June S&P 500 E-Mini futures (ESM24) are up +0.02%, and June Nasdaq 100 E-Mini futures (NQM24) are up +0.03% this morning as investors geared up for crucial U.S. producer inflation data while also awaiting comments from Federal Reserve Chair Jerome Powell.
In yesterday’s trading session, Wall Street’s major indexes ended mixed. Incyte Corp. (INCY) climbed over +8% and was the top percentage gainer on the S&P 500 after announcing that its board approved a share repurchase authorization of $2 billion. Also, Intel (INTC) rose more than +2% and was the top percentage gainer on the Dow following a report from the Wall Street Journal stating that the company is in advanced talks for a deal in which Apollo Global Management would provide over $11 billion to help the chipmaker set up a plant in Ireland. In addition, Squarespace (SQSP) surged over +13% after the website-building platform agreed to be acquired by private equity firm Permira in an all-cash deal valued at about $6.9 billion. On the bearish side, Applied Materials (AMAT) fell over -1% after Jefferies downgraded the stock to Hold from Buy with a price target of $210.
Federal Reserve Vice Chair Philip Jefferson stated on Monday that it’s appropriate to keep interest rates at their current level until there is further evidence that inflation will return to the Fed’s 2% target. Jefferson, characterizing Fed policy as restrictive, expressed concern about the lack of progress in inflation during the first quarter. “In light of the attenuation in progress, in terms of getting inflation down to our target, it is appropriate that we maintain the policy rate in restrictive territory, which it is right now,” he said at a Cleveland Fed event.
U.S. rate futures have priced in an 8.9% probability of a 25 basis point rate cut at the June FOMC meeting and a 27.6% chance of a 25 basis point rate cut at the conclusion of the Fed’s July meeting.
Meanwhile, Federal Reserve Chairman Jerome Powell is scheduled to participate in a moderated discussion with De Nederlandsche Bank President Klaas Knot at the Annual General Meeting of the Foreign Bankers’ Association later in the day. Also, Fed Governor Lisa Cook will speak today.
On the earnings front, home improvement chain Home Depot (HD) is set to report its Q1 earnings results today.
Today, all eyes are focused on the U.S. Producer Price Index in a couple of hours. Economists, on average, forecast that the U.S. April PPI will stand at +0.3% m/m and +2.2% y/y, compared to the previous figures of +0.2% m/m and +2.1% y/y.
The U.S. Core PPI will also be closely watched today. Economists expect April’s figures to be +0.2% m/m and +2.4% y/y, compared to the previous numbers of +0.2% m/m and +2.4% y/y.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.479%, down -0.04%.
The Euro Stoxx 50 futures are down -0.12% this morning as investors cautiously awaited the release of U.S. producer inflation data as well as Fed Chair Jerome Powell’s remarks due later in the day. Travel and leisure stocks underperformed on Tuesday, while automobile and energy stocks advanced. Final data from the Federal Statistical Office showed Tuesday that the German annual inflation rate arrived at 2.2% in April, confirming preliminary data. Separately, the Office for National Statistics said Tuesday that Britain’s unemployment rate rose to 4.3% in the quarter to March. In addition, the ZEW Economic Research Institute reported Tuesday that German investor morale improved more than expected in May. Meanwhile, Bank of England Chief Economist Huw Pill said a summer interest-rate cut is on the table but warned that there is “still some work to do” to alleviate domestic price pressures in the U.K. In corporate news, Alcon Inc. (ALC.Z.IX) climbed over +9% after the Swiss eye-care products maker reported stronger-than-expected Q1 earnings. Also, Delivery Hero Se (DHER.D.DX) surged more than +21% after the company announced that Uber would buy its Foodpanda delivery business in Taiwan for $950 million in cash. At the same time, Rheinmetall Ag (RHM.D.DX) slid over -3% after the German arms manufacturer posted downbeat Q1 results.
U.K.’s Average Earnings Index +Bonus, U.K.’s Unemployment Rate, Germany’s CPI, Spain’s CPI, Germany’s ZEW Economic Sentiment, and Eurozone’s ZEW Economic Sentiment data were released today.
U.K. March Average Earnings Index +Bonus has been reported at 5.7%, stronger than expectations of 5.3%.
U.K. March Unemployment Rate was at 4.3%, in line with expectations.
The German April CPI arrived at +0.5% m/m and +2.2% y/y, in line with expectations.
The Spanish April CPI stood at +0.7% m/m and +3.3% y/y, in line with expectations.
The German May ZEW Economic Sentiment came in at 47.1, stronger than expectations of 44.9.
Eurozone May ZEW Economic Sentiment arrived at 47.0, stronger than expectations of 46.1.
Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.07% and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.46%.
China’s Shanghai Composite Index closed slightly lower today as investors exercised caution ahead of China’s Big Tech earnings and the release of the latest U.S. inflation report. Automobile stocks outperformed on Tuesday, while energy stocks led the declines. Property stocks also lost ground, with Agile Group Holdings plunging over -12% after the developer missed an interest payment for its $483 million senior note and cautioned that it might be unable to meet all offshore debt payment obligations due to liquidity pressure. Meanwhile, reports in state media suggest that Chinese authorities can be preparing to cut banks’ reserve requirement ratios, coming a day after Beijing revealed the start of its ultralong bond sales plan. “China’s central bank should flexibly conduct open-market operations and cut the amount of cash banks must hold in reserves when necessary,” the state-run Economic Daily said in an article. In other corporate news, ESR Group surged +26% after receiving a non-binding proposal from a U.S. consortium led by Starwood Capital to take the company private. Investor attention this week is centered on the release of a raft of Chinese economic data for April, including fixed asset investment, unemployment, industrial production, and retail sales, scheduled for Friday.
Japan’s Nikkei 225 Stock Index closed higher today. Energy, consumer cyclical, and technology stocks outperformed on Tuesday. Data released by the Bank of Japan on Tuesday revealed that producer prices in Japan remained steady year-over-year in April. Meanwhile, Japanese government bond yields climbed on Tuesday, with the 20-year government bond yield reaching its highest level since 2013, amid speculation that the Bank of Japan would once more reduce debt-buying amounts in its regular operations to ease pressure on the struggling yen. The yen weakened to a two-week low against the dollar, falling for the third straight day. In corporate news, Suzuki Motor climbed over +6% after the company reported a 21% year-over-year increase in full-year net profit. Also, SoftBank Group gained more than +4% after the technology giant swung to a profit in Q4 and substantially narrowed its annual loss from the prior year. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -1.41% to 18.23.
The Japanese April PPI stood at +0.9% y/y, in line with expectations.
Pre-Market U.S. Stock Movers
Fulcrum Therapeutics (FULC) climbed more than +7% in pre-market trading after Goldman Sachs upgraded the stock to Buy from Neutral with a $15 price target.
Amicus Therapeutics (FOLD) advanced about +4% in pre-market trading after Guggenheim upgraded the stock to Buy from Neutral with a $13 price target.
Planet Fitness (PLNT) gained over +3% in pre-market trading after JPMorgan upgraded the stock to Overweight from Neutral with a $78 price target.
Akoya Biosciences (AKYA) tumbled more than -20% in pre-market trading after the company reported downbeat Q1 results and provided below-consensus FY24 revenue guidance.
StoneCo (STNE) slumped over -9% in pre-market trading after the company reported weaker-than-expected Q1 results.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Tuesday - May 14th
Home Depot (HD), Nu Holdings (NU), Alcon (ALC), Sea (SE), Flutter Entertainment (FLUT), Nextracker (NXT), IGT (IGT), Dlocal (DLO), Prestige Consumer Health (PBH), Boot Barn Holdings (BOOT), HudBay Minerals (HBM), DHT Holdings Inc (DHT), Rumble (RUM), Smith Douglas Homes (SDHC), Navios Maritime Unit (NMM), Centerra Gold (CGAU), IHS Holding (IHS), SilverCrest Metals (SILV), Oxford Lane (OXLC), Infinera (INFN), Capital Southwest (CSWC), Jack In The Box (JACK), Autolus Therapeutics (AUTL), Liquidia Technologies (LQDA), Arcutis (ARQT), Sky Harbour (SKYH), Bioceres Crop (BIOX), Intuitive Machines (LUNR), Absci (ABSI), Taysha Gene (TSHA), Ocugen (OCGN), Lifeway (LWAY), Atea (AVIR), Precigen (PGEN), Fennec Pharma (FENC), Nyxoah (NYXH), Terran Orbital (LLAP), Acumen Pharmaceuticals (ABOS), Innate Pharma (IPHA), VirTra (VTSI), Alimera (ALIM), Origin Materials (ORGN).
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