S&P Futures Muted as Mixed Earnings Weigh on Sentiment, PMI Data in Focus
June S&P 500 futures (ESM23) are trending up +0.07% this morning after three major U.S. benchmark indices finished the regular session in the red as investors assessed a mixed slate of corporate earnings while parsing through economic data and comments from Federal Reserve officials.
In Thursday’s trading session, Tesla Inc (TSLA) tumbled over -9% after the electric vehicle maker posted weaker-than-expected Q1 results, dragging the tech-heavy Nasdaq 100 sharply into negative territory. Meanwhile, AT&T Inc (T) plunged more than -10% and was the top percentage loser on the benchmark S&P 500 after the wireless carrier reported weaker-than-expected Q1 free cash flow. Also, American Express Company (AXP) fell about -1% after the company’s Q1 earnings fell short of Wall Street expectations, weighing on the blue-chip Dow. On the positive side, Lam Research Corp (LRCX) climbed more than +7% after reporting better-than-expected Q3 results.
The Labor Department’s report on Thursday showed claims for state unemployment benefits rose +5K to a seasonally adjusted 245K last week, higher than the expected figure of 240K. Also, the U.S. Philly Fed business outlook survey unexpectedly fell to -31.3 in April, weaker than expectations of -19.2, marking the index’s eighth negative reading in a row and its lowest since May 2020. In addition, U.S. Existing Home Sales stood at 4.44M in March, weaker than expectations of 4.50M.
Cleveland Fed President Loretta Mester Thursday signaled support for another interest-rate hike while flagging the need to watch how much banks pull back on lending due to the recent stress. “Demand is still outpacing supply in both product and labor markets, and inflation remains too high,” Mester said. Also, Philadelphia Fed President Patrick Harker warned that “some additional tightening may be needed to ensure the policy is restrictive enough to support both pillars of our dual mandate.” In addition, Dallas Fed President Lorie Logan and Fed Governor Michelle Bowman said that inflation remained “too high” and that reducing it was “essential” for the economy.
Meanwhile, U.S. rate futures have priced in an 84.6% probability of a 25 basis point rate increase and a 15.4% chance of no hike at the May meeting.
On the earnings front, global companies like Procter&Gamble (PG), HCA (HCA), and Schlumberger (SLB) are set to report their quarterly figures today. Analysts estimate aggregate S&P 500 earnings to fall around 5% year-over-year in Q1.
Today, all eyes are focused on the U.S. S&P Global Composite PMI preliminary reading in a couple of hours. Economists, on average, forecast that the April S&P Global Composite PMI will stand at 52.8, compared to the previous value of 52.3.
Also, investors are likely to focus on the U.S. Manufacturing PMI, which was at 49.2 in March. Economists foresee the new figure to be 49.0.
U.S. Services PMI preliminary reading will be reported today as well. Economists foresee this figure to stand at 51.5 in April, compared to the previous number of 52.6.
In addition, investors will likely focus on a speech from Federal Reserve Governor Lisa Cook for more clues on the path of interest rates.
In the bond markets, United States 10-Year rates are at 3.534%, down -0.32%.
The Euro Stoxx 50 futures are up +0.16% this morning as investors digested a slew of important regional economic data and more corporate earnings. Eurozone S&P Global Composite PMI unexpectedly jumped to an 11-month high of 54.4 in April from March’s 53.7, indicating that the bloc’s economic recovery has gathered pace. Meanwhile, mining stocks are underperforming as iron ore fell to the lowest since December, with Rio Tinto Plc (RIO.L.EB) dropping more than -4%. ECB Vice President Luis de Guindos said Friday that the European Central Bank is unlikely to return to guiding its next policy moves amid the uncertainty in the outlook. In corporate news, shares of Essilorluxottica Sa (EL.P.DX) climbed over +7% after the luxury eyewear maker reported a rise in first-quarter revenues.
U.K.’s Core Retail Sales, U.K.’s Retail Sales, France’s Manufacturing PMI (preliminary), France’s S&P Global Composite PMI (preliminary), France’s Services PMI (preliminary), Germany’s Composite PMI (preliminary), Germany’s Manufacturing PMI (preliminary), Germany’s Services PMI (preliminary), Eurozone’s Manufacturing PMI (preliminary), Eurozone’s S&P Global Composite PMI (preliminary), Eurozone’s Services PMI, U.K.’s Composite PMI (preliminary), U.K.’s Manufacturing PMI (preliminary), and U.K.’s Services PMI (preliminary) data were released today.
U.K. March Core Retail Sales stood at -1.0% m/m and -3.2% y/y, weaker than expectations of -0.7% m/m and -3.1% y/y.
U.K. March Retail Sales came in at -0.9% m/m and -3.1% y/y, compared to expectations of -0.5% m/m and -3.1% y/y.
The French April Manufacturing PMI has been reported at 45.5, weaker than expectations of 47.8.
The French April S&P Global Composite PMI was at 53.8, stronger than expectations of 52.7.
The French April Services PMI stood at 56.3, stronger than expectations of 53.4.
The German April Composite PMI came in at 53.9, stronger than expectations of 52.7.
The German April Manufacturing PMI has been reported at 44.0, weaker than expectations of 45.7.
The German April Services PMI was at 55.7, stronger than expectations of 53.3.
Eurozone April Manufacturing PMI came in at 45.5, weaker than expectations of 48.0.
Eurozone April S&P Global Composite PMI stood at 54.4, stronger than expectations of 53.7.
Eurozone April Services PMI was at 56.6, stronger than expectations of 54.5.
U.K. April Composite PMI has been reported at 53.9, stronger than expectations of 52.6.
U.K. April Manufacturing PMI stood at 46.6, weaker than expectations of 48.5.
U.K. April Services PMI came in at 54.9, stronger than expectations of 53.0.
Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -1.95%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.33%.
China’s Shanghai Composite today closed sharply lower, weighed down by artificial intelligence and tech stocks as concerns over a mixed economic recovery in the country kept market sentiment subdued. AI and information technology stocks were one of the biggest drags on the market, with All Winner Technology Co Ltd slumping more than -15% and IFLYTEK Co Ltd plunging over -9%. Meanwhile, U.S. Treasury Secretary Janet Yellen said Thursday that the U.S. seeks “constructive and fair” economic ties with China.
“Investor sentiment edged down as debate over the sustainability of fundamental recovery continues despite the strong macro data,” said Morgan Stanley analysts.
Japan’s Nikkei 225 Stock Index closed lower today after data showed core inflation remained sticky in March. At the same time, a preliminary reading on Friday showed that the Japanese manufacturing activity contracted at the slowest pace in six months in April, while the service sector stayed strong. Focus is now squarely on the Bank of Japan’s two-day policy meeting next week, with some analysts expecting the central bank to tweak its yield curve control policy. Meanwhile, chip-related stocks demonstrated strong performance on Friday, with Tokyo Electron Ltd rising over +1% and Advantest Corp climbing more than +3%. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up 0.94% to 16.19.
The Japanese March National Core CPI has been reported at +3.1% y/y, in line with expectations.
The Japanese April Manufacturing PMI stood at 49.5, weaker than expectations of 49.9.
The Japanese April Services PMI came in at 54.9, weaker than expectations of 55.1.
Pre-Market U.S. Stock Movers
Contextlogic Inc (WISH) climbed about +20% in pre-market trading after the company announced a $50M stock repurchase program.
CSX Corporation (CSX) gained over +3% in pre-market trading after the railroad operator reported upbeat Q1 results.
Eyepoint Pharmaceuticals Inc (EYPT) soared more than +7% in pre-market trading after Baird initiated coverage on the stock with an outperform rating and a $33 price target.
AT&T Inc (T) rose about +1% in pre-market trading after HSBC upgraded the stock to buy from hold with a $21 price target.
ZIM Integrated Shipping Services Ltd (ZIM) slid more than -2% in pre-market trading after JPMorgan downgraded the stock to neutral from overweight.
Big Lots Inc (BIG) fell over -3% in pre-market trading after Piper Sandler downgraded the stock to underweight from neutral.
You can see more pre-market stock movershere
Today’s U.S. Earnings Spotlight: Friday - April 21st
Procter&Gamble (PG), HCA (HCA), Schlumberger (SLB), Freeport-McMoran (FCX), Regions Financial (RF), Autoliv (ALV).
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- Electric Vehicle Stocks Take a Beating Following Tesla’s Price Cut
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.
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