Morning Markets

June S&P 500 futures this morning are currently down by -1.55% at a 1-year nearest-futures low.  Stock index futures today extended last Friday’s plunge on concern that tighter Fed policy and persistent inflation will slow economic growth and lead to stagflation.  Also, concern that the war in Ukraine and Covid lockdowns in China will boost inflation and undercut economic growth is weighing on stocks today. 

The 10-year T-note yield climbed to a 3-1/2 year high of 3.201%, which is weighing on technology stocks. U.S. stock indexes recovered slightly from their worst levels this morning after Atlanta Fed President Bostic pushed back on the need to raise interest rates as much as 75 bp at a single meeting.  Mr. Bostic today said, "fifty basis points over the last 20 years is already a pretty aggressive move by the Fed.  I don't think we need to be moving even more aggressively."

The Euro Stoxx 50 index this morning is down -1.93% at a 2-month low.  A slump in European real estate stocks today is leading the overall market lower on concerns about recession risk spurred by rising bond yields and interest rates.  The 10-year German bund yield jumped to a 7-3/4 year high today of 1.188%.  Stocks also retreated after a gauge of Eurozone investor confidence fell more than expected to a 23-month low.

The Eurozone May Sentix investor confidence fell -4.6 to a 23-month low of -22.6, weaker than expectations of -21.6.

Asian markets today closed mixed, with China’s Shanghai Composite Index closing up +0.09% and Japan’s Nikkei Stock Index closing down -2.53%. The Shanghai Composite Index today recovered early losses and eked out a small gain on hopes for additional government stimulus to prop up the economy. 

The PBOC today reaffirmed it would focus on supporting small businesses and also sectors and groups hit by Covid outbreaks and vowed to use various monetary policy tools to keep overall liquidity ample.  Better-than-expected Chinese trade data also supported stocks.  Chinese stocks today initially moved lower after Chinese Premier Li Keqiang warned of a "complicated and grave" employment situation as Beijing and Shanghai tightened restrictions on residents to contain Covid outbreaks.

Better-than-expected trade data today was supportive for stocks after China's Apr exports rose +3.9% y/y, stronger than expectations of +2.7% y/y.  China Apr imports were unch y/y, stronger than expectations of -3.0% y/y. 

Japanese stocks tumbled today on negative carry-over from last Friday’s plunge in U.S. stocks as concerns mount over rising inflation and Fed rate hikes that could bring about an economic downturn.  Japanese stocks were also under pressure on concern that China’s recovery may be in peril and drag down the global economy after Chinese Premier Li Keqiang warned that China’s employment situation had turned “grave” because of Covid restrictions.

Today’s Japanese economic data was supportive for stocks after Japan's Mar labor cash earnings rose +1.2% y/y, stronger than expectations of +0.9% y/y.  Also, the Japan Apr Jibun Bank services PMI was revised upward by +0.2 to a 4-month high of 50.7 from the previously reported 50.5.

Pre-Market U.S. Stock Movers

Major U.S. technology stocks are weaker in pre-market trading as they extend last Friday’s losses on economic concerns and after the 10-year T-note yield today rose to a new 3-1/2 year high.  Apple (AAPL), Amazon.com (AMZN), Microsoft (MSFT), Alphabet (GOOGL), and Meta Platforms (FB) are all down more than -1%. 

Cryptocurrency-exposed stocks are falling in pre-market trading, with Bitcoin down more than -8% at a 9-1/2 month low.  Riot Blockchain (RIOT) and Marathon Digital (MARA) are down more than -6%.  Also, MicroStrategy (MSTR), Bit Digital (BTBT), and Coinbase (COIN) are down more than -4%. 

Rivian Automotive (RIVN) sank more than -9% in pre-market trading as a post-IPO selling lockup on the stock expires and after CNBC reported that Ford and another investor are looking to sell shares in Rivian at a discount.  Other electric vehicle markers also fell on the news, with Tesla (TSLA) and Nikola (NKLA) falling more than -4%.

Uber Technologies (UBER) dropped -4% in pre-market trading after CEO Khosrowshahi said the company had made progress in terms of profitability, but the goalposts have changed and now it is about free cash flow and getting there fast. 

Virgin Galactic (SPCE) tumbled -5% in pre-market trading after Truist Securities downgraded the stock to hold from buy. 

Prestige Consumer Healthcare is (PBH) up nearly +1% in pre-market trading after Oppenheimer upgraded the stock to outperform from perform. 

Coty (COTY) rose more than +2% in pre-market trading after reporting Q3 net revenue of $1.19 billion, better than the consensus of $1.16 billion.

Today’s U.S. Earnings Reports (5/9/2022)

Duke Energy Corp (DUK), Exelon Corp (EXC), International Flavors & Fragra (IFF), Microchip Technology Inc (MCHP), Simon Property Group Inc (SPG), Tyson Foods Inc (TSN), Viatris Inc (VTRS).