Morning Markets
December E-Mini S&P 500 futures (ESZ23) are down -0.06%, and Dec Nasdaq 100 E-Mini futures (NQZ23) are down -0.16%.
Stock index futures are slightly lower on some disappointing corporate earnings results. A -10% plunge in Cisco Systems in pre-market trading is leading technology stocks lower after it cut its full-year revenue forecast. Also, Walmart is down more than -3% after striking a cautious tone about the outlook for U.S. shoppers. Stock index futures recovered from their worst levels as bond yields fell when weekly U.S. continuing unemployment claims rose to a nearly 2-year high, a dovish factor for Fed policy.
Stocks also have support after the Senate Wednesday night voted 87-11 to approve a temporary funding measure to avert a government shutdown. The bill will now be signed by President Biden. The measure will fund some parts of the government through Jan 19 and others through Feb 2.
U.S. weekly initial unemployment claims rose +13,000 to 231,000, showing a weaker labor market than expectations of 220,000. Also, weekly continuing claims rose +32,000 to a 2-year high of 1.865 million, showing a weaker labor market than expectations of 1.843 million.
The U.S. Nov Philadelphia Fed business outlook survey rose +3.1 to -5.9, stronger than expectations of -8.0.
The U.S. Oct import price index ex-petroleum fell -0.2% m/m, just above expectations of -0.3% m/m.
On the positive side for stocks, Macy’s is up more than +10% in pre-market trading after reporting Q3 adjusted EPS well above the consensus and raising its full-year adjusted EPS forecast. Also, DoorDash and BorgWarner are up more than +1% after being upgraded to buy.
The markets are discounting a 5% chance for a +25 bp rate hike at the next FOMC meeting on Dec 12-13 FOMC and a 0% chance for that +25 bp rate hike at the following FOMC meeting on Jan 30-31, 2024. The markets are then discounting a +32% chance for a -25 bp rate cut at the March 19-20, 2024, FOMC meeting and an 85% chance for that same -25 bp rate cut at the Apr 30-May 1, 2024 FOMC meeting.
U.S. and European government bond yields today are lower. The 10-year T-note yield is down -7.4 bp at 4.457%. The 10-year German bund yield is down -4.6 bp at 2.598%. The 10-year UK gilt yield is down -8.9 bp at 4.138%.
Overseas stock markets are lower. The Euro Stoxx 50 is down -0.11%. China’s Shanghai Composite Index closed down -0.71%. Japan’s Nikkei Stock Index closed down -0.28%.
The Euro Stoxx 50 today is modestly lower as some disappointing corporate earnings results dampen market sentiment. Burberry Group Plc tumbled more than -8% after saying weaker demand for high-end goods may make its sales forecast impossible to attain. Also, HelloFresh SE dropped -10% after issuing a profit warning and cutting its full-year sales guidance. Technology stocks are also under pressure as Cisco Systems retreated after saying new product orders are slowing.
China’s Shanghai Composite today closed moderately lower. Concerns about China’s housing market weighed on property stocks and undercut the overall market after today’s news that home prices in October fell at the fastest pace in 8-1/2 years. Also, disappointment that the meeting between U.S. President Biden and Chinese President Xi Jinping yielded only modest results weighed on Chinese stocks. On the positive side, Chinese airline stocks rallied after both countries agreed to increase direct flights next year significantly.
China Oct new home prices fell -0.38% m/m, the biggest decline in 8-1/2 years, and the fifth consecutive month home prices have fallen.
Japan’s Nikkei Stock Index fell back from a 2-month high and closed moderately lower. Japanese stocks swung to losses today as profit-taking occurred after Wednesday’s sharp rally. Strength in the yen weighed on exporter stocks. Also, networking stocks retreated after Cisco Systems, the largest maker of computer networking equipment, cut its revenue forecast for the year. The Nikkei Stock Index today initially moved higher on better-than-expected trade news for October and a bigger-than-expected increase in Sep core machine orders.
Japan Oct exports rose +1.6%y/y, stronger than expectations of +1.0% y/y. Also, Oct imports fell -12.5% y/y, a smaller decline than expectations of -12.8% y/y.
Japan Sep core machine orders rose +1.4% m/m, stronger than expectations of +0.9% m/m.
The Japan Sep tertiary index fell -1.0% m/m, worse than expectations of -0.1% m/m and the biggest decline in 6 months.
Pre-Market U.S. Stock Movers
Walmart (WMT) tumbled more than -3% in pre-market trading, despite raising its full-year profit forecast, after CEO Rainey said there was a “sharper falloff” in sales in the last two weeks of October and that they are “more cautious on the consumer than they were 90 days ago at this time.”
Cisco Systems (CSCO) sank more than -10% in pre-market trading after cutting its full-year revenue forecast to $53.8 billion-$55.0 billion from a prior forecast of $57.0 billion-$58.2 billion, well below the consensus of $57.84 billion.
Cybersecurity stocks fell in pre-market trading after Palo Alto Networks reported Q1 billings of $2.02 billion, weaker than the consensus of $2.08 billion. As a result, Palo Alto Networks (PANW) is down more than -6%, Crowdstrike Holdings (CRWD) is down more than -3%, and Zscaler (ZS), Fortinet (FTNT), and SentinelOne (S) are down more than -2%.
Children’s Place (PLCE) plunged more than -18% in pre-market trading after reporting Q3 adjusted EPS of $3.22, well below the consensus of $3.75.
Alibaba Group Holding (BABA) dropped more than -7% in pre-market trading after calling off a spinoff of its cloud business, blaming U.S. restrictions on the sale of advanced chips to China.
Target (TGT) slid more than -1% in pre-market trading after TD Cowen downgraded the stock to market perform from outperform.
Macy’s (M) jumped more than +10% in pre-market trading after reporting Q3 adjusted EPS of 21 cents, well above the consensus of zero cents, and raising its full-year adjusted EPS forecast to $2.88-$3.12 from a previous forecast of $2.70-$3.20.
DoorDash (DASH) rose more than +1% in pre-market trading after Deutsche Bank reinstated coverage of the stock with a buy recommendation and a price target of $125.
Catalent (CTLT) climbed more than +2% in pre-market trading after Baird upgraded the stock to outperform from neutral with a price target of $53.
BorgWarner (BWA) gained more than +1% in pre-market trading after Guggenheim Securities upgraded the stock to buy from neutral with a price target of $41.
BILL Holdings (BILL) rose more than +1% in pre-market trading on signs of insider buying after an SEC filing showed that Director Hornik bought $1 million worth of shares on Monday.
Earnings Reports (11/16/2023)
Applied Materials Inc (AMAT), Bath & Body Works Inc (BBWI), Berry Global Group Inc (BERY), Copart Inc (CPRT), Dolby Laboratories Inc (DLB), Gap Inc/The (GPS), Globant SA (GLOB), Macy's Inc (M), Post Holdings Inc (POST), Ross Stores Inc (ROST), UGI Corp (UGI), Walmart Inc (WMT), Williams-Sonoma Inc (WSM), Woodward Inc (WWD).
On the date of publication, Rich Asplund 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.
