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Oleksandr Pylypenko

Stocks Set to Open Higher as Investors Await More Corporate Earnings and Fed Speak

June S&P 500 E-Mini futures (ESM24) are up +0.24%, and June Nasdaq 100 E-Mini futures (NQM24) are up +0.18% this morning as market participants looked ahead to a fresh batch of corporate earnings reports and remarks from a host of Federal Reserve officials.

In Friday’s trading session, Wall Street’s major averages closed higher, with the benchmark S&P 500 and tech-heavy Nasdaq 100 posting 2-1/2 week highs and the blue-chip Dow notching a 3-1/2 week high. Amgen (AMGN) surged over +11% and was the top percentage gainer on all three major Wall Street averages after the biotech giant reported better-than-expected Q1 adjusted EPS and its chief executive officer said the company was “very encouraged” by early results from a study of its experimental obesity drug, MariTide. Also, Apple (AAPL) climbed about +6% after the iPhone maker reported better-than-expected Q2 results, projected a return to growth in the current quarter, and unveiled a record $110 billion share buyback program. In addition, Arista Networks (ANET) gained more than +4% after Jeffries upgraded the stock to Buy from Hold with a price target of $320. On the bearish side, Expedia Group (EXPE) tumbled over -15% and was the top percentage loser on the S&P 500 after reporting weaker-than-expected Q1 gross bookings.

The U.S. Labor Department’s report on Friday showed that nonfarm payrolls rose by 175K jobs last month, significantly below the consensus estimate of 238K and the smallest gain in 6 months. Also, the U.S. April unemployment rate unexpectedly ticked up to 3.9%, weaker than expectations of no change at 3.8%. In addition, U.S. average hourly earnings came in at +0.2% m/m and +3.9% y/y in April, weaker than expectations of +0.3% m/m and +4.0% y/y. Finally, the U.S. ISM services index unexpectedly fell to 49.4 in April, the steepest pace of contraction in 16 months, while the ISM services prices paid sub-index rose to 59.2 in April.

“[Friday’s] jobs report is the definition of Goldilocks: job growth that is gradually moving back to around trend amid a normalization of wage growth. This is certainly the type of employment report that Fed officials will welcome. We remain optimistic that the Fed will first ease rates at its September FOMC meeting,” said Gennadiy Goldberg at TD Securities.

Fed Governor Michelle Bowman stated on Friday that inflation is expected to stay elevated for “some time,” yet she expressed her anticipation that price gains would eventually ease with interest rates held at current levels. “My baseline outlook continues to be that inflation will decline further with the policy rate held steady, but I still see a number of upside inflation risks that affect my outlook,” she said. At the same time, Bowman reaffirmed she would be willing to hike interest rates if progress on inflation stalls or reverses. Separately, Chicago Fed President Austan Goolsbee told Bloomberg Television on Friday that additional jobs reports similar to Friday’s would provide him with assurance that the economy is not overheating.

Meanwhile, U.S. rate futures have priced in an 8.2% chance of a 25 basis point rate cut at the June FOMC meeting and a 34.1% chance of a 25 basis point rate cut at the July meeting.

First-quarter earnings season continues, and investors await new reports from notable companies this week, including Disney (DIS), Tyson Foods (TSN), Vertex Pharmaceuticals (VRTX), Palantir (PLTR), Datadog (DDOG), Electronic Arts (EA), Rivian Automotive (RIVN), Uber Technologies (UBER), Arm (ARM), Airbnb (ABNB), Shopify (SHOP), Energy Transfer (ET), Trade Desk (TTD), Warner Bros. Discovery (WBD), Hyatt Hotels (H), and Enbridge (ENB).

Market participants will also be monitoring several economic data releases this week, including U.S. Consumer Credit, Wholesale Inventories, Crude Oil Inventories, Initial Jobless Claims, and Michigan Consumer Sentiment (preliminary).

In addition, a host of Fed officials will be making appearances throughout the week, including Barkin, Williams, Kashkari, Jefferson, Cook, Bowman, Goolsbee, and Barr.

The U.S. economic data slate is mainly empty on Monday.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.474%, down -0.53%.

The Euro Stoxx 50 futures are up +0.45% this morning as investors digested a raft of regional economic data and continued to assess the possibility of Federal Reserve interest-rate cuts following cooler-than-expected U.S. jobs data. Energy stocks outperformed on Monday as oil prices climbed after Saudi Arabia increased its official selling price for crude in June for most regions. A survey showed on Monday that Eurozone business activity expanded at its quickest rate in nearly a year in April, with a revival in the bloc’s dominant services industry outweighing a further decline in manufacturing. Meanwhile, European Central Bank Chief Economist Philip Lane said in an interview with Spanish newspaper El Confidencial that recent data from the euro area have bolstered his confidence in the return of inflation to the 2% goal. In other news, Goldman Sachs boosted its 2024 EPS growth forecast for STOXX 600 companies to 6% from 3% on Friday. In corporate news, Indra Sistemas Sa (IDR.E.DX) surged over +7% after the Spanish defense and technology firm reported a 40% increase in Q1 net profit. At the same time, Postnl (PNL.NA) fell more than -4% after the Dutch postal firm reported a wider-than-expected Q1 loss.

Spain’s Services PMI, Italy’s Services PMI, France’s Services PMI, Germany’s Services PMI, Eurozone’s Composite PMI, Eurozone’s Services PMI, Eurozone’s Sentix Investor Confidence Index and Eurozone’s PPI data were released today.

The Spanish April Services PMI arrived at 56.2, stronger than expectations of 56.0.

The Italian April Services PMI came in at 54.3, weaker than expectations of 54.7.

The French April Services PMI stood at 51.3, stronger than expectations of 50.5.

The German April Services PMI was at 53.2, weaker than expectations of 53.3.

Eurozone April Composite PMI arrived at 51.7, stronger than expectations of 51.4.

Eurozone April Services PMI came in at 53.3, stronger than expectations of 52.9.

Eurozone May Sentix Investor Confidence Index stood at -3.6, stronger than expectations of -4.8.

Eurozone March PPI has been reported at -0.4% m/m, in line with expectations.

China’s Shanghai Composite Index (SHCOMP) closed up +1.16%, while Japanese markets were closed for a holiday.

China’s Shanghai Composite Index closed sharply higher today as trading resumed following a five-day local holiday, with sentiment boosted by Beijing’s supportive policy stance and indications of ongoing consumption recovery. Consumer staples and healthcare stocks led the gains on Monday. A private sector survey revealed on Monday that China’s service sector continued to expand in April, albeit at a slower pace than in March, amid increasing costs. However, growth in new orders accelerated, and business sentiment saw a solid rise. Meanwhile, revenue from tourists in Beijing surged by 10% year-over-year to 19.6 billion yuan during the May Day holiday, with the number of tourists increasing by 9.4% to approximately 17 million, according to a report from Xinhua News Agency on Sunday, citing the city’s culture and tourism bureau. Sentiment was also buoyed by China’s commitment to bolster the economy through prudent monetary and proactive fiscal measures, including adjustments to interest rates and bank reserve requirement ratio, as reported by state media quoting the Politburo of the Communist Party. On the ground of this, BNP Paribas revised its view on the MSCI China index last week, shifting to the bull case as the new base scenario. In other news, China’s President Xi Jinping arrived in France to initiate talks focused on stabilizing the country’s relationship with Europe. In corporate news, Kexing Biopharm surged over +7% after receiving a certificate of good manufacturing practice from the Norwegian Medical Products Agency for its production line of paclitaxel for injection.

“The important meeting held before the holidays clarified the goal of continuing to deepen reforms and expand opening up, which will help drive the onshore equity market higher in the near term. The travel and consumption trend during the holidays also raised expectations for the consumption recovery,” said Shen Meng, director at Chanson & Co. 

The Chinese April Caixin Services PMI came in at 52.5, in line with expectations.

Japan’s Nikkei Stock Index was closed for the Children’s Day holiday. The markets will reopen on Tuesday.

Pre-Market U.S. Stock Movers

Perficient (PRFT) soared about +52% in pre-market trading after EQT AB agreed to acquire the technology consultant in a deal valued at around $3 billion, including debt.

Apple (AAPL) fell nearly -1% in pre-market trading after Warren Buffett’s Berkshire Hathaway trimmed the size of its stake in the iPhone maker by over 22% in the first quarter of 2024.

CytomX Therapeutics (CTMX) climbed more than +5% in pre-market trading after Jefferies upgraded the stock to Buy from Hold with a price target of $8.

Micron Technology (MU) gained over +2% in pre-market trading after Baird upgraded the stock to Outperform from Neutral with a price target of $150. The firm also added Micron to its list of top semiconductor ideas.

U.S. Steel (X) rose about +2% in pre-market trading after Morgan Stanley upgraded the stock to Overweight from Equal Weight.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Monday - May 6th

Vertex (VRTX), Itau Unibanco (ITUB), Simon Property (SPG), Palantir (PLTR), Microchip (MCHP), Realty Income (O), Williams (WMB), Fidelity National Info (FIS), Axon Enterprise (AXON), Symbotic (SYM), BioNTech (BNTX), IFF (IFF), Tyson Foods (TSN), Loews (L), Aecom Technology (ACM), Shockwave Medical (SWAV), CNA Financial (CNA), Regal Beloit (RRX), Coty (COTY), BWX Tech (BWXT), Jones Lang LaSalle (JLL), FMC (FMC), Primerica (PRI), Bellring (BRBR), Fabrinet (FN), Noble (NE), Lucid Group (LCID), Coherent (COHR), Air Lease (AL), Vornado (VNO), Freshpet Inc (FRPT), Cabot Corp (CBT), Affiliated Managers (AMG), Varonis Systems (VRNS), Krystal Biotech (KRYS), Alpha Metallurgical Resources (AMR), One Gas (OGS), Otter Tail (OTTR), Teradata (TDC), Axsome Therapeutics (AXSM), Goodyear Tire & Rubber (GT), Black Stone Minerals (BSM), Marriot Vacations Worldwide (VAC), Sterling Construction (STRL), Lumentum Holdings (LITE), Golub (GBDC), National Health Investors (NHI), Zeta Global Holdings (ZETA), J & J Snack Foods (JJSF), Paymentus (PAY), Mueller Water Products (MWA), Talos Energy (TALO), Hims Hers Health (HIMS), Atlas Energy Solutions (AESI), Rxsight (RXST), Integra (IART), Sunstone Hotel Investors (SHO), Federal Agricultural Mortgage (AGM), Treehouse Foods (THS), Rocket Lab USA (RKLB), Ultra Cleans (UCTT), Bowlero (BOWL), Crescent Energy (CRGY), Par Pacific Holdings (PARR), Semrush Holdings (SEMR), Perficient (PRFT), Addus (ADUS), NAPCO (NSSC), Northwest Natural Gas (NWN), Matterport (MTTR), Claros Mortgage Trust (CMTG), Playa Hotels & Resorts (PLYA), MFA Financial (MFA), Alexanders (ALX), Bain Capital Specialty Finance (BCSF).

More Stock Market News from Barchart

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.
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