Nasdaq Futures Climb as Bond Yields Retreat From Decade Highs, Micron Earnings on Tap

Oleksandr Pylypenko - Barchart - Wed Sep 27, 2023

December Nasdaq 100 E-Mini futures (NQZ23) are trending up +0.44% this morning as U.S. Treasury yields slipped from decade highs, while investors braced for a new round of economic data as well as an earnings report from chip maker Micron Technology.

In Tuesday’s trading session, the benchmark S&P 500, the blue-chip Dow, and the tech-heavy Nasdaq 100 dropped to 3-1/2 month lows. Cintas Corporation (CTAS) plunged over -5% and was the top percentage loser on the S&P 500 after the provider of workplace uniforms posted Q1 revenue that was in line with analysts’ estimates. Also, mega-cap growth stocks retreated, with Apple Inc (AAPL) falling more than -2% and Alphabet Inc (GOOGL) dropping over -1%. In addition, Amazon.com Inc (AMZN) slumped about -4% after the U.S. Federal Trade Commission filed its long-anticipated antitrust lawsuit against the online retailer. On the bullish side, DraftKings Inc (DKNG) rose over +2% after JPMorgan upgraded the stock to Overweight from Neutral.

Economic data on Tuesday showed the U.S. CB consumer confidence index dipped to a 4-month low of 103.0 in September, lower than the consensus figure of 105.5. Also, U.S. August new home sales fell to a 5-month low of 675K, weaker than expectations of 700K. In addition, the U.S. S&P/CS HPI composite - 20 n.s.a. unexpectedly rose +0.1% y/y in July, stronger than expectations of -0.3% y/y.

“Investors are beginning to realize that a ‘higher for longer’ interest rate environment is a likely outcome and are slowly adjusting to the ‘new normal. Higher-for-longer has been the mantra of the Fed for a few months. It is only recently that the markets have been taking them at their word,” Paul Nolte, a senior wealth manager at Murphy & Sylvest Wealth Management, wrote in a note.

U.S. rate futures have priced in a 19.5% probability of a 25 basis point rate increase at the November meeting and a 31.9% chance of a 25 basis point rate hike at the December meeting.

Meanwhile, Senate Democratic and Republican leaders Tuesday introduced their own bill that would keep the government open through mid-November and provide $6 billion in assistance to Ukraine. However, the plan to prevent a shutdown on October 1st still needs to overcome gridlock in the House.

On the earnings front, notable companies like Micron (MU), Paychex (PAYX), and Jefferies Financial (JEF) are slated to release their quarterly results today.

Today, all eyes are focused on U.S. Core Durable Goods Orders data in a couple of hours. Economists, on average, forecast that August Core Durable Goods Orders will stand at +0.1% m/m, compared to the previous value of +0.5% m/m.

Also, investors are likely to focus on U.S. Durable Goods Orders data, which came in at -5.2% m/m in July. Economists foresee the August figure to be -0.5% m/m.

U.S. Crude Oil Inventories data will be reported today as well. Economists estimate this figure to be -1.320M, compared to last week’s value of -2.135M.

In the bond markets, United States 10-year rates are at 4.504%, down -1.30%.

The Euro Stoxx 50 futures are up +0.36% this morning, following four consecutive sessions of losses. Technology and energy stocks gained ground on Wednesday, while insurance stocks underperformed. According to a survey conducted by the GfK institute, German consumer sentiment is expected to decline in October, as consumers lean towards saving rather than spending amid a gloomy economic picture. In corporate news, H & M Hennes & Mauritz Ab (HMB.S.DX) climbed over +3% after the world’s second-largest fashion retailer posted a slightly bigger-than-expected increase in its quarterly profit, attributed to effective cost-cutting measures.

Germany’s GfK Consumer Climate and France’s Consumer Confidence data were released today.

The German October GfK Consumer Climate stood at -26.5, weaker than expectations of -26.0.

The French September Consumer Confidence came in at 83, weaker than expectations of 84.

Asian stock markets today settled in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.16%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.18%.

China’s Shanghai Composite today closed higher as positive industrial profits data and the central bank’s vow to support the economic recovery boosted investor sentiment. The People’s Bank of China announced its intention to step up policy adjustments and implement monetary policy in a “precise and forceful” manner to bolster an economy whose recovery was improving with “increasing momentum.” Official data showed on Wednesday that Chinese industrial profits experienced a year-on-year increase of 17.2% in August, marking the first increase in over a year and providing additional evidence of economic stabilization. Meanwhile, foreign investors bought a net 1.8 billion yuan worth of Chinese stocks through the Stock Connect program on Wednesday. On the negative side, Hong Kong-listed property stocks declined for a third day, with CIFI Holdings Group Co Ltd tumbling over -58% after resuming trading following a six-month break. Also, China Evergrande Group plunged about -19% after Bloomberg News reported that the company’s chairman, Hui Ka Yan, had been placed under police surveillance.

Japan’s Nikkei 225 Stock Index closed higher today, rebounding from a 1-month low as investors scooped up stocks to secure rights for dividend payouts that were set to expire after the trading session. Healthcare stocks outperformed on Wednesday, with Chugai Pharmaceutical Co Ltd climbing about +4% and Daiichi Sankyo Co Ltd rising more than +3%. Technology stocks also gained ground. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -0.55% to 18.12.

“The market tracked Wall Street’s declines earlier in the session, but investors bought shares to get rights for dividend payouts, which pushed the market higher,” said Shigetoshi Kamada, general manager at the research department at Tachibana Securities.

Pre-Market U.S. Stock Movers

Costco Wholesale Corp (COST) fell about -2% in pre-market trading despite the company posting Q4 results that exceeded expectations.

ChargePoint Holdings Inc (CHPT) rose over +3% in pre-market trading after UBS initiated coverage of the stock with a Buy rating.

Galecto Inc (GLTO) surged about +30% in pre-market trading after the company announced it would reduce its workforce by about 70% and explore potential strategic alternatives.

Cardiff Oncology Inc (CRDF) soared more than +32% in pre-market trading after releasing phase 2 data on metastatic pancreatic ductal adenocarcinoma candidate onvansertib.

DocuSign Inc (DOCU) gained over +1% in pre-market trading after HSBC upgraded the stock to Hold from Reduce.

Zions Bancorporation (ZION) fell more than -1% in pre-market trading after Morgan Stanley downgraded the stock to Underweight from Equal Weight.

You can see more pre-market stock movershere

Today’s U.S. Earnings Spotlight: Wednesday - September 27th

Micron (MU), Paychex (PAYX), Jefferies Financial (JEF), Concentrix (CNXC), H B Fuller (FUL), Worthington Industries (WOR), Duckhorn Portfolio (NAPA), Comtech (CMTL), Sangoma Technologies (SANG).

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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.