September S&P 500 futures (ESU23) are down -0.23%, and September Nasdaq 100 E-Mini futures (NQU23) are down -0.26% this morning as market participants exercised caution and refrained from taking big positions ahead of key U.S. inflation data scheduled for release on Wednesday.
In Monday’s trading session, Wall Street’s major indices closed in the green. Tesla Inc (TSLA) climbed over +10% and was the top percentage gainer on the tech-heavy Nasdaq 100 after Morgan Stanley upgraded the stock to Overweight from Equal Weight and said its Dojo supercomputer could add to its market capitalization by as much as $500 billion. Also, Qualcomm Incorporated (QCOM) gained more than +3% after the chipmaker announced it had extended an agreement with Apple to supply 5G chips until at least 2026. In addition, Hostess Brands Inc (TWNK) soared over +19% after JM Smucker agreed to acquire the owner of Twinkies snack cakes for $5.6 billion. On the bearish side, Rtx Corp (RTX) plunged more than -7% after the company cut its full-year sales outlook.
Meanwhile, a survey conducted by the New York Fed revealed that inflation expectations among U.S. consumers remained relatively steady in August. However, households grew more concerned about their finances and more pessimistic about the job market.
On the earnings front, Oracle Corporation (ORCL) plunged over -9% in pre-market trading after the company’s first-quarter report showed a slowdown in cloud revenue, while its quarterly sales fell short of expectations.
The U.S. economic data slate is mainly empty on Tuesday. Investor attention is currently centered on upcoming U.S. inflation data scheduled for release on Wednesday.
“Even if the August core CPI surprises to the upside, we doubt it would spur the FOMC to hike again next week. Policymakers have been stressing that the cumulative amount of rate hikes and uncertainty surrounding the lagged effect of policy changes require moving more cautiously at this juncture of the cycle and assessing a longer period of data before determining its next move,” said Jay Bryson, managing director and chief economist at Wells Fargo Corporate & Investment Banking.
U.S. rate futures have priced in a 7.0% probability of a 25 basis point rate increase at the September FOMC meeting and a 39.8% chance of a 25 basis point rate hike at the November FOMC meeting.
In the bond markets, United States 10-year rates are at 4.284%, down -0.09%.
The Euro Stoxx 50 futures are down -0.23% this morning as investors digested a slew of regional economic data while cautiously awaiting crucial U.S. inflation data and the latest policy-setting meeting by the European Central Bank due later in the week. Healthcare stocks gained ground on Tuesday, while technology stocks underperformed. Data released on Tuesday indicated a weakening of the labor market in the United Kingdom, while wage growth in the U.K. remained at a record high in the three months through July. Separately, data indicated that German investor sentiment experienced an unexpected improvement in September, driven by investor expectations of a pause in interest rate hikes. In corporate news, Associated British Foods Plc (ABF.LN) climbed over +5% after the Primark owner boosted its annual profit guidance for the second time in four months.
U.K.’s Average Earnings Index +Bonus, U.K.’s Claimant Count Change, U.K.’s Employment Change 3M/3M, U.K.’s Unemployment Rate, Spain’s CPI, Germany’s ZEW Economic Sentiment, and Eurozone’s ZEW Economic Sentiment data were released today.
U.K. July Average Earnings Index +Bonus has been reported at 8.5%, stronger than expectations of 8.2%.
U.K. August Claimant Count Change stood at +0.9K, stronger than expectations of +17.1K.
U.K. July Employment Change 3M/3M came in at -207K, weaker than expectations of -185K.
U.K. July Unemployment Rate was at 4.3%, in line with expectations.
The Spanish August CPI stood at +0.5% m/m and +2.6% y/y, in line with expectations.
The German September ZEW Economic Sentiment arrived at -11.4, stronger than expectations of -15.0.
Eurozone September ZEW Economic Sentiment has been reported at -8.9, weaker than expectations of -6.2.
Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.18%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.95%.
China’s Shanghai Composite today closed slightly lower, despite recent data indicating signs of stabilization in the world’s second-largest economy, as investors awaited more clues on recovery and policy measures. The yuan was little changed following China’s central bank’s decision to establish its daily fixing rate at a level below 7.20 against the U.S. dollar. Meanwhile, China’s largest private property developer, Country Garden Holdings Co Ltd, gained over +3% following a Reuters report stating that the company had secured approval from its creditors to extend the repayments on six onshore bonds by three years. Also, consumer discretionary and automobile stocks outperformed on Tuesday. In other news, Goldman Sachs anticipates Chinese equity to stage a tradable recovery towards their MSCI China index target of 67 during the latter part of 2023, citing factors such as the relaxation of policy measures, early indications of cyclical stabilization, and favorable market technicals. Investor focus this week is on crucial Chinese retail sales and industrial production data for August, scheduled for release on Friday.
“The continuing improvement in economic indicators would gradually repair negative investor sentiment,” said analysts at Sinolink Securities.
At the same time, Japan’s Nikkei 225 Stock Index closed higher today as a weaker yen lifted export-oriented stocks and boosted risk appetite. Automobile stocks gained ground on Tuesday as the yen retreated from a one-week high, with Toyota Motor Corp rising over +2%. In other corporate news, technology start-up investor SoftBank Group gained nearly +2%, while Uniqlo brand owner Fast Retailing climbed more than +1%, providing the biggest boost to the Nikkei. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -3.96% to 16.23.
Pre-Market U.S. Stock Movers
Sight Sciences Inc (SGHT) tumbled more than -31% in pre-market trading after the company provided weaker-than-expected Q3 revenue guidance and lowered its FY23 revenue forecast.
Acelyrin Inc (SLRN) tanked about -56% in pre-market trading following the announcement that its primary drug, izokibep, failed a mid-stage clinical trial in the treatment of the skin disorder hidradenitis suppurativa.
Geron Corporation (GERN) climbed over +5% in pre-market trading after Goldman Sachs upgraded the stock to Buy from Neutral.
AerCap Holdings NV (AER) fell more than -5% in pre-market trading after announcing the pricing of a secondary offering of 40.68 million of its ordinary shares by GE Capital US Holdings Inc, a wholly owned subsidiary of General Electric.
CVS Health Corp (CVS) gained about +0.8% in pre-market trading after Wolfe Research upgraded the stock to Outperform from Peer Perform.
Perion Network (PERI) dropped over -1% in pre-market trading after Raymond James downgraded the stock to Market Perform from Outperform.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Tuesday - September 12th
InnovAge Holding (INNV), Lovesac (LOVE), Evolution Petroleum (EPM), WildBrain (WLDBF), Lesaka Tech (LSAK), Mama’s Creations (MAMA), Anixa Biosciences (ANIX).
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