Morning Markets
December E-Mini S&P 500 futures (ESZ23) are down -0.24%, and Dec Nasdaq 100 E-Mini futures (NQZ23) are down -0.37%.
Stock index futures are moderately lower on some disappointing corporate earnings results. Also, long liquidation pressure is weighing on the overall market after Monday’s rally. The markets are awaiting the minutes of the Oct 31-Nov 1 FOMC meeting later today to see the Fed’s assessment of the economy and the future direction of Fed policy.
Stocks came under pressure today after Goldman Sachs sent a note to clients that said the recent rally in stocks increases the risk of "disappointment in the near term" amid lingering concerns about economic growth and inflation.
On the negative side for stocks, Best Buy is down more than -4% in pre-market trading after reporting Q3 revenue below consensus and cutting its full-year revenue forecast. Also, Lowe’s is down more than -4% after reporting a bigger-than-expected decline in Q3 same-store sales and reducing its full-year adjusted revenue forecast. In addition, Kohl’s is down more than -4% after reporting a bigger-than-expected fall in Q3 same-store sales.
On the positive side, Dick’s Sporting Goods jumped more than +8% after reporting Q3 net sales above consensus and raising its 2024 comparable sales forecast. Also, Agilent is up more than +6% after reporting stronger-than-expected Q4 net revenue.
The U.S. Oct Chicago Fed national activity index fell -0.47 to a seven-month low of -0.49, weaker than expectations of zero.
The markets are discounting a 0% chance for a +25 bp rate hike at the next FOMC meeting on Dec 12-13 FOMC and a 2% chance for that +25 bp rate hike at the following FOMC meeting on Jan 30-31, 2024. The markets are then discounting a +31% chance for a -25 bp rate cut at the March 19-20, 2024, FOMC meeting and a 76% chance for that same -25 bp rate cut at the Apr 30-May 1, 2024 FOMC meeting.
U.S. and European government bond yields today are lower. The 10-year T-note yield is down -1.2 bp at 4.408%. The 10-year German bund yield is down -2.6 bp at 2.585%. The 10-year UK gilt yield is down -2.3 bp at 4.101%.
Overseas stock markets are lower. The Euro Stoxx 50 is down -0.22%. China’s Shanghai Composite Index closed down -0.01%. Japan’s Nikkei Stock Index closed down -0.10%.
The Euro Stoxx 50 today is moderately lower. Weakness in bank stocks is weighing on the overall market, led by a -4 % decline in Banca Monte del Paschi di Siena SpA after Italy sold about 25% of its stake for about approximately 920 million euros ($1 billion) as part of its plan to divest from the bailed-out lender. Also, MorphoSys sank -20% after it announced that the results of a trial of its pelabresib drug to treat myelofibrosis were “mixed.” On the positive side, European automakers rallied after Eurozone new car registrations rose for the fifteenth consecutive month. Also, mining stocks gained as iron ore prices rallied to a 9-month high on optimism about China’s latest stimulus.
Comments from ECB Governing Council member Simkus suggest he favors keeping ECB policy steady when he said, "There's no reason to speak about a further increase this December, and market expectations that there will be ECB interest rate cuts in a few months are too optimistic in my view."
Eurozone Oct new car registrations rose +14.6% y/y to 855,000 units, the fifteenth consecutive month registrations have increased.
China’s Shanghai Composite today fell back from a 5-week high and closed little changed. The strength of Chinese property developers today supported the overall market after authorities drafted a list of 50 real estate companies that would be eligible for a range of financing as the government seeks to support the ailing property sector. Also, Bloomberg News reported that China plans to provide at least one trillion-yuan worth of low-cost financing to certain affordable housing programs to help the market.
The yuan rose to a 3-3/4 month high against the dollar today on the new government stimulus measures. However, the Shanghai Composite gave up all of its gains as Chinese bank stocks retreated on a report that the PBOC is encouraging lenders to cap the amount of new loans they issue in early 2024 to contend with shrinking profit margins and rising bad loans. For China’s biggest banks, net interest margins dropped to a record low of 1.74% at the end of the first half of 2023, below the industry’s 1.8% threshold seen as necessary to maintain a reasonable amount of profitability.
Japan’s Nikkei Stock Index today closed slightly lower. Strength in the yen today undercut exporter stocks and weighed on the overall market as the yen rallied to a 2-1/4 month high against the dollar. Stock losses were limited as Japanese technology stocks moved higher on carryover support from Monday’s rally in U.S. technology stocks. Also, a decline in Japanese government bond yields was supportive for stocks after the 10-year JGB bond yield fell to a 2-1/4 month low today at 0.695%.
Pre-Market U.S. Stock Movers
Best Buy (BBY) tumbled more than -4% in pre-market trading after reporting Q3 revenue of $9.76 billion, below the consensus of $9.90 billion, and cut its full-year revenue forecast to $43.1 billion-$43.7 billion from a previous forecast of $43.8 billion-$44.5 billion.
Lowe’s (LOW) dropped more than -4% in pre-market trading after reporting a -7.4% drop in Q3 same-store sales, weaker than the consensus of -4.9%, and lowered its full-year adjusted revenue forecast to a decline of -5% from a previous view of 02% to -4%.
Kohl’s (KSS) fell more than -4% in pre-market trading after reporting Q3 same-store sales fell -5.5%, a bigger decline than the consensus of -3.45%.
Analog Devices (ADI) dropped more than -2% in pre-market trading after forecasting Q1 adjusted EPS of $1.60-$1.80, below the consensus of $1.92.
Moderna (MRNA) slid more than -2% in pre-market trading after Reuters reported that BioNTech said the European Patent Office has declared a mRna patent invoked by Moderna in litigation as invalid.
Jacobs Solutions (J) fell more than -4% in pre-market trading after forecasting 2024 adjusted Ebitda of $1.53 billion-$1.60 billion, weaker than the consensus of $1.61 billion.
Dick’s Sporting Goods (DKS) jumped more than +8% in pre-market trading after reporting Q3 net sales of $3.04 billion, above the consensus of $2.95 billion, and raised its 2024 comparable sales forecast to +0.5% to +2.0% from a previous view of 0% to +2.0%, the midpoint above the consensus of +1.02%.
Hibbett (HIBB) surged more than +13% in pre-market trading after reporting Q3 EPS of $2.05, well above the consensus of $1.18, and raising its 2024 EPS forecast to $8.00-$8.30 from a previous estimate of $7.00-$7.75, stronger than the consensus of $7.27.
Symbotic (SYM) soared more than +19% in pre-market trading after reporting Q4 revenue of $391.9 million, well above the consensus of $307 million, and forecast Q1 revenue of $350 million-$370 million, above the consensus of $346 million.
Agilent (A) climbed more than +6% in pre-market trading after reporting Q4 net revenue of $1.69 billion, better than the consensus of $1.67 billion.
Burlington Stores (BURL) rallied more than +10% in pre-market trading after reporting Q3 comparable sales rose +6.00%, above the consensus of +5.88%.
Medtronic Plc (MDT) rose more than +2% in pre-market trading after reporting Q2 adjusted EPS of $1.25, stronger than the consensus of $1.18.
Cloudflare (NET) gained more than +1% in pre-market trading after Oppenheimer upgraded the stock to outperform from perform with a price target of $85.
Earnings Reports (11/21/2023)
Analog Devices Inc (ADI), Autodesk Inc (ADSK), Best Buy Co Inc (BBY), Burlington Stores Inc (BURL), Dick's Sporting Goods Inc (DKS), HP Inc (HPQ), Jacobs Solutions Inc (J), Kohl's Corp (KSS), Lowe's Cos Inc (LOW), Medtronic PLC (MDT), Nordstrom Inc (JWN), NVIDIA Corp (NVDA).
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.
