Morning Markets
June E-Mini S&P 500 futures (ESM23) this morning are up +0.21%, and June Nasdaq 100 E-Mini futures (NQM23) are down -0.05%.
U.S. stock index futures this morning are mixed. Strength in regional bank stocks in pre-market trading is easing banking concerns and boosting the overall market. Also, energy stocks are climbing, with the price of crude up more than +2%. However, higher bond yields today are weighing on technology stocks.
Clarity regarding the U.S. debt ceiling is a bearish factor for stocks. Treasury Secretary Yellen said Sunday that there are “simply no good options” for solving the debt limit stalemate other than Congress lifting the debt ceiling cap. Yellen has said that the Treasury Department may run out of cash to pay its bills as soon as June 1 unless the debt ceiling is raised. President Biden is scheduled to meet House Speaker McCarthy and other congressional leaders Tuesday to discuss the debt ceiling.
Global bond yields are higher. The 10-year T-note yield is up +5.5 bp at 3.492%. The 10-year German bund yield is up +4.0 bp at 2.321%, and the UK 10-year gilt is not trading with markets closed today in the UK for the king’s coronation.
On the bullish side for stocks, regional bank stocks are moving higher in pre-market trading, led by a +37% surged in PacWest Bancorp, after the bank said its business remains “sound” and that it was cutting its quarterly dividend to one cent to accelerate capital build plans. Also, energy stocks and energy service providers are climbing in pre-market trading as WTI crude prices rose more than +2%. In addition, Zscaler is up more than +20% after reporting preliminary Q3 revenue above consensus and raising its full-year revenue forecast.
On the bearish side, Tyson Foods sank more than -8% in pre-market trading after reporting weaker-than-expected Q2 sales and cutting its full-year sales estimate. Also, Dish Network is down more than -4% after reporting Q1 revenue below consensus. In addition, cryptocurrency-exposed stocks are falling in pre-market trading, with Bitcoin down more than -5% at a 1-1/2 week low as Binance restarted withdrawals of Bitcoin after citing congestion on the token’s blockchain for two halts in less than 12 hours.
Overseas stock markets are mixed. The Euro Stoxx 50 is up +0.32%. China’s Shanghai Composite closed up +1.81%, and Japan’s Nikkei Stock Index closed down -0.71%.
The Euro Stoxx 50 index today is moderately higher. Strength in energy stocks is giving the overall market a lift, with Brent crude up more than +2%. Also, healthcare stocks moved higher today, led by a +3% gain in Novo Nordisk A/S after Citigroup said growth rates of its prescription drug sales were “stellar.” Stocks were undercut by weaker-than-expected Eurozone Sentix investor confidence and German industrial production reports. Also, European government bond yields were pushed higher by hawkish comments from ECB Governing Council member Knot who said the ECB needs to continue raising interest rates.
The Eurozone May Sentix investor confidence index unexpectedly fell -4.4 to a 4-month low of -13.1, weaker than expectations of an increase to -7.5.
German Mar industrial production fell -3.4% m/m, weaker than expectations of -1.5% m/m and the biggest decline in a year.
ECB Governing Council member Knot said the ECB needs to continue raising interest rates amid a "too high" underlying inflation rate.
China’s Shanghai Composite Stock Index today rallied to a 10-month high and closed sharply higher. Chinese banking stocks surged today to lead the overall market higher after more lenders cut deposit rates, and further progress on state-owned enterprise reform boosted market sentiment toward the sector. Shares of state-owned firms rose after China’s State-owned Assets Supervision and Administration Commission of State Council released new rules over bond issuance for companies to improve the efficiency of the approval process and strengthen supervision control to prevent default risks. In addition, Chinese electric vehicle makers moved higher after the government pledged further support for the sector. Finally, education stocks rallied after Chinese President Xi Jinping called on top officials to step up efforts to maintain an “appropriate” birthrate and population level.
Japan’s Nikkei Stock Index fell to a 1-week low and closed moderately lower as trading resumed after the Golden Week holidays. Japanese stocks were weighed down on negative carryover from last Friday’s stronger-than-expected U.S. Apr payroll report, which bolstered expectations for the Fed to keep interest rates higher for longer. Also, weakness in Japanese bank stocks weighed on the overall market due to negative carryover from the turmoil in the U.S. banking sector. Japanese cosmetics makers retreated after Estee Lauder slashed its profit projections and predicted a bigger-than-expected sales decline due to a volatile recovery for Asia travel retail. On the positive side, recent weakness in the yen may have boosted corporate profits from many Japanese international companies, which will be reporting quarterly earnings results in earnest this week.
The Japan Apr Jibun Bank services PMI was revised upward by +0.5 to 55.4 from the initially reported 54.9.
Pre-Market U.S. Stock Movers
Regional bank stocks are moving higher in pre-market trading, led by a +37% surged in PacWest Bancorp (PACW) after the bank said its business remains “sound” and that it was cutting its quarterly dividend to one cent to accelerate capital build plans. Also, Western Alliance Bancorp (WAL) is up more than +11%, and Zions Bancorp (ZION) is up more than +5%. Truist Financial (TFC), Comerica (CMA), KeyCorp (KEY), and US Bancorp (USB) are up more than +2%.
Energy stocks and energy service providers are climbing in pre-market trading as WTI crude prices rise more than +2%. Baker Hughes (BKR), ConocoPhillips (COP), Devon Energy (DVN), Diamondback Energy (FANG), Exxon Mobil (XOM), Haliburton (HAL), and Valero Energy (VLO) are up more than +1%.
Zscaler (ZS) surged more than +20% in pre-market trading after reporting preliminary Q3 revenue of $415 million-$419 million, stronger than the consensus of $398.6 million, and raising its full-year revenue forecast to $1.59 billion from a prior estimate of $.156 billion.
Six Flags Entertainment (SIX) rallied more than +9% in pre-market trading after reporting a Q1 adjusted Ebitda loss of -$17.4 million, narrower than the consensus of -$24.5 million.
Snowflake (SNOW) climbed more than +2% in pre-market trading after Stifel upgraded the stock to buy from hold with a price target of $185.
Spectrum Brands (SPB) jumped more than +8% in pre-market trading after Wells Fargo Securities hiked its price target for the stock to $90 from $75.
American Airlines Group (AAL) climbed more than +3% in pre-market trading after JPMorgan Chase upgraded the stock to overweight from neutral.
Icahn Enterprises LP (IEP) rose more than +3% in pre-market trading, extending last Friday’s +27% surge, after the company said it would pay a dividend of $2.00 per unit to investors for the quarter ending March 31.
Tyson Foods (TSN) sank more than -8% in pre-market trading after reporting Q2 sales of $13.13 billion, weaker than the consensus of $13.60 billion, and cutting its full-year sales estimate to $53 billion-$54 billion from a previous estimate of $55 billion-$57 billion.
Cryptocurrency-exposed stocks are falling in pre-market trading, with Bitcoin down more than -5% at a 1-1/2 week low as Binance restarted withdrawals of Bitcoin after citing congestion on the token’s blockchain for two halts in less than 12 hours. Marathon Digital (MARA) and Riot Blockchain (RIOT) are down more than -6%. Also, MicroStrategy (MSTR), Coinbase Global (COIN), and Bit Digital (BTBT) are down -3% or more.
Dish Network (DISH) tumbled more than -4% in pre-market trading after reporting Q1 revenue of $3.96 billion, below the consensus of $4.06 billion.
Workday (WDAY) fell nearly -2% in pre-market trading after Stifel downgraded the stock to hold from buy.
Today’s U.S. Earnings Reports (5/8/2023)
DaVita Inc (DVA), Devon Energy Corp (DVN), DISH Network Corp (DISH), International Flavors & Fragrance (IFF), McKesson Corp (MCK), PayPal Holdings Inc (PYPL), Skyworks Solutions Inc (SWKS), Tyson Foods Inc (TSN), Ventas Inc (VTR), Viatris Inc (VTRS), Western Digital Corp (WDC).
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.
