Morning Markets
March E-Mini S&P 500 futures (ESH24) are up +0.06%, and March Nasdaq 100 E-Mini futures (NQH24) are up +0.18%.
Stock index futures this morning are moderately higher. An increase in M&A activity supports stocks after Boston Scientific agreed to buy Axionics for $3.7 billion and Johnson & Johnson agreed to buy Ambix Biopharma for $2 billion. Also, Merck & Co was said to be in advanced talks to acquire Harpoon Therapeutics for about $700 million.
Stock indexes are finding support from lower bond yields on comments over the weekend from Dallas Fed President Logan, who said the Fed may slow the pace at which it shrinks its portfolio of assets amid scarcer liquidity in financial markets.
On the negative side for stocks, Boeing tumbled more than -8% in pre-market trading after a fuselage section on a new 737 Max 9 aircraft ejected during an Air Alaska flight over the weekend, forcing the company to pull the jet from service for inspections. Also, Spirit AeroSystems Holdings, which installed the panel, sank more than -20%.
The markets are discounting the chances for a -25 bp rate cut at 5% at the next FOMC meeting on Jan 30-31 and 68% for that same -25 bp rate cut for the following meeting on March 19-20.
U.S. and European government bond yields today are mixed. The 10-year T-note yield is down -0.6 bp at 4.040%. The 10-year German bund yield is up +3.3 bp at 2.190%. The 10-year UK gilt yield is up +2.5 bp at 3.812%.
Overseas stock markets are mixed. The Euro Stoxx 50 is up +0.13%. China’s Shanghai Composite Index closed down -1.42%. Japan’s Nikkei Stock Index was closed for the Coming-of-Age holiday.
The Euro Stoxx 50 today is slightly higher. Positive economic news is lifting stocks today after German trade news for November was better than expected, and Eurozone Dec economic confidence rose more than expected to an 8-month high. Gains in the overall market are limited due to weakness in energy stocks, with crude prices down more than -3%. Also, German Nov factory orders rose less than expected. European suppliers to Boeing are under pressure today after the company pulled its 737 Max 9 jet from service for inspections after a fuselage section on a new Alaska Airlines jet blew out during flight. In addition, European government bond yields rose after ECB Governing Council member Vujcic said the ECB is unlikely to lower borrowing costs before the summer.
The Eurozone Dec economic confidence indicator rose +2.4 to an 8-month high of 96.4, stronger than expectations of 94.2.
The Eurozone Jan Sentix investor confidence index rose +1.0 to an 8-month high of -15.8, right on expectations.
German Nov factory orders rose +0.3% m/m, weaker than expectations of +1.1% m/m.
German trade news was better than expected as Nov exports rose +3.7% m/m, stronger than expectations of +0.5% m/m and the biggest increase in 1-3/4 years. Also, Nov imports rose +1.9% m/m, stronger than expectations of +0.4% m/m and the biggest increase in 9 months.
ECB Governing Council member Vujcic said he expects inflation to slow gradually and that the ECB "is not talking about cutting interest rates now, and probably won't before the summer."
Swaps are pricing in the chances for a -25 bp rate cut by the ECB at 4% for its next meeting on January 25 and at 48% for the following meeting on March 7.
China’s Shanghai Composite Index today dropped to a 2-week low and closed moderately lower. Weakness in Chinese technology stocks led the overall market lower today on concerns over the country’s regulatory developments. Also, persistent concerns over China’s economic recovery weigh on sentiment toward Chinese stocks. Bank stocks fell today on financial concerns after Chinese shadow bank Zhongzhi Enterprise Group filed for bankruptcy. Selling pressure on stocks intensified today after Reuters reported that the China Securities Regulatory Commission is allowing mutual fund managers to sell more shares than they buy, removing a ban on short selling introduced last year.
Japan’s Nikkei Stock Index today was closed for the Coming-of-Age holiday.
Pre-market U.S. Stock Movers
Axionics (AXNX) surged more than +21% in pre-market trading after Boston Scientific agreed to buy the company for $3.7 billion or about $71 per share.
Ambrix Biopharma (AMAM) is up sharply by more than +98% in pre-market trading after Johnson & Johnson agreed to buy the company for $2 billion or about $28 per share.
Harpoon Therapeutics (HARP) soared more than +99% in pre-market trading after Merck & Co was said to be in advanced talks to acquire the company for $700 million or about $23 per share.
Moderna (MRNA) is up more than +1% in pre-market trading after reporting $6.7 billion in 2023 product sales, above the consensus of $6.3 billion.
Dell Technologies (DELL) rose more than +2% in pre-market trading after JPMorgan Chase upgraded the stock to overweight from neutral.
Crocs (CROX) jumped more than +% in pre-market trading after raising its full-year revenue forecast to $3.95 billion from a previous forecast of $3.91-$3.94 billion, stronger than the consensus of $3.93 billion.
DoorDash (DASH) climbed more than +3% in pre-market trading after Jeffries upgraded the stock to buy from hold with a price target of $130.
Gitlab (GTLB) rose more than +3% in pre-market trading after Mizuho Securities upgraded the stock to buy from neutral with a price target of $73.
Boeing (BA) dropped more than -8% in pre-market trading after it pulled its 737 Max 9 jet from service for inspections after a fuselage section on a new Alaska Airlines jet blew out during flight.
Genesco (GCO) tumbled more than -7% in pre-market trading after reporting comparable sales fell -4% for the quarter-to-date period, and it cut its full-year adjusted EPS continuing operations estimate to 65 cents-85 cents from a previous estimate of $1.50-$2.00, well below the consensus of $1.73.
Lululemon Athletica (LULU) slid more than -1% in pre-market trading after forecasting Q4 net revenue of $3.17 billion-$3.19 billion, the midpoint below the consensus of $3.19 billion.
PulteGroup (PHM) fell more than -1% in pre-market trading after Citigroup downgraded the stock to neutral from buy.
NetApp (NTAP) slid over 1% in pre-market trading after JPMorgan Chase downgraded the stock to underweight from neutral.
ZoomInfo Technologies (ZI) fell more than -2% in pre-market trading after RBC Capital Markets downgraded the stock to underperform from sector perform with a price target of $14.
Earnings Reports (1/8/2024)
Accolade Inc (ACCD), Commercial Metals Co (CMC), Helen of Troy Ltd (HELE), Infinera Corp (INFN), Jefferies Financial Group Inc (JEF).
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.
