What you need to know…

The S&P 500 Index ($SPX) (SPY) today is down -0.67%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.30%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -1.20%.

U.S. stock index futures this morning are moderately lower amid mixed earnings reports.  Lumen Technologies plunged more than -19% after forecasting full-year adjusted Ebitda below consensus.  Also, Jack Henry & Associates is down more than -9% after reporting weaker-than-expected Q2 revenue.  Trimble and Illumina are down more than -3% after forecasting full-year adjusted EPS below expectations. 

Inflation concerns are also weighing on stock index futures today after Manheim reported that U.S. Jan average used-vehicle prices rose +2.5% m/m. Used car prices are one of the larger components of the Consumer Price Index, making up 4.5% of its core. 

Higher global bond yields today are bearish for stocks.  The 10-year T-note yield rose to a 1-month high of 3.690%, and the 10-year German bund yield climbed to a 5-week high of 2.399%.

On the positive side, Fortinet is up more than +12% today to lead a rally in cybersecurity stocks after forecasting full-year revenue above estimates.  Also, CVS Health is up more than +3% after forecasting stronger-than-expected full-year revenue, and CME Group is up more than +3% after reporting better-than-expected Q4 adjusted EPS. 

Comments today from New York Fed President Williams were on the dovish side and supportive for stocks when he said a peak interest rate of 5.00% to 5.25% is still a reasonable view, and 25 bp rate increases seem like the right size.

Overseas markets are mixed.  The Euro Stoxx 50 index is up +0.08%.  China’s Shanghai Composite stock index closed down -0.49%, and Japan’s Nikkei Stock index closed down -0.29%.

Today’s stock movers…

Lumen Technologies (LUMN) is down more than -19% to lead losers in the S&P 500 after forecasting full-year adjusted Ebitda of $4.6 billion to $4.8 billion, below the consensus of $5.15 billion. 

Jack Henry & Associates (JKHY) is down more than -9% after reporting Q2 revenue of $505.3 million, weaker than the consensus of $515.6 million, and cutting its full-year revenue forecast to $2.05 billion-$2.06 billion from a previous view of $2.09 billion-$2.10 billion, below the consensus of $2.09 billion. 

Alphabet (GOOGL) is down more than -5% to lead losers in the Nasdaq 100 after reports that the company’s newly launched artificial intelligence chatbot Bard delivered erroneous responses. 

Emerson Electric (EMR) is down more than -5% after reporting Q1 net sales of $3.37 billion, below the consensus of $3.42 billion. 

Trimble (TRMB) is down more than -4% after forecasting 2023 adjusted EPS of $2.66-$2.86, weaker than the consensus of $2.89. 

Illumina (ILMN) is down more than -3% after forecasting full-year adjusted EPS of $1.25-$1.50, well below the consensus of $1.70. 

Chipotle Mexican Grill (CMG) is down more than -3% after reporting Q4 comparable same-store sales rose +5.60%, well below the consensus of +7.04%. 

Fortinet (FTNT) is up more than +12% to lead gainers in the S&P 500 and Nasdaq 100 after forecasting full-year revenue of $5.37 billion-$5.43 billion, above the consensus of $5.36 billion. Other cybersecurity stocks are also moving higher on the Fortinet news.  Pala Alto Networks (PANW) is up more than +5%, and Crowdstrike Holdings (CRWD), Zscaler (ZS), and SentinelOne (S) are up more than +2%.

CVS Health (CVS) is up more than +3% after forecasting full-year revenue of $332.7 billion-$338.5 billion, well above the consensus of $324.87 billion. 

CME Group (CME) is up more than +3% after reporting Q4 adjusted EPS of $1.92, stronger than the consensus of $1.87.

Fox Corp (FOXA) is up more than +6% after reporting Q2 revenue of $4.61 billion, stronger than the consensus of $4.57 billion.

Omnicom Group (OMC) is up more than +5% after Morgan Stanley upgraded the stock to equal weight from underweight. 

Microsoft (MSFT) is up more than +1% to lead gainers in the Dow Jones Industrials after Piper Sandler raised its price target on the stock to $290 from $247, citing optimism in the company’s AI products. 

Across the markets…

March 10-year T-notes (ZNH23) today are down -1 tick, and the 10-year T-note yield is up +0.7 bp at 3.681%.  Mar T-notes this morning gave up early gains and are slightly lower and just above Tuesday’s 1-month low.  The 10-year T-note yield posted a 1-month high of 3.690%. Hawkish ECB comments today pushed the 10-year German bund yield to a 5-week high of 2.399% and undercut T-note prices.  Also, supply pressures are weighing on T-note prices as the Treasury later today will auction $35 billion 10-year T-notes as part of this week’s auction package of $96 billion of T-note and T-bonds.  T-notes this morning initially posted moderate gains on comments from New York Fed President Williams, who said a peak interest rate of 5.00% to 5.25% is still a reasonable view and 25 bp rate increases seem like the right size. 

The dollar index (DXY00) today is down by -0.17%.  The dollar this morning is slightly higher on strength in T-note yields.  Also, the weakness in stocks today has boosted the liquidity demand for the dollar. Gains in the dollar are limited on dovish comments from New York Fed President Williams. 

EUR/USD (^EURUSD) today is down by -0.03%.  A stronger dollar today is weighing on the euro.  Losses in EUR/USD are limited by hawkish comments from ECB Vice President Guindos, who said he wouldn't exclude further interest rate hikes after the March ECB meeting. 

Italy Dec retail sales fell -0.2% m/m, stronger than expectations of -0.7% m/m.

ECB Vice President Guindos said, "it may well be that financial markets are too optimistic with regard to inflation and our monetary response," and he wouldn't exclude further interest rate hikes after the March ECB meeting.

USD/JPY (^USDJPY) today is up by +0.26%.  The yen is under pressure today on comments from Japanese Prime Minister Kishida, who said he would carefully consider the market impact while choosing a new BOJ Governor, which signals little indication to signal a shift in the BOJ’s current ultra-easy yen-negative monetary policy.

Today’s Japanese economic news was bullish for the yen.  The Jan eco watchers outlook survey rose +2.5 to an 8-month high of 49.3, stronger than expectations of 47.6.

April gold (GCJ3) this morning is up +0.8 (+0.04%), and March silver (SIH23) is up +0.203 (+0.92%).  Precious metals prices this morning are moderately higher.  Weakness in stocks today has increased safe-haven demand for precious metals.  Dovish comments today from New York Fed President Williams also gave metals a boost when he said 25 bp rate increases from the Fed seem like the right size.  A stronger dollar today is limiting the upside in metals prices.  Liquidation of long gold positions in ETFs is also undercutting gold after the amount of gold held in ETFs fell to a 2-3/4 year low Tuesday. 

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On the date of publication, Rich Asplund 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.