June S&P 500 futures (ESM23) are down -0.46%, and June Nasdaq 100 E-Mini futures (NQM23) are down -0.76% this morning after three major U.S. benchmark indices struggled for direction on Tuesday as investors weighed the latest batch of earnings reports and comments from two Federal Reserve officials.
In Tuesday’s trading session, Wall Street’s major averages closed mixed, with the benchmark S&P 500 posting a 10-week high. Goldman Sachs (GS) fell over -1% after the banking giant reported first-quarter revenue that fell short of expectations. Also, Johnson & Johnson (JNJ) slumped more than -2% after the healthcare giant warned investors about the lingering impact of inflation-driven costs this year. On the positive side, Lockheed Martin (LMT) rose more than +2% and was among the top percentage gainers on the S&P 500 after the U.S. weapons maker reported upbeat Q1 results and reaffirmed its FY23 outlook.
St. Louis Fed President James Bullard said Tuesday the Fed should continue with its interest rate hikes after the latest data showed persistent inflation in an economy. “Inflation is coming down, but not as fast as Wall Street expects,” Bullard warned. Also, Atlanta Fed President Raphael Bostic said he favors raising interest rates one more time and then holding them above 5% “for quite some time.” “There is still more work to be done, and I am ready to do it,” he said.
Meanwhile, U.S. rate futures have priced in an 85.7% probability of a 25 basis point rate increase and a 14.3% chance of no hike at the May meeting.
First-quarter earnings season picks up steam, with investors awaiting fresh reports from major global companies, including Tesla (TSLA), Abbott Labs (ABT), Morgan Stanley (MS), and IBM (IBM). Analysts expect corporate earnings from S&P 500 companies to fall 4.8% in the first quarter from a year earlier.
Today, all eyes are focused on U.S. Crude Oil Inventories data in a couple of hours. Economists estimate this figure to be -1.088M, compared to last week’s value of +0.597M.
Also, investors will likely focus on speeches from New York Fed President John Williams and Chicago Fed President Austan Goolsbee for fresh insights on the Fed’s monetary policy trajectory.
In the bond markets, United States 10-Year rates are at 3.616%, up +1.22%.
The Euro Stoxx 50 futures are down -0.32% this morning as investors digested fresh Eurozone and U.K. inflation data as well as corporate earnings. Weakness in real estate and technology stocks is leading the overall market lower, with Asml Holding (ASML.NA) dropping over -2% after the company’s Q1 report raised concerns over the demand outlook. On the economic front, Eurozone headline inflation eased last month on a rapid fall in energy costs, but core inflation edged up in March, keeping European Central Bank on alert. In addition, U.K. headline inflation unexpectedly remained in double-digits in March, boosting bets that the Bank of England will again hike interest rates next month. Meanwhile, Goldman Sachs on Tuesday raised its terminal rate forecast for the ECB to 3.75% from 3.5% as signs of underlying inflation remain strong. In corporate news, shares of Heineken (HEIA.NA) rose over +3% after the Dutch brewer reported a steeper-than-expected drop in beer sales in Q1 but maintained its forecast for 2023 profit growth.
U.K.’s CPI, U.K.’s Core CPI, Eurozone’s CPI, and Eurozone’s Core CPI data were released today.
U.K. March CPI has been reported at +0.8% m/m and +10.1% y/y, stronger than expectations of +0.5% m/m and +9.8% y/y.
U.K. March Core CPI came in at +0.9% m/m and +6.2% y/y, stronger than expectations of +0.6% m/m and +6.0% y/y.
Eurozone March CPI stood at +0.9% m/m and +6.9% y/y, in line with expectations.
Eurozone March Core CPI came in at +1.3% m/m and +5.7% y/y, compared to expectations of +1.2% m/m and +5.7% y/y.
Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.68%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.18%.
China’s Shanghai Composite today closed lower as an uneven economic rebound and some contradictory data in the first quarter weighed on investor sentiment. Stocks of property developers were one of the biggest drags on the market after data on Tuesday showed property investment dropped -5.8% in January-March from a year earlier. Weakness in technology giant stocks also weighed on the broader market. At the same time, artificial intelligence stocks outperformed as some investors continued to bet on them amid the frenzy around OpenAI’s ChatGPT chatbot. Meanwhile, National Development and Reform Commission spokesperson Meng Wei said Wednesday that the country was formulating plans to boost the recovery and expansion of consumption.
Japan’s Nikkei 225 Stock Index closed slightly lower today, snapping an eight-day winning streak, pressured by a drop in heavyweight technology stocks as investors paused their buying spree. Also, data on Wednesday showed that major manufacturers became even more pessimistic about the business environment. Meanwhile, shares of Lixil Corp plunged over -3% after the luxury toilet maker cut its annual profit forecast for the second time. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down 1.59% and hit a new 1-month low of 16.10.
“Investors still believe the Nikkei will rise further to cross the close in the previous session soon, but they wanted to take a pause today,” said Seiichi Suzuki, a chief equity market analyst at Tokai Tokyo Research Institute.
The Japanese April Reuters Tankan Index stood at -3, weaker than expectations of -1.
The Japanese February Industrial Production came in at +4.6% m/m, stronger than expectations of +4.5% m/m.
Pre-Market U.S. Stock Movers
Western Alliance Bancorporation (WAL) climbed about +15% in pre-market trading after the regional bank reported upbeat Q1 results and said its deposits stabilized this month.
Metropolitan Bank Holding (MCB) soared more than +14% in pre-market trading after the lender posted stronger-than-expected Q1 results.
Intuitive Surgical Inc (ISRG) gained about +7% in pre-market trading after the company reported upbeat Q1 results.
Netflix Inc (NFLX) fell over -1% in pre-market trading after the company reported mixed Q1 results and posted weaker-than-expected Q2 guidance.
CDW Corp (CDW) plunged more than -5% in pre-market trading after the company reported preliminary Q1 revenue that fell short of expectations.
Interactive Brokers Group Inc (IBKR) slid over -3% in pre-market trading after the automated electronic broker’s Q1 profit fell short of estimates.
Bowlero Corp (BOWL) rose about +1% in pre-market trading after Jefferies initiated coverage on the stock with a buy rating.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Wednesday - April 19th
Tesla (TSLA), Abbott Labs (ABT), Morgan Stanley (MS), IBM (IBM), Elevance Health (ELV), Lam Research (LRCX), Crown Castle (CCI), U.S. Bancorp (USB), Las Vegas Sands (LVS), Kinder Morgan (KMI), Travelers (TRV), Baker Hughes (BKR), Nasdaq Inc (NDAQ), Discover (DFS), Equifax (EFX), Steel Dynamics (STLD), Citizens Financial Group Inc (CFG), Synchrony Financial (SYF), Rexford Inl Rty (REXR), Globe Life (GL), F5 Networks (FFIV), Ally Financial Inc (ALLY), Alcoa (AA), First Industrial RT (FR), New Oriental Education&Tech (EDU), Lithia Motors (LAD), RLI (RLI), Zions (ZION), Wintrust (WTFC), FNB (FNB), Calix (CALX), Cohen Steers (CNS), Liberty Oilfield (LBRT), CVB Financial (CVBF), Banner (BANR), SL Green (SLG), Northwest Bancshares (NWBI), Monarch (MCRI), National Bank Holdings (NBHC), Winmark (WINA), Healthcare Services (HCSG), Eagle (EGBN), Brandywine (BDN), Community Trust (CTBI), Great Southern Bancorp (GSBC), Middlefield Banc (MBCN), Central Valley Community (CVCY), Plumas (PLBC), Consumer Portfolio Services (CPSS), Chemung (CHMG), LCNB (LCNB), Porter Bancorp (LMST), First Community (FCCO), Private Bancorp of America (PBAM).
On the date of publication, Oleksandr Pylypenko 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.
