Provided Content: Content provided by Barchart. The Globe and Mail was not involved, and material was not reviewed prior to publication.
Markets Today: Stocks Slump as Bond Yields Rise on Hawkish Comments from Bullard
Morning Markets
December S&P 500 futures (ESZ22) this morning are down -1.27%, and December Nasdaq 100 E-Mini futures (NQZ22) are down -1.45%.
Rising bond yields this morning are weighing on stock index futures. Comments from St. Louis Fed President Bullard pushed the 10-year T-note yield up +7.2 bp to 3.762% when he said interest rates might need to rise to 5% to 7% to attain a sufficiently restrictive level. Even the mention of a 7% federal funds rate spooked the markets.
This morning’s economic news showing an unexpected decline in weekly jobless claims shows strength in the labor market that may also keep the Fed hawkish.
Stock indexes initially rose in overnight trading on better-than-expected quarterly earnings results from Cisco Systems and Nvidia. U.S. economic news this morning was mixed for stocks.
U.S. weekly initial unemployment claims unexpectedly fell -4,000 to 222,000, showing a stronger labor market than expectations of an increase to 228,000.
U.S. Oct housing starts fell -4.2% m/m to 1.425 million, stronger than expectations of 1.41 million. Oct building permits, a proxy for future construction, fell -2.4% m/m to a 2-year low of 1.526 million, although stronger than expectations of 1.514 million.
The U.S. Nov Philadelphia Fed business outlook survey unexpectedly fell -10.7 to a 2-1/2 year low of -19.4, weaker than expectations of an increase to -6.0.
St. Louis Fed President Bullard said, "thus far, the change in the monetary-policy stance appears to have had only limited effects on observed inflation, and to attain a sufficiently restrictive level, the policy rate will need to be increased further" to between 5% and 7%.
The Euro Stoxx 50 index today is down by -0.79%. Concerns about tighter global central bank policies are weighing on stocks today. Hawkish comments from St. Louis Fed President Bullard knocked T-note prices lower and weighed on European government bond prices. The 10-year German bund yield is up +3.2 bp to 2.028% after initially falling to a 6-week low of 1.950% after Eurozone Oct consumer prices were revised lower.
Eurozone Oct CPI was revised downward by -0.1 to a record 10.6% y/y from the initially reported 10.7% y/y.
Eurozone Oct new car registrations rose +12.2% y/y to 746,000, the most in 17 months.
Asian markets today closed lower. China’s Shanghai Composite closed down -0.15%, and Japan’s Nikkei Stock Index closed down -0.35%.
Losses in technology stocks led China’s Shanghai Composite Index lower today on speculation the PBOC may refrain from adding more long-term stimulus after it warned inflation might accelerate as overall demand picks up. Stocks also fell on concern that rising Covid infections in China will delay the reopening of the economy after China reported 23,132 new Covid infections on Wednesday, the most in more than 6-1/2 months.
The People's Bank of China (PBOC) warned that it "will pay serious attention to the underlying possibility of rising inflation, especially changes in the demand side," suggesting the scope for further monetary policy easing may be limited.
Japan’s Nikkei Stock Index today posted moderate losses. Japanese semiconductor-related stocks led the losses in the overall market after Micron Technology said it is reducing the production of DRAM and NAND wafers and may lower Capex amid weak market conditions. However, losses in the overall market were limited as Japanese retail and transportation companies rallied after foreign visitor arrivals in Japan more than doubled in October versus the previous month.
Japan’s trade news was mixed. Japan Oct exports rose +25.3% y/y, weaker than expectations of +29.3% y/y. However, Japan Oct imports rose +53.5% y/y, stronger than expectations of +50.0% y/y and the most in 42 years.
Pre-Market U.S. Stock Movers
Principal Financial Group (PFG) fell more than -2% in pre-market trading after Morgan Stanley downgraded the stock to underweight from equal weight.
Cruise line operators are moving lower in pre-market trading after Credit Suisse double-downgraded Norwegian Cruise Line Holdings stock to underperform from outperform. Norwegian Cruise Line Holdings (NCLH) is down more than -4%. Also, Carnival (CCL) and Royal Caribbean Cruises Ltd (RCL) are down more than -1%.
Advanced Auto Parts (AAP) slid more than -1% in pre-market trading after Citigroup downgraded the stock to neutral from buy.
NetEase (NTES) slipped more than -1% in pre-market trading after it said it would end its 14-year partnership with Blizzard Entertainment in January, suspending services to licensed games that represented a low-single-digit percentage of its revenue and net income in 2021.
Ormat (ORA) dropped more than -8% in pre-market trading after offering 3.75 million shares of its stocks by holder Orix via Bank of America and JPMorgan Chase.
Cisco Systems (CSCO) climbed more than +3% in pre-market trading after reporting Q1 revenue of $13.63 billion, better than the consensus of $13.31 billion, and raising its full-year revenue forecast to up +4.5% to +6.5% from a prior estimate of up +4.0% to +6.0%.
Nvidia (NVDA) rose more than +2% in pre-market trading after reporting Q3 revenue of $5.93 billion, stronger than the consensus of $5.79 billion.
Bath & Body Works (BBWI) surged more than +20% in pre-market trading after reporting Q3 net sales of $1.60 billion, above the consensus of $1.56 billion, and raising its full-year EPS from continuing operations estimate to $3.00-$3.20 from a previous estimate of $2.70-$3.00, higher than the consensus of $2.95.
Macy’s (M) jumped more than +6% in pre-market trading after reporting Q3 adjusted EPS of 52 cents, well above the consensus of 19 cents, and raising its full-year adjusted EPS estimate to $4.07-$4.27 from a previous estimate of $4.00-$4.20, higher than the consensus of $4.09.
BJ’s Wholesale Club Holdings (BJ) rose more than +2% in pre-market trading after reporting Q3 revenue of $4.79 billion, above the consensus of $4.67 billion.
Today’s U.S. Earnings Reports (11/17/2022)
Applied Materials Inc (AMAT), BJ's Wholesale Club Holdings Inc (BJ), Dolby Laboratories Inc (DLB),
Gap Inc/The (GPS), Globant SA (GLOB), Keysight Technologies Inc (KEYS), Kohl's Corp (KSS), Macy's Inc (M), Palo Alto Networks Inc (PANW), Post Holdings Inc (POST), Ross Stores Inc (ROST), UGI Corp (UGI),
Williams-Sonoma Inc (WSM), Woodward Inc (WWD).
More Stock Market News from Barchart
- Why Alphabet (GOOG) May Soon Join the Cost-Cutting Club
- 2 Covered Call Ideas on Pfizer Stock
- Pre-Market Brief: Stocks Fall As Weakness In Retailers and Chip Stocks Weigh On Sentiment
- Stocks Close Lower on Weakness in Retailers and Hawkish Fed Comments
