSN) tumbled more than -3% in pre-market trading after reporting Q4 sales of $13.35 billion, weaker than the consensus of $13.71 billion.
Henry Schein (HSIC) dropped more than -4% in pre-market trading after reporting Q3 sales of $3.16 billion, below the consensus of $3.21 billion.
Tower Semiconductor Ltd (TSEM) sank more than -7% in pre-market trading after reporting Q3 revenue of $358.2 million, below the consensus of $358.8 million, and forecasting Q4 revenue of $350 million, weaker than the consensus of $359 million.
Verve Therapeutics (VERV) plunged more than -25% in pre-market trading after it said two patients experienced serious heart-related adverse effects during a trial of its gene-editing therapy.
Southwest Airlines (LUV) fell more than -1% in pre-market trading after Melius Research LLC downgraded the stock to sell from hold.
Boeing (BA) rose more than +3% in pre-market trading after China said it was considering ending a freeze on its purchases of Boeing’s airliners.
Monday.com (MNDY) jumped more than +8% in pre-market trading after reporting Q3 adjusted EPS of 64 cents, well above the consensus of 19 cents.
StoneCo (STNE) climbed more than +4% in pre-market trading after reporting 3.33 million active clients in Q3 revenue, above the consensus of 3.17 million.
HP Inc (HPQ) rose more than +1% after Citigroup upgraded the stock to buy from neutral with a price target of $33.
CrowdStrike Holdings (CRWD) gained more than +1% in pre-market trading after Stifel upgraded the stock to buy from hold with a price target of $225.
Tesla (TSLA) rose nearly +1% in pre-market trading after Guotai Junan Securities initiated coverage on the stock with a recommendation of overweight with a price target of $248
Capital Products Partners LP (CPLP) jumped more than +8% in pre-market trading after reporting Q3 adjusted earnings per unit of 84 cents, above the consensus of 73 cents.
Earnings Reports (11/13/2023)
AECOM (ACM), Azenta Inc (AZTA), Fortrea Holdings Inc (FTRE), Henry Schein Inc (HSIC), Roivant Sciences Ltd (ROIV), Tyson Foods Inc (TSN), XP Inc (XP).
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.
