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Stock Index Futures Muted Ahead of More Fed Speak, Disney Earnings on Tap

Barchart - Tue May 7, 4:33AM CDT

June S&P 500 E-Mini futures (ESM24)are up +0.09%, and June Nasdaq 100 E-Mini futures (NQM24) are down -0.02% this morning after three major U.S. benchmark indices ended the regular session higher as recent U.S. jobs data and remarks from Federal Reserve officials buoyed rate-cut hopes while investors awaited further signals on interest rates from the Fed and a new batch of earnings reports.

In yesterday’s trading session, the benchmark S&P 500 and tech-heavy Nasdaq 100 notched 3-week highs, and the blue-chip Dow posted a 3-1/2 week high. Micron Technology (MU) climbed over +4% and was the top percentage gainer on the Nasdaq 100 after Baird upgraded the stock to Outperform from Neutral with a price target of $150. Also, Paramount Global (PARA) advanced more than +3% after the New York Times reported that the media and entertainment company had decided to formally open negotiations with a bidding group led by Sony and Apollo Global Management. In addition, Perficient (PRFT) surged about +52% after EQT AB agreed to acquire the technology consultant in a deal valued at around $3 billion, including debt. On the bearish side, Tyson Foods (TSN) plunged over -5% and was the top percentage loser on the S&P 500 after the company reported weaker-than-expected Q2 sales and cautioned that consumers were under pressure from persistent inflation.

“Bulls will be looking to maintain their momentum after snatching last week from the jaws of bears. This week is light on high-profile economic data, but heavy on Fed members hitting the speaking circuit. Traders will be dissecting any comments they make about potential rate cuts,” said Chris Larkin at E*Trade from Morgan Stanley.

Richmond Fed President Thomas Barkin expressed his anticipation on Monday that high interest rates would lead to a further economic slowdown and bring inflation to the central bank’s 2% target. “I am optimistic that today’s restrictive level of rates can take the edge off demand in order to bring inflation back to our target,” Barkin said. Also, New York Fed President John Williams stated that interest rate cuts will eventually occur, but the timing of such decisions will hinge on the totality of the data.

Meanwhile, U.S. rate futures have priced in an 8.7% probability of a 25 basis point rate cut at the next central bank meeting in June and a 29.2% chance of a 25 basis point rate cut at the conclusion of the Fed’s July meeting.

In other news, the Federal Reserve’s Senior Loan Officer Opinion Survey, released on Monday, indicated that a higher number of U.S. banks reported stricter credit standards in the first quarter. The net percentage of U.S. banks that tightened standards on commercial and industrial loans for mid-sized and large businesses increased to 15.6% in the first quarter, up from 14.5% in the fourth quarter. Lending standards for consumers were also tightened by banks. “A significant net share of banks reported increasing minimum credit score requirements for credit card loans, while moderate net shares of banks reported doing so for auto loans and other consumer loans,” the Federal Reserve said.

First-quarter earnings season continues in full flow, with investors awaiting fresh reports from notable companies today, including Disney (DIS), Arista Networks (ANET), Duke Energy (DUK), Occidental Petroleum Corporation (OXY), McKesson (MCK), GlobalFoundries (GFS), Electronic Arts (EA), Rivian Automotive (RIVN), Datadog (DDOG), and Twilio (TWLO).

On the economic data front, investors will likely focus on U.S. Consumer Credit data due later in the day. Economists, on average, forecast that March Consumer Credit will stand at $14.80B, compared to the previous value of $14.12B.

In addition, market participants will be looking toward a speech from Minneapolis Fed President Neel Kashkari.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.461%, down -0.62%.

The Euro Stoxx 50 futures are up +0.55% this morning as investors digested a series of upbeat corporate earnings reports, with ongoing optimism about interest rate cuts from the Federal Reserve and the European Central Bank this year lending further support to market sentiment. Financial services and retail stocks outperformed on Tuesday. The Federal Statistics Office reported Tuesday that German exports rebounded in March, driven by robust demand from the United States and China for German-manufactured products, while industrial orders unexpectedly declined during the same month. Separately, Eurostat data released Tuesday indicated that the Eurozone’s monthly retail sales rebounded in March, driven by higher spending on fuel and food. In corporate news, UBS Group Ag (UBSG.Z.IX) surged over +8% after the Swiss banking giant returned to profit in the first quarter following two quarterly losses. Also, Unicredit Spa (UCG.M.DX) gained more than +3% after Italy’s second-biggest bank posted better-than-expected results for the January-March period and raised its full-year investor reward guidance. In addition, Zalando Se (ZAL.D.DX) advanced over +6% after reporting Q1 operating profit that topped analysts’ estimates.

U.K.’s Halifax House Price Index, Germany’s Factory Orders, Germany’s Exports, Germany’s Imports, and Eurozone’s Retail Sales data were released today.

U.K. April Halifax House Price Index has been reported at +0.1% m/m, weaker than expectations of +0.2% m/m.

The German March Factory Orders stood at -0.4% m/m, weaker than expectations of +0.4% m/m.

The German March Exports came in at +0.9% m/m, stronger than expectations of +0.4% m/m.

The German March Imports arrived at +0.3% m/m, stronger than expectations of -1.0% m/m.

Eurozone March Retail Sales stood at +0.8% m/m, stronger than expectations of +0.6% m/m.

Asian stock markets today settled in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.22%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +1.57%. 

China’s Shanghai Composite Index closed slightly higher today as investors digested strong tourism data for the Labor Day holiday period and government initiatives aimed at bolstering the ailing property market. According to the Ministry of Culture and Tourism, domestic tourists expended a total of 166.89 billion yuan ($23.56 billion) during the five-day Labor Day holiday period, marking a 12.7% increase compared to the previous year and a 13.5% rise compared to the same period in pre-Covid 2019. Meanwhile, sentiment was also boosted by a report from Xinhua Finance, indicating that the technology hub of Shenzhen joined other major cities in easing home-buying regulations, particularly by relaxing personal income tax and social insurance payment requirements for buyers in certain districts. It will also permit local families with two or more children to purchase another home in certain non-core districts. In other news, the Xinhua News Agency reported that President Xi Jinping and his French counterpart, President Emmanuel Macron, issued joint statements and forged interdepartmental agreements on various fronts, including artificial intelligence, the Middle East, and agriculture, during Xi’s visit to France. In corporate news, BrightGene Bio-Medical Technology gained over +7% following the announcement of its intention to raise 500 million yuan through a share sale to one of its actual controllers.

Meanwhile, the Reserve Bank of Australia on Tuesday kept the official cash rate unchanged at a 12-year high of 4.35%, as widely expected. Policymakers also projected inflation to align with the target range of 2% to 3% in the latter half of 2025 and to reach the midpoint in 2026.

Japan’s Nikkei 225 Stock Index closed sharply higher today as trading resumed after a holiday, with sentiment boosted by strong domestic earnings and optimism surrounding potential interest rate cuts by the Federal Reserve this year. Brokerage and electronics stocks led the gains on Tuesday. S&P Global reported on Tuesday that business activity in Japan’s service sector experienced its most rapid growth in April since August 2023, driven by robust demand and favorable economic conditions. Meanwhile, the Japanese yen fell on Tuesday following remarks from Japan’s top currency official, Masato Kanda, who stated that government intervention wasn’t necessary if the market was operating properly. In corporate news, Ceres Inc. climbed over +10% after the company lifted its earnings forecast. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -3.57% to 19.20.

The Japanese April au Jibun Bank Japan Services PMI came in at 54.3, weaker than expectations of 54.6.

Pre-Market U.S. Stock Movers

Palantir Technologies (PLTR) plunged over -9% in pre-market trading as investors seemed unimpressed by the enterprise software company’s full-year sales guidance.

Hims Hers Health (HIMS) surged more than +18% in pre-market trading after the company reported stronger-than-expected Q1 results and raised its 2024 revenue guidance. 

Coherent (COHR) climbed over +10% in pre-market trading after the optoelectronic components maker posted upbeat Q3 results and offered a solid Q4 outlook.

Microchip Technology (MCHP) slid more than -4% in pre-market trading after the company reported mixed Q4 results and provided below-consensus Q1 guidance.

Insulet Corporation (PODD) gained over +1% in pre-market trading after Wolfe Research upgraded the stock to Outperform from Peer Perform with a $200 price target.

Target Corporation (TGT) rose more than +1% in pre-market trading after Citi upgraded the stock to Buy from Neutral with an unchanged price target of $180.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Tuesday - May 7th

Walt Disney (DIS), Arista Networks (ANET), Duke Energy (DUK), Transdigm (TDG), McKesson (MCK), Occidental (OXY), Suncor Energy (SU), Sempra Energy (SRE), Datadog (DDOG), Kenvue (KVUE), Electronic Arts (EA), Rockwell Automation (ROK), GlobalFoundries (GFS), Builders FirstSource (BLDR), Waters (WAT), Jacobs Engineering (J), Celsius (CELH), Bentley (BSY), NRG (NRG), Expeditors Washington (EXPD), Ovintiv (OVV), Permian Resources (PR), Topbuild Corp (BLD), Aspen (AZPN), Toast (TOST), Jack Henry&Associates (JKHY), Twilio (TWLO), Wynn Resorts (WYNN), Rivian Automotive (RIVN), Assurant (AIZ), Confluent (CFLT), TIM Participacoes (TIMB), Henry Schein (HSIC), Tempur Sealy International (TPX), Match Group (MTCH), Kinross Gold (KGC), Aramark Holdings (ARMK), Penumbra Inc (PEN), Bio-Rad Labs (BIO), Crocs (CROX), MarketAxesss (MKTX), Reddit (RDDT), Inspire Medical Systems (INSP), Chord Energy (CHRD), Intracellular Th (ITCI), Masimo (MASI), LYFT (LYFT), Globus Medical (GMED), Atkore Intl (ATKR), ZoomInfo (ZI), Qualys (QLYS), Ionis Pharma (IONS), GXO Logistics (GXO), Apellis Pharma (APLS), Healthcare RT (HR), Red Rock Resorts (RRR), Novanta (NOVT), Dutch Bros (BROS), Magnolia Oil (MGY), DoubleVerify Holdings (DV), Halozyme (HALO), Arcadium Lithium (ALTM), Madrigal Pharma (MDGL), Squarespace (SQSP), Cirrus (CRUS), IAC/InterActiveCorp (IAC), Kyndryl Holdings (KD), Nuvei (NVEI), Perrigo (PRGO), Knife River (KNF), NewJersey Resources (NJR), Assured Guaranty (AGO), Oscar Health (OSCR), Grand Canyon Education (LOPE), Avient Corp (AVNT), Acushnet Holdings (GOLF), Power Integrations (POWI), Inter Parfums (IPAR), Spirit Aerosystems (SPR), Joby Aviation (JOBY), Blackline (BL), California Resources (CRC), Tripadvisor (TRIP), Envestnet (ENV), Powerschool Holdings (PWSC), Fortrea Holdings (FTRE), Baldwin Insurance (BRP), Enpro Industries (NPO), Surgery Partners (SGRY), Brighthouse Financial (BHF), Hagerty (HGTY), Hannon Armstrong Sustainable (HASI), Global Business Travel (GBTG), Dorman (DORM), Rapid7 Inc (RPD), Under Armour C (UA), Kratos Defense&Security (KTOS), Ringcentral Inc (RNG), Certara (CERT), Kosmos Energy (KOS), Douglas Emmett (DEI), American States Water (AWR), Rhythm Pharma (RYTM), Grocery Outlet (GO), Consol Energy (CEIX), USA Compression Partners LP (USAC), Flywire (FLYW), Premier Inc (PINC), ICU Medical (ICUI), Intapp (INTA), (LZ), STAAR Surgical (STAA), Virgin Galactic Holdings (SPCE).

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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.

Provided Content: Content provided by Barchart. The Globe and Mail was not involved, and material was not reviewed prior to publication.

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