Stock Index Futures Tick Lower Ahead of U.S. JOLTs Report and Fed Speak

Oleksandr Pylypenko - Barchart - Tue Apr 2, 4:32AM CDT

June S&P 500 E-Mini futures (ESM24)are down -0.21%, and June Nasdaq 100 E-Mini futures (NQM24) are down -0.25% this morning as market participants geared up for the latest reading on U.S. job openings while also awaiting comments from Fed officials.

In Monday’s trading session, Wall Street’s major indices ended mixed. Universal Health Services (UHS) slid about -4% after the company said in an SEC filing that its indirect subsidiary, Pavillion Behavioral Health System, had been ordered to pay $60 million in compensatory damages and $475 million in punitive damages related to a sexual assault of a patient in 2020. Also, Bill Holdings (BILL) plunged more than -6% after Wells Fargo Securities downgraded the stock to Underweight from Equal Weight with a price target of $60. On the bullish side, Micron Technology (MU) climbed over +5% and was the top percentage gainer on the Nasdaq 100 after BofA Securities raised its price target on the stock to $144 from $120. In addition, Semtech (SMTC) advanced more than +6% after the company reported better-than-expected Q4 net sales and provided above-consensus Q1 net sales guidance.

Economic data on Monday showed that the U.S. ISM manufacturing index increased to 50.3 in March, stronger than expectations of 48.5. Also, the U.S. March ISM prices paid sub-index rose to a 1-1/2 year high of 55.8, stronger than expectations of 53.3. At the same time, the U.S. S&P Global manufacturing PMI came in at 51.9 in March, weaker than expectations of 52.5. In addition, U.S. February construction spending unexpectedly fell -0.3% m/m, weaker than expectations of +0.7% m/m.

“The ISM manufacturing index surprised everyone by moving into growth territory for the first time since late 2022, with production jumping, new orders rising, and inflation pressures increasing. Markets interpreted that as reducing the chances of meaningful Fed rate cuts, but construction was much weaker, and there are a lot of jobs numbers still to come,” said James Knightley, chief international economist at ING.

Meanwhile, U.S. rate futures have priced in a 1.0% chance of a 25 basis point rate cut at the next central bank meeting in May and a 62.1% chance of a 25 basis point rate cut at the June FOMC meeting.

Today, all eyes are focused on the U.S. JOLTs Job Openings data in a couple of hours. Economists, on average, forecast that the February JOLTs Job Openings will come in at 8.760M, compared to the previous figure of 8.863M.

Also, investors will likely focus on the U.S. Factory Orders data, which stood at -3.6% m/m in January. Economists foresee the February figure to be +1.1% m/m.

In addition, market participants will be looking toward a batch of speeches from Fed officials Bowman, Williams, Mester, and Daly.

In the bond markets, United States 10-year rates are at 4.350%, up +0.51%.

The Euro Stoxx 50 futures are up +0.22% this morning as trading resumed after the Easter long weekend and investors digested factory activity data from Europe’s largest economies. Energy and technology stocks outperformed on Tuesday, while retail stocks lost ground. A survey showed on Tuesday that the Eurozone’s manufacturing sector experienced a deeper contraction in March due to continued demand weakness. Meanwhile, Eurozone government bond yields climbed, mirroring a sell-off in Treasuries on Monday. Investor attention is currently directed towards inflation data from Germany scheduled for later in the session that could provide insights into the timing of interest rate cuts from the European Central Bank. In corporate news, BE Semiconductor Industries N.V. (BESI.NA) gained over +3% after Barclays upgraded the stock to Overweight from Equal Weight.

Spain’s Manufacturing PMI, Italy’s Manufacturing PMI, France’s Manufacturing PMI, Germany’s Manufacturing PMI, and Eurozone’s Manufacturing PMI data were released today.

The Spanish March Manufacturing PMI stood at 51.4, stronger than expectations of 51.1.

The Italian March Manufacturing PMI arrived at 50.4, stronger than expectations of 48.9.

The French March Manufacturing PMI came in at 46.2, stronger than expectations of 45.8.

The German March Manufacturing PMI was at 41.9, stronger than expectations of 41.6.

Eurozone March Manufacturing PMI has been reported at 46.1, stronger than expectations of 45.7.

Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.08% and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.09%.

China’s Shanghai Composite Index closed just below the flatline today after notching its biggest daily gain in a month on Monday. Software and tech hardware stocks led the declines on Tuesday. Real estate stocks also retreated, with China Vanke slumping more than -12% in Hong Kong after the property developer reported a 50.6% decline in 2023 core profit and declared no dividend payout for the first time in 31 years. Meanwhile, data from research firm China Index Academy revealed that prices of second-hand homes across 100 mainland cities dropped by 4.8% to 15,088 yuan ($2,087) per square meter in March compared to the previous year. In other news, Reuters reported that major state-owned banks in China were observed selling dollars in onshore markets on Tuesday, responding to the local currency’s decline to a 4-1/2-month low. In other corporate news, Xiaomi Corp. surged about +9% in Hong Kong as orders for its first electric vehicle surpassed expectations.

Japan’s Nikkei 225 Stock Index closed slightly higher today. Gains in chip stocks helped offset losses in retail and shipping stocks on Tuesday. Meanwhile, the yen steadied after weakening against the dollar on Monday to approximately its lowest levels of the year. Japanese Finance Minister Shunichi Suzuki stated on Tuesday that authorities were prepared to take appropriate action against excessive volatility in the currency market without excluding any options. In other news, the World Bank said in its semi-annual economic outlook that Developing East Asia and Pacific, which includes Japan, is witnessing growth slower than pre-pandemic levels but still surpassing global averages. In corporate news, Rakuten Group slid over -3% following the completion of its previously announced simplified absorption-type split involving its employment information community site business, Rakuten Min-Shu. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -2.54% to 19.15.

Pre-Market U.S. Stock Movers

Health insurer stocks are falling in pre-market trading after the industry regulator announced on Monday that U.S. payments to Medicare Advantage plans will only rise by 3.7% on average in 2025. Health insurers were anticipating a higher final rate, according to Bloomberg. As a result, Humana (HUM) is down more than -9%. Also, CVS Health (CVS) is down over -5%, and UnitedHealth Group (UNH) is down more than -3%.

Kidpik (PIK) spiked about +66% in pre-market trading after the company announced that it had entered into a definitive merger agreement with Nina Footwear.

PVH Corp. (PVH) tumbled over -23% in pre-market trading as soft Q1 and FY24 guidance overshadowed better-than-expected Q4 results.

Canoo (GOEV) plunged more than -24% in pre-market trading after reporting mixed Q4 results and providing below-consensus FY24 revenue guidance.

Estee Lauder (EL) gained over +1% in pre-market trading after Citi upgraded the stock to Buy from Neutral with a price target of $175.

Lennar (LEN) fell more than -1% in pre-market trading after Wedbush downgraded the stock to Underperform from Neutral.

You can see more pre-market stock movershere

Today’s U.S. Earnings Spotlight: Tuesday - April 2nd

Paychex (PAYX), Cal-Maine (CALM), Dave & Buster’s Entertainment (PLAY), Allego US (ALLG).

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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.