Morning Markets
June E-Mini S&P 500 futures (ESM23) this morning are up +0.53%, and June Nasdaq 100 E-Mini futures (NQM23) are up +0.42%.
U.S. stock index futures this morning are moderately higher. Strong quarterly earnings results from Apple are boosting market sentiment and giving stock index futures a lift. Also, a recovery in regional bank stocks in pre-market trading is easing banking concerns.
Stock index futures fell back from their best levels after bond yields jumped on the stronger-than-expected U.S. Apr payrolls report.
U.S. Apr nonfarm payrolls rose +253,000, stronger than expectations of +185,000. Also, the Apr unemployment rate unexpectedly fell -0.1 to a 54-year low of 3.4%, showing a stronger labor market than expectations of an increase to 3.6%. The report was hawkish for Fed policy.
U.S. Apr average hourly earnings rose +0.5% m/m and +4.4% y/y, stronger than expectations of +0.3% m/m and +4.2% y/y.
Clarity regarding the U.S. debt ceiling is a bearish factor for stocks. Treasury Secretary Yellen on Monday said the Treasury Department may run out of cash to pay its bills as soon as June 1 unless the debt ceiling is raised.
Global bond yields are higher. The 10-year T-note yield is up +7.4 bp at 3.452%. The 10-year German bund yield is up +11.1 bp at 2.301%, and the UK 10-year gilt is up +14.2 bp at 3.795%.
On the bullish side for stocks, Apple is up more than +2% in pre-market trading after reporting Q2 revenue above consensus, raising its quarterly dividend, and announcing a $90 billion stock buyback program. Also, regional bank stocks are rebounding in pre-market trading as they recover some of this week’s sharp losses. DoorDash is up more than +5% after reporting Q1 revenue of $2.04 billion above consensus and raising its full-year adjusted Ebitda forecast.
On the bearish side, Atlassian sank more than -15% in pre-market trading after forecasting Q4 revenue below consensus. Also, Lyft is down more than -16% after forecasting Q2 revenue below consensus. In addition, Warner Bros Discovery is down more than -2% after reporting a larger-than-expected Q1 loss per share.
Overseas stock markets are mixed. The Euro Stoxx 50 is up +0.47%. China’s Shanghai Composite closed down -0.48% and Japan’s Nikkei Stock Index was closed for Children’s Day.
The Euro Stoxx 50 index today is moderately higher. Better-than-expected corporate earnings results are giving stocks a boost. IAG SA, which owns British Airways and Iberia, sparked a rally in airline stocks as it rallied more than +5% after reporting an unexpected profit in Q1 and raising its full-year earnings outlook. Also, Adidas AG jumped more than +7% after reporting Q1 operating profit well above consensus. European chipmakers rose after Apple reported demand for its iPhone rebounded last quarter. However, gains in the overall market were limited by weaker-than-expected Eurozone economic news that showed Eurozone Mar retail sales fell more than expected, and German Mar factory orders posted their most significant decline in nearly 3 years.
ECB Governing Council member Muller said Eurozone inflation is still far above the ECB's 2% target, indicating Thursday's interest rate hike won't be the last.
Eurozone Mar retail sales fell -1.2% m/m, weaker than expectations of -0.2%.
German Mar factory orders fell -10.7% m/m, weaker than expectations of -2.3% m/m and the biggest decline in nearly three years.
The German Apr S&P construction PMI fell -0.9 to 42.0, the steepest pace of contraction in 4 months.
China’s Shanghai Composite Stock Index today fell back from a 2-week high and closed moderately lower. Lackluster corporate earnings results have dampened sentiment for Chinese stocks. Data from China International Capital Corp showed the average profit for Chinese companies in Q1 grew an average +2.2% y/y despite the full reopening of China’s economy from Covid Zero restrictions, well below the days of double-digit growth seen just a few years ago. Also, signs of an uneven recovery are bearish for market sentiment and stock prices after a gauge of activity in China’s service sector fell more than expected last month.
The China Apr Caixin services PMI fell -1.4 to 56.4, weaker than expectations of 57.0.
Japan’s Nikkei Stock Index was closed for the Children’s Day holiday today and will reopen on Monday.
Pre-Market U.S. Stock Movers
Apple (AAPL) climbed more than +2% in pre-market trading after reporting Q2 revenue of $94.84 billion, stronger than the consensus of $92.60 billion. The company also raised its quarterly dividend by +4% to 24 cents a share and announced plans for $90 billion in stock repurchases.
Regional bank stocks are moving higher in pre-market trading as they recover some of this week’s sharp losses. PacWest Bancorp (PACW) is up more than +25%, Western Alliance Bancorp (WAL) is up more than +14%, and First Horizon is up more than +6%. Also, Zions Bancorp (ZION), Truist Financial (TFC), Comerica (CMA), and KeyCorp (KEY) are up more than +2%.
DoorDash (DASH) jumped more than +5% in pre-market trading after reporting Q1 revenue of $2.04 billion, better than the consensus of $1.93 billion, and raised its full-year adjusted Ebitda forecast to $600 million-$900 million from a previous estimate of $500 million-$800 million, stronger than the consensus of $681.4 million.
Block Inc (SQ) rose more than +4% in pre-market trading after forecasting Q1 net revenue of $4.99 billion, above the consensus of $4.51 billion.
Johnson Controls International (JCI) rose more than +4% in pre-market trading after narrowing its full-year adjusted EPS estimate to $3.50-$3.60 from a prior estimate of $3.30-$3.60, the midpoint stronger than the consensus of $3.51.
Cigna (CI) gained more than +2% in pre-market trading after reporting Q1 adjusted operating EPS of $5.41, better than the consensus of $5.23.
Bill Holdings (BILL) surged more than +14% in pre-market trading after reporting Q3 adjusted EPS of 50 cents, more than double the consensus of 24 cents, and raised its full-year adjusted EPS forecast to $1.46-$1.48 from a prior estimate of 99 cents-$1.05, well above the consensus of $1.05.
CNH Industrial NV (CNHI) gained more than +1% in pre-market trading after reporting Q1 industrial net sales of $4.78 billion, stronger than the consensus of $4.70 billion.
Atlassian (TEAM) sank more than -15% in pre-market trading after forecasting Q4 revenue of $900 million-$920 million, below the consensus of $920.5 million.
Microchip Technology (MCHP) tumbled more than -5% in pre-market trading on concerns about building inventories after the company CFO said it “rescheduled significant amounts of backlog to later quarters to help customers with their inventory positions, which resulted in building inventory on our balance sheet.”
Lyft (LYFT) dropped more than -16% in pre-market trading after forecasting Q2 revenue of $1.0 billion-$1.02 billion, weaker than the consensus of $1.08 billion.
Warner Bros Discovery (WBD) fell more than -2% in pre-market trading after reporting a Q1 loss per share of -44 cents, much steeper than the consensus of -3.6 cents.
Monolithic Power Systems (MPWR) slumped more than -10% in pre-market trading after forecasting Q2 revenue of $430 million-$450 million, weaker than the consensus of $455.7 million.
Epam Systems (EPAM) tumbled more than -7% in pre-market trading after cutting its full-year adjusted EPS estimate to $10.60-$10.80 from a previous estimate of $11.15-$11.35.
Today’s U.S. Earnings Reports (5/5/2023)
AES Corp/The (AES), Cboe Global Markets Inc (CBOE), Cigna Group/The (CI), Dominion Energy Inc (D), EPAM Systems Inc (EPAM), Evergy Inc (EVRG), Johnson Controls International (JCI), News Corp (NWSA), Warner Bros Discovery Inc (WBD).
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.
