December S&P 500 futures (ESZ23) are trending up +0.12% this morning as market participants geared up for a big week for central banks, with the spotlight on the Federal Reserve’s interest rate decision on Wednesday.
In Monday’s trading session, Wall Street’s major averages closed just above the flatline. Apple Inc (AAPL) rose over +1% on optimism regarding robust pre-orders for the company’s latest iPhone 15. Also, Alteryx Inc (AYX) climbed more than +4% after Morgan Stanley upgraded the stock to Overweight from Equal Weight. On the bearish side, Tesla Inc (TSLA) fell over -3% and was among the top percentage losers on the tech-heavy Nasdaq 100 after Goldman Sachs slightly lowered its 2023 and 2024 earnings estimates for the electric vehicle giant. In addition, Arm Holdings (ARM) plunged more than -4% after Bernstein initiated coverage of the stock with an Underperform rating.
The Federal Reserve kicks off its two-day meeting later in the day, with investors widely expecting the U.S. central bank to keep rates on hold Wednesday. Also, investors’ focus will be on Fed Chair Jerome Powell’s post-decision press conference and the Fed’s quarterly dot plot in its Summary of Economic Projections.
“Ongoing questions about Fed policy - how high and for how long? - almost ensure near-term stock activity will remain choppy, although longer-term investors who take their cue from earnings should have an opportunity to benefit,” said Robert Teeter, managing director of Silvercrest Asset Management.
Meanwhile, oil soared to a 10-month high, continuing a robust rally that could reignite inflation, as OPEC+ supply cuts tightened the market, and Saudi Arabia’s energy minister showed no inclination to alter the current course.
Today, all eyes are focused on the U.S. Building Permits preliminary data in a couple of hours. Economists, on average, forecast that August Building Permits will stand at 1.440M, compared to the previous value of 1.443M.
Also, investors are likely to focus on U.S. Housing Starts data, which was at 1.452M in July. Economists foresee the August figure to be 1.440M.
In the bond markets, United States 10-year rates are at 4.325%, up +0.16%.
The Euro Stoxx 50 futures are up +0.26% this morning as investors exercised caution and refrained from making big bets ahead of interest rate decisions by major central banks this week. Automobile and energy stocks gained ground on Tuesday, while industrial and tech stocks underperformed. Eurostat said on Tuesday that consumer inflation in the Eurozone for August was slightly below the initial estimate, although it still remained more than twice the European Central Bank’s target. Meanwhile, the Bank of England is set to meet on Thursday, and it is expected to implement its 15th consecutive interest rate hike, bringing benchmark borrowing costs to 5.5%. Also, European Central Bank Governing Council member Francois Villeroy de Galhau stated that the ECB would keep interest rates at 4% for as long as necessary to tame inflation, indicating that he is not inclined toward future rate hikes at this stage. In corporate news, Kingfisher Plc (KGF.LN) plunged over -6% after the European home improvement retailer slashed its annual profit guidance.
Eurozone’s CPI, Eurozone’s Core CPI, and Eurozone’s Current Account data were released today.
Eurozone August CPI has been reported at +0.5% m/m and +5.2% y/y, weaker than expectations of +0.6% m/m and +5.3% y/y.
Eurozone August Core CPI stood at +0.3% m/m and +5.3% y/y, in line with expectations.
Eurozone July Current Account came in at 20.9B, weaker than expectations of 30.2B.
Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.03%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.87%.
China’s Shanghai Composite today closed slightly lower as some investors maintained their cautious stance regarding the world’s second-largest economy despite recent data indicating some signs of stabilization. China’s central bank and forex regulator convened a meeting with foreign financial institutions and companies on Monday, including JPMorgan and HSBC, as part of Beijing’s efforts to attract overseas investment and support its economic recovery. People’s Bank of China Governor Pan Gongsheng said China would improve its policies and create a market-oriented and international-level business climate. Meanwhile, tourism, new energy, and computer stocks underperformed on Monday. On the positive side, Country Garden received bondholder approval on the last of a batch of eight local notes for which it had requested repayment extensions, while Sunac China Holdings gained approval from creditors for its debt restructuring plan.
“August activity data released last week showed some marginal improvement... However, we see very limited signs that the economy has truly bottomed out. All eyes are on the property sector after so many easing measures were rolled out in the past month,” said Ting Lu, chief China economist at Nomura.
Japan’s Nikkei 225 Stock Index closed lower today, with chip-related stocks leading the decline, as investors exercised caution in anticipation of central bank meetings in both the United States and Japan. Chip-making equipment maker Tokyo Electron plunged over -5% and was the top percentage loser on the Nikkei. Also, chip-testing equipment maker Advantest slid about -4%, while chip maker Renesas Electronics fell more than -4%. Meanwhile, the Bank of Japan will announce its policy decision on Friday following a two-day policy meeting. Investors are anticipating remarks from BOJ Governor Kazuo Ueda, who stated in an interview earlier this month that the central bank might gather sufficient data by year-end to assess whether conditions were suitable for raising short-term interest rates. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +5.82% to 16.92.
“Investors were cautious ahead of big events - the central meetings in the U.S. and Japan,” said Takamasa Ikeda, a senior portfolio manager at GCI Asset Management.
Pre-Market U.S. Stock Movers
Nio Inc (NIO) slid over -4% in pre-market trading after announcing a proposed offering of $500M in aggregate principal amount of convertible senior notes due 2029 and $500M in aggregate principal amount of convertible senior notes due 2030.
Dell Technologies Inc (DELL) rose about +1% in pre-market trading after Daiwa upgraded the stock to Outperform from Neutral.
Avinger Inc (AVGR) soared over +11% in pre-market trading after the pharma device manufacturer entered into an agreement as a sales agent to offer shares initially up to an aggregate offering price of $7M at-the-market public offering.
Kinnate Biopharma Inc (KNTE) plunged more than -8% in pre-market trading following the company’s announcement of a 70% reduction in its workforce as part of a realignment of its drug development initiatives. Also, Piper Sandler downgraded the stock to Neutral from Overweight.
Globus Medical (GMED) gained over +1% in pre-market trading after Stifel upgraded the stock to Buy from Hold.
Planet Fitness Inc (PLNT) dropped more than -4% in pre-market trading after JPMorgan downgraded the stock to Neutral from Overweight.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Tuesday - September 19th
AutoZone (AZO), Endava (DAVA), Apogee (APOG), Steelcase (SCS).
More Stock Market News from Barchart
- Stock Investors Remain Cautious Ahead of FOMC Meeting
- 3 Cannabis Stocks That Have More Upside Potential Than Canopy Growth, According to Wall Street Analysts
- 1 Standout Oil Stock to Buy as Crude Hits Another New 2023 High
- Bumble's Big Bet: Why NOW Could Be the Perfect Time to Swipe Right on BMBL Stock
