June S&P 500 futures (ESM23) are up +0.21%, and June Nasdaq 100 E-Mini futures (NQM23) are up +0.28% this morning as market participants continued to assess the path of Federal Reserve monetary policy following a solid U.S. jobs report while bracing for the start of the earnings season and inflation data later this week.
In Monday’s trading session, the blue-chip Dow outperformed the other two indices, boosted by gains in industrial stocks, with the sector’s bellwether, Caterpillar Inc (CAT), closing up about +3%. Also, Western Digital (WDC) and Micron Technology (MU) climbed over +8% and were the top two percentage gainers on the S&P 500, helping keep the benchmark index in positive territory. At the same time, the tech-heavy Nasdaq 100 underperformed major benchmarks as the prospect of another rate hike weighed on megacap growth stocks, while Apple Inc (AAPL) fell over -1% after research firm IDC said Mac shipments dropped -40.5% y/y in the first quarter.
New York Fed President John Williams said Monday he doesn’t think that the central bank’s aggressive interest-rate hikes caused the crisis at the two banks back in March. Also, Williams played down the importance of market expectations for Fed officials. “At the end of the day, we need to make the decisions we think are the right ones to achieve our goals of maximum employment and price stability,” he said.
Meanwhile, U.S. rate futures have priced in a 66.7% probability of a 25 basis point rate increase and a 33.3% chance of no hike at the May meeting.
Investor focus is now squarely on Wednesday’s U.S. inflation data for March and FOMC minutes from the March policy meeting for more insights on the near-term path of interest rates.
“The U.S. CPI print could further solidify market pricing for a 25 bps rate hike for the May meeting,” said Pooja Kumra, rates strategist at TD Securities.
On the corporate side, a trio of U.S. big banks, JPMorgan Chase & Co (JPM), Wells Fargo & Company (WFC), and Citigroup (C), kick off the first-quarter earnings season later this week.
The U.S. economic data slate is mainly empty on Tuesday. However, investors will likely focus on speeches from Philadelphia Fed President Patrick Harker and Minneapolis Fed President Neel Kashkari for fresh clues on the Fed’s monetary policy trajectory.
In the bond markets, United States 10-Year rates are at 3.394%, down -0.61%.
The Euro Stoxx 50 futures are up +0.73% this morning as investors returned from the long Easter weekend with a largely positive outlook. Gains in mining and auto stocks are leading the overall market higher. In addition, European stocks have received a positive handover from Asia after most main indexes closed in the green. Meanwhile, Eurozone retail sales came in at -0.8% m/m and -3.0% y/y in February, compared to expectations of -0.8% m/m and -3.5% y/y. In corporate news, shares of Cineworld Group Plc (CINE.LN) plunged over -21% after the world’s second-largest cinema chain operator filed a plan of reorganization with the U.S. Bankruptcy Court.
Eurozone Sentix Investor Confidence Index was also released today.
Eurozone April Sentix Investor Confidence Index stood at -8.7, stronger than expectations of -9.9.
Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.05%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +1.05%.
China’s Shanghai Composite today lagged its regional peers and closed slightly lower as sentiment took a hit after data showed that Chinese March consumer inflation grew at the slowest pace since September 2021. The Chinese March CPI has been reported at -0.3% m/m and +0.7% y/y, weaker than expectations of +0.2% m/m and +1.0% y/y, indicating persistent demand weakness. Also, producer price inflation stood at -2.5% y/y in March, in line with expectations, extending declines for a sixth successive month amid slowing manufacturing activity.
“Economic recovery is on track but not strong enough to push up prices. There is room for fiscal and monetary policies to boost growth further,” said Zhiwei Zhang, President at Pinpoint Asset Management.
At the same time, Japan’s Nikkei 225 Stock Index closed sharply higher, climbing for a third straight session as the new Bank of Japan governor’s pledge to maintain an ultra-easy monetary policy bolstered investor sentiment. Also, billionaire investor Warren Buffett told Nikkei in an interview on Tuesday that he intends to boost his investments in Japanese stocks. Shares of the country’s major trading houses jumped after Buffett said his stake in them had risen to 7.4% from about 5% in 2020. In addition, export-oriented stocks gained ground as the Japanese yen weakened following Ueda’s comments. Meanwhile, Japan Display Inc rose over +4% after the company said it would team up with China’s HKC Corporation Ltd on next-generation technology for screens. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down 0.92% to 17.14.
Pre-Market U.S. Stock Movers
Tilray Inc (TLRY) plunged over -7% in pre-market trading after the company reported weaker-than-expected Q3 revenue.
Hexo Corp (HEXO) tumbled more than -20% in pre-market trading after Tilray Brands confirmed it had agreed to acquire the cannabis company at a purchase price of $1.25 per share.
Whirlpool Corporation (WHR) rose over +2% in pre-market trading after Goldman Sachs upgraded the stock to buy from neutral.
Kura Sushi USA Inc (KRUS) slid about -5% in pre-market trading after the company announced that it had commenced an underwritten public offering of 1.1M shares of its Class A common stock.
Smith & Nephew SNATS Inc (SNN) gained more than +2% in pre-market trading after Morgan Stanley upgraded the stock to overweight from equal weight.
Leggett & Platt Incorporated (LEG) fell over -1% in pre-market trading after Goldman Sachs downgraded the stock to neutral from buy.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Tuesday - April 11th
Albertsons (ACI), CarMax (KMX), Freedom (FRHC), Nurix (NRIX), Skillsoft Corp Class A (SKIL), Intralot ADR (IRLTY), Cognyte Software (CGNT), OrganiGram Holdings Inc (OGI), Lifecore Biomedical (LFCR).
Earnings Season Will Be A Test For Tech Stock Rally
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