Morning Markets
December E-Mini S&P 500 futures (ESZ23) are up +0.06%, and Dec Nasdaq 100 E-Mini futures (NQZ23) are up +0.01%.
Stock index futures this morning are slightly higher. Some positive corporate news today is lifting stock index futures along with a decline in global bond yields. The markets are awaiting comments from Fed Chair Powell later this morning that could determine market direction.
On the positive side, Take-Two Interactive Software is up more than +7% in pre-market trading after Bloomberg News reported that the company's Rockstar Games division will soon announce a new version of the Grand Theft Auto game. Also, DaVita is up more than +6% after boosting its full-year free cash flow estimate, and Akamai Technologies is up more than +5% after reporting Q3 adjusted EPS above consensus.
On the negative side, Ebay and Bumble are down more than -6% in pre-market trading after forecasting full-year revenue below consensus. Also, Lucid Group is down more than -4% after cutting its full-year vehicle production forecast. In addition, Warner Bros Discovery is down more than -2% after reporting a wider-than-expected Q3 EPS loss.
Weekly U.S. MBA mortgage applications rose +2.5% in the week ended Nov 3. The purchase mortgage sub-index rose +3.0%, and the refinancing mortgage sub-index rose +1.6%. The average 30-year fixed rate mortgage fell -25 bp to 7.61% from 7.86% the prior week.
The markets are discounting a 10% chance for a +25 bp rate hike at the next FOMC meeting on Dec 12-13 FOMC and a 16% 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 moving lower. The 10-year T-note yield is down by -0.4 bp at 4.563%. The 10-year German bund yield dropped to a 1-3/4 month low of 2.624% and is down -2.7 bp at 2.631%. The 10-year UK gilt yield fell to a 1-1/2 month low of 4.233% and is down -1.4 bp at 4.256%.
Overseas stock markets are mixed. The Euro Stoxx 50 is up +0.37%. China’s Shanghai Composite Index closed down -0.16%. Japan’s Nikkei Stock Index closed down -0.33%.
The Euro Stoxx 50 today is moderately higher. Strength in retailers is lifting the overall market, with Marks & Spencer Group Plc jumping more than +9% after reporting stronger-than-expected first-half sales and reinstating its dividend for the first time since 2019. A decline in bond yields is also supportive for stocks after the 10-year German bund yield fell to a 1-3/4 month low today at 2.624%.
Economic growth concerns are limiting the upside in stocks after Eurozone Sep retail sales fell more than expected. Also, the ECB’s monthly consumer inflation expectations survey showed 1-year inflation expectations rose to a 5-month high in Sep.
Eurozone Sep retail sales fell -0.3% m/m, weaker than expectations of -0.2% m/m.
ECB Governing Council member Makhlouf said, "It's far too early to start talking about when the ECB will start cutting interest rates."
ECB Governing Council member Kazaks said the ECB "cannot exclude the possibility that further rate increases might be necessary."
The ECB's monthly consumer inflation expectations survey showed 1-year inflation expectations in Sep rose to a 5-month high of 4.0% from 3.5% in Aug, but Sep 3-year inflation expectations were unchanged at 2.5%.
China’s Shanghai Composite today posted modest losses. Market sentiment toward Chinese stocks remains subdued on skepticism about the sustainability of China’s economic recovery. Strength in property stocks limited losses in the overall market today after Reuters reported that the Chinese government asked Ping An Insurance Group to take a controlling stake in developer Country Garden Holdings. However, the gains in property stocks were muted after Ping An said it had exited its stake in Country Garden Holdings and has no takeover plan.
Japan’s Nikkei Stock Index today closed moderately lower. Weakness in Japanese bank stocks weighed on the overall market as investors took profits from one of the best-performing sectors this year. Strength in stocks related to gene editing limited losses in the overall market on news that Elliot Management has built a stake in BioMartin Pharmaceutical. Also, airline stocks rose after crude prices tumbled to a 3-1/2 month low, lowering airlines’ fuel costs. A decline in government bond yields was also supportive for stocks after the 10-year JGB bond yield fell to a 2-week low today at 0.848%.
The Japan Sep leading index CI fell -0.5 to 108.7, weaker than expectations of 108.8.
Pre-Market U.S. Stock Movers
Take-Two Interactive Software (TTWO) jumped more than +7% in pre-market trading after Bloomberg News reported that Rockstar Games, a division of the company, plans to announce a new version of the Grand Theft Auto game as soon as this week.
Rivian Automotive (RIVN) climbed more than +5% in pre-market trading after reporting Q3 revenue of $1.34 million, better than the consensus of $1.31 billion, and raising its full-year vehicle production forecast to 54,000 vehicles from 52,000.
Akamai Technologies (AKAM) rose more than +5% in pre-market trading after reporting Q3 adjusted EPS of $1.63, stronger than the consensus of $1.50.
DaVita (DVA) jumped more than +6% after boosting its full-year free cash flow estimate to $950 million-$1.15 billion from a previous forecast of $850 million-$1.10 billion.
Upwork Inc (UPWK) surged more than +20% in pre-market trading after reporting Q3 revenue of $175.7 million, above the consensus of $167.8 million, and raising its full-year revenue forecast to $680 million-$685 million from a prior forecast of $655 million-$670 million, stronger than the consensus of $669.4 million.
Microchip Technology (MCHP) rose more than +2% in pre-market trading after Citigroup upgraded the stock to buy from neutral with a price target of $100.
Quanta Services (PWR) gained more than +1% in pre-market trading after Goldman Sachs upgraded the stock to buy from neutral with a price target of $211.
Ebay (EBAY) tumbled more than -7% in pre-market trading after forecasting full-year revenue of $10.02 billion-$10.08 billion, below the consensus of $10.15 billion.
Lucid Group (LCID) dropped more than -4% in pre-market trading after reporting 1,457 Q3 vehicle deliveries, below the consensus of 1,774, and cutting its full-year vehicle production forecast to 8,000-8,500 from a previous estimate of 10,000.
Sleep Number (SNBR) plunged more than -20% in pre-market trading after reporting Q3 net sales of $472.6 million, well below the consensus of $512 million, and cutting its full-year EPS forecast to a loss of -70 cents per share from a prior estimate of a gain of $1.25-$1.75.
Toast Inc (TOST) sank more than -18% in pre-market trading after reporting Q3 subscription revenue of $131 million, weaker than the consensus of $133.1 million.
Coupang Inc (CPNG) fell more than -6% in pre-market trading after reporting Q3 EPS of 5 cents, below the consensus of 7 cents.
Bumble (BMBL) tumbled more than -6% in pre-market trading after forecasting full-year revenue of $1.05 billion-$1.06 billion, weaker than the consensus of $1.07 billion.
Warner Bros Discovery (WBD) dropped more than -2% in pre-market trading after reporting a Q3 loss per share of -17 cents, weaker than expectations of -9 cents.
Sempra (SRE) dropped more than -2% in pre-market trading after offering $1 billion of shares via Morgan Stanley and Citigroup.
Datadog (DDOG) slid more than -1% in pre-market trading after Mizuho Securities downgraded the stock to neutral from buy.
Earnings Reports (11/8/2023)
Ameren Corp (AEE), Atmos Energy Corp (ATO), Biogen Inc (BIIB), Charles River Laboratories Int (CRL), Corteva Inc (CTVA), Fair Isaac Corp (FICO), FleetCor Technologies Inc (FLT), Kellanova (K), MGM Resorts International (MGM), Ralph Lauren Corp (RL), Take-Two Interactive Software (TTWO), Walt Disney Co/The (DIS), 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.
