Morning Markets

March S&P 500 futures (ESH23) this morning are down -1.29%, and March Nasdaq 100 E-Mini futures (NQH23) are down -2.08%. 

U.S. stock index futures this morning are sharply lower.  Weakness in technology stocks weighed on stock index futures in overnight trade after Apple, Alphabet, and Amazon.com reported disappointing quarterly earnings results.  In addition, losses in stock index futures accelerated after this morning’s monthly U.S. payroll report pointed to a hot labor market, which may keep the Fed’s aggressive tightening stance in place. 

U.S. Jan nonfarm payrolls surged +517,000, much stronger than expectations of +188,000 and the largest increase in 6 months.  The Jan unemployment rate unexpectedly fell -0.1 to a 53-year low of 3.4%, showing a stronger labor market than expectations for an increase to 3.6%.

U.S. Jan average hourly earnings eased to +4.4% y/y from 4.8% y/y in Dec, the slowest pace of increase in 17 months but stronger than expectations of +4.3% y/y.

Stock indexes were hammered in overnight trading, with Apple, Alphabet, and Amazon.com all down more than -4% in pre-market trading after reporting disappointing earnings results. Also, Ford Motor is down more than -7% after reporting weaker-than-expected Q4 adjusted Ebitda, and Qualcomm is down more than -3% after reporting weaker-than-expected Q1 revenue and forecasting a decline in Q2 revenue.

A surge in global bond yields today is also undercutting stocks, as the 10-year T-note yield is up +11.5 bp to 3.508%, and the 10-year German bund yield is up +13.1 bp to 2.211%.

Overseas markets are mixed.  The Euro Stoxx 50 index is down -0.65%.  China’s Shanghai Composite stock index closed up +0.02%, and Japan’s Nikkei Stock index closed up +0.20%. 

The Euro Stoxx 50 index today is moderately lower as weakness in U.S. mega-capo technology stocks weighs on European technology stocks.  European tech stocks are reeling today after U.S. peers Apple, Amazon.com, and Alphabet posted quarterly earnings results that showed weakening demand for their goods and services.  European stocks are also under pressure on signs of persistent European producer price pressures that may prompt the ECB to remain aggressive in raising interest rates after today’s report on Eurozone Dec PPI rose more than expected.

Eurozone Dec PPI rose +1.1% m/m and +24.6% y/y, stronger than expectations of -0.4% m/m and +22.4% y/y.

The Eurozone Jan S&P Global composite PMI was revised by +0.1 to 50.3 from the initially reported 50.2, the strongest pace of expansion in 7 months.

France Dec manufacturing production unexpectedly rose +0.3% m/m, stronger than expectations of a decline of -0.3% m/m.

Hawkish ECB comments today weighed on stocks after ECB Governing Council member Simkus said, "we're only now entering the mildly restrictive area of monetary policy," and next month's planned 50 bp rate hike by the ECB may not be the last. Also, ECB Governing Council member Kazimir said, "the fight against inflation is far from won," and the planned March rate hike by the ECB probably won't be the last.

China’s Shanghai Composite today fell to a 2-week low and closed moderately lower.  Doubts about the strength of China’s economic recovery weighed on stocks.  While recent reports during the Lunar New Year holidays pointed to a comeback in consumer spending, the economy has yet to fully recover due to the ongoing slump in the property market.  Losses in the overall market were limited after Chinese officials said the border between Hong Kong and mainland China would fully reopen for the first time in three years. Daily quotas and testing requirements will be dropped, and all boundary checkpoints will reopen starting next week.

The China Jan Caixin services PMI rose +4.9 to 52.9, better than expectations of 51.0 and the strongest pace of expansion in 5 months.

Japan’s Nikkei Stock Index today rallied to a 1-1/2 month high and settled moderately higher.  Foreign buying of Japanese stocks is a positive factor for the overall market after a report from the Japan Exchange Group showed foreign investors bought a net total of 1.3 trillion yen ($10.2 billion) worth of Japanese stocks and futures in the week ended January 27, the most in over four years.  Better-than-expected quarterly corporate earnings results also boosted the overall market after Sony and Takeda Pharmaceutical reported strong earnings.  On the negative side, Panasonic fell more than -3% after reporting Q3 operating profit below consensus.

Pre-Market U.S. Stock Movers

Apple (AAPL) is down more than -4% in pre-market trading after reporting Q1 revenue of $117.15 billion, weaker than the consensus of $121.14 billion. 

Alphabet (GOOGL) tumbled more than -4% in pre-market trading after reporting Q4 advertising revenue of $59.04 billion, below the consensus of $60.64 billion.

Amazon.com (AMZN) dropped more than -5% in pre-market trading after reporting Q4 Amazon Web Services net sales excluding F/X up +20%, weaker than the consensus of up +23.5% and forecasting Q1 net sales of $121.0 billion-$126.0 billion, the midpoint below the consensus of $125.5 billion.

Ford Motor (F) sank more than -7% in pre-market trading after reporting Q4 adjusted Ebitda of $2.60 billion, weaker than the consensus of $3.45 billion. 

Qualcomm (QCOM) fell more than -3% in pre-market trading after reporting Q1 adjusted revenue of $9.46 billion, below the consensus of $9.61 billion, and forecast Q2 adjusted revenue of $8.7 billion-$9.5 billion, weaker than the consensus of $9.58 billion.

Atlassian Corp (TEAM) tumbled more than -11% in pre-market trading after reporting Q2 new customers rose +4,004, weaker than the consensus of +6,102, and Q2 total of customers of 253,177 was below the consensus of 255,449.

Starbucks (SBUX) slid more than -2% in pre-market trading after reporting Q1 comparable same-store sales rose +5%, weaker than the consensus of +6.79%. 

Nordstrom (JWN) surged more than +30% in pre-market trading on news that activist investor Ryan Cohen is building a large stake in the company. 

Gilead Sciences (GILD) climbed more than +3% in pre-market trading after reporting Q4 adjusted EPS of $1.67, stronger than the consensus of $1.51 and forecasting full-year adjusted EPS of $6.60-$7.00, above the consensus of $6.63.

Cigna (CI) rose more than +1% in pre-market trading after reporting Q4 adjusted operating EPS of $4.96, stronger than the consensus of $4.86.

Boyd Gaming (BYD) is up more than +4% in pre-market trading after reporting Q4 revenue of $922.9 million, above the consensus of $879.1 million. 

U.S. Steel (X) gained more than -1% in pre-market trading after forecasting Q4 net sales of $4.34 billion, stronger than the consensus of $4.02 billion. 

Today’s U.S. Earnings Reports (2/3/2023)

Aon PLC (AON), Cboe Global Markets Inc (CBOE), Church & Dwight Co Inc (CHD), Cigna Corp (CI), 

LyondellBasell Industries NV (LYB), Regeneron Pharmaceuticals Inc (REGN), Zimmer Biomet Holdings Inc (ZBH).

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