Morning Markets

Stocks ((SPY)(QQQ)) are down this morning as signs of persistent price pressures were reflected in a PPI report rose more than expected in April.  Also, a drop of more than -4% in Disney in pre-market trading is weighing on the overall market after it forecast weaker-than-expected growth in the second half of the year.  Stocks continue to see weakness on concern that extended pandemic lockdowns in China will increase supply-chain turmoil, curb global growth, and boost inflation. 

U.S. stock indexes erased overnight gains of more than +1% on inflation concerns.  Stock indexes had posted moderate gains in overnight trade on positive carry-over from a rally in Chinese stocks after Covid infections in China eased.

The 10-year T-note yield today is down -9.3 bp at 2.828%.  The 10-year yield tumbled to a 2-week low today of 2.812% as a slump in global equity markets fuels safe-haven demand for T-notes. 

The U.S. Apr final-demand PPI index rose +11.0% y/y, stronger than expectations of +10.7% y/y.  The Apr core PPI rose +8.8% y/y, slightly weaker than expectations of +8.9% y/y.  On the brighter side, both the headline and core PPIs fell back from March’s record highs of +11.5% y/y and +9.6% y/y, respectively.

The Euro Stoxx 50 index this morning is down -2.42%.  European stocks are down sharply today as they catch up with Wednesday’s plunge in U.S. stocks.  Investors are dumping risk assets on fears of an economic slowdown from inflation and rising interest rates.  Concern that inflation pressure in the Eurozone may persist or even climb is weighing on stocks today after European natural gas prices surged more than +20% after Russia cut gas flows into Germany.  German Economy Minister Habeck said Russia is using energy exports as a “weapon” in retaliation for EU sanctions on Russia for its attack on Ukraine. 

Hawkish comments today from ECB Governing Council member Makhlouf weighed on stocks when he said the current level of inflation in the Eurozone is "concerning," and we have reached a point where the ECB needs to act.

Asian markets today closed lower, with China’s Shanghai Composite Index closing down -0.12% and Japan’s Nikkei Stock Index closing down -1.77%.  Chinese stocks posted modest losses today after Shanghai found new Covid infections outside of isolation centers, pushing back the timeline for a relaxation of pandemic lockdowns.  Losses in Chinese stocks were limited by hopes of additional government stimulus measures after Chinese Premier Li Keqiang urged officials to use fiscal and monetary policies to stabilize employment and the economy.   

Japan’s Nikkei Stock Index fell to a 1-3/4 month low today and posted moderate losses.  Concern that the Fed may have to be more aggressive in tightening policy weighed on Japanese stocks after U.S. Apr PPI data showed elevated inflation.  Also, concern that Chinese growth will stagnate and drag down the global economy is undercutting Japanese stocks as pandemic restrictions in China continues.

Today’s Japanese economic data was bearish for stocks after Japan's Apr eco-watchers expectations survey rose +0.2 to 50.3, weaker than expectations of 51.0.

Pre-Market U.S. Stock Movers

Disney (DIS) dropped nearly -5% in pre-market trading after it said growth in the second half of the year might not be as fast as previously expected. 

Beyond Meat (BYND) plunged -24% in pre-market trading after reporting a Q1 adjusted loss per share of -$1.58, wider than the consensus of -98 cents. 

Cryptocurrency-exposed stocks are moving lower in pre-market trading, with the price of Bitcoin falling to a 16-1/2 month low after the collapse of the TerraUSD stable coin. MicroStrategy (MSTR) is down more than -10%, and Coinbase Global (COIN) is down more than -7%. Also, Riot Blockchain (RIOT) is down more than -6%, and Marathon Digital (MARA) is down more than -5%. 

Meta Platforms (FB) fell more than -1% in pre-market trading after HSBC cut its price target on the stock to $200 from $225.

Zoom Video Communications (ZM) dropped more than +3% in pre-market trading after Piper Sandler cut its recommendation on the stock to neutral, citing limited upside to paid video service.

General Motors (GM) and Ford Motor (F) both fell more than -3% in pre-market trading after Wells Fargo downgraded the automakers to underweight from overweight.

Bumble (BMBL) rallied more than +8% in pre-market trading after reporting Q1 revenue of $211.2 million, better than the consensus of $208.3 million. 

ON Semiconductor (ON) gained nearly +1% in pre-market trading after Wells Fargo raised its recommendation on the stock to overweight from equal-weight.

STMicroelectronics (STM) climbed more than +5% in pre-market trading after it said it sees more than $20 billion in revenue in its 2025-27 plans.

Today’s U.S. Earnings Reports (5/12/2022)

Coherent Inc (COHR), Embecta Corp (EMBC), Figs Inc (FIGS), Legalzoom.com Inc (LZ), Mister Car Wash Inc (MCW), Motorola Solutions Inc (MSI), N-able Inc (NABL), New Relic Inc (NEWR), Six Flags Entertainment Corp (SIX), Tapestry Inc (TPR), US Foods Holding Corp (USFD).