Morning Markets

June S&P 500 futures (ESM23) this morning are up +0.21%, and June Nasdaq 100 E-Mini futures (NQM23) are up +0.37%.

U.S. stock index futures this morning are moderately higher after U.S. Mar producer prices rose less than expected, easing inflation concerns.  Also, weekly jobless claims rose more than expected, which is dovish for Fed policy.  The markets are currently pricing in a 74% chance of a 25 bp rate hike at the upcoming May 2-3 FOMC meeting.

U.S. Mar PPI final demand eased to +2.7% y/y from +3.9% y/y in Feb, weaker than expectations of +3.0% y/y and the weakest report in more than two years.  Mar PPI ex-food and energy eased to +3.4% y/y from +4.8% y/y, right on expectations and the weakest report in 2 years.

U.S. weekly initial unemployment claims rose +11,000 to 239,000, showing a weaker labor market than expectations of 235,000.  However, weekly continuing claims unexpectedly fell -13,000 to 1.810 million, showing a stronger labor market than expectations of an increase to 1.833 million.

Stocks are awaiting Q1 earnings reporting season, which kicks off Friday with earnings results from big U.S. banks, including Citigroup, JPMorgan Chase, and Wells Fargo. 

On the positive side for stocks, Delta Air Lines is up more than +2% in pre-market trading after forecasting Q2 EPS above consensus. Also, VF Corp, Crispr Therapeutics, and Steven Madden are up +1% or more after being upgraded.

On the negative side, Sportsman’s Warehouse Holdings slumped more than -15% in pre-market trading after reporting weaker-than-expected Q4 net sales and forecasting Q1 net sales below consensus.  Also, Fastenal is down more than -3% after reporting March daily sales growth that was weaker than in previous months. 

Global bond yields are slightly higher.  The 10-year T-note yield is up +0.6 bp at 3.396%.  The 10-year German bund yield is up +0.7 bp at 2.376%, and the 10-year UK gilt yield is up +0.8 bp at 3.578%.

Overseas stock markets are mixed.  The Euro Stoxx 50 is up +0.38%.  China’s Shanghai Composite closed down -0.27%, and Japan’s Nikkei Stock Index closed up +0.26%. 

The Euro Stoxx 50 index today is moderately higher but remains below Wednesday’s 15-month high.  Strength in luxury goods makers rallied on signs that Chinese shoppers returned after Covid lockdowns.  LVMH jumped more than +4% to a record higher after it reported Q1 organic sales rose +18%, nearly double the consensus.  Also, Givaudan SA moved higher after Q1 organic sales beat expectations. 

Economic sentiment also improved after Eurozone industrial production in Feb posted its largest increase in 6-months.  In addition, dovish comments from ECB Governing Council member Villeroy de Galhau eased interest rate concerns when he said the ECB has already completed most of the interest rate increases it needs to combat inflation.

Eurozone Feb industrial production rose +1.5% m/m, stronger than expectations of +1.0% m/m and the largest increase in 6 months.

China’s Shanghai Composite Stock Index today fell back from a 5-week high and closed moderately lower. Better-than-expected Chinese trade news today initially pushed stocks higher after China Mar exports unexpectedly rose by the most in 8 months.  However, stocks gave up their advance and turned lower on signs that foreign companies were lowering their exposure to China.  Alibaba Group Holding fell more than -5% after the Financial Times reported that Japan’s SoftBank Group is moving to sell the majority of its stake in the company.  This news comes after Europe’s Prosus NV registered more than $4 billion of stock in Tencent Holdings for potential sale in Hong Kong on Wednesday. 

Today’s trade news was supportive of Chinese stocks.  China Mar exports unexpectedly rose +14.8% y/y, stronger than expectations of -7.1% y/y and the biggest increase in 8 months. Also, Mar imports fell -1.4% y/y, a smaller decline than expectations of -6.4% y/y.

Japan’s Nikkei Stock Index today climbed to a 1-week high and closed moderately higher.  Signs of stronger foreign demand for Japanese stocks boosted the overall market today after Japan’s Ministry of Finance reported that overseas funds bought a net 2.4 trillion yen ($18 billion) of Japanese stocks in the week ending April 7, the highest amount for a weekly period ever.  However, the Nikkei Stock index fell back from its best levels on losses in airline stocks, which moved lower on the heels of the slump in American Airlines Group on Wednesday after it said its Q1 profit would likely fall short of consensus. 

Pre-Market U.S. Stock Movers

Delta Air Lines (DAL) rose more than +2% in pre-market trading after forecasting Q2 EPS of $2.00-$2.25, stronger than the consensus of $1.61.

Cryptocurrency-exposed stocks are climbing in pre-market trading after Bank of America said the action by investors to send $368 million of Bitcoin to personal wallets in the week through April 4 indicates investors plan to hold the cryptocurrency for the long term and decreases selling pressure in Bitcoin.  Riot Platforms (RIOT), Coinbase Global (COIN), Bit Digital (BTBT), and Marathon Digital (MARA) are up more than +2%.   

Steven Madden (SHOO) climbed more than +2% in pre-market trading after Citigroup upgraded the stock to buy from neutral.

VF Corp (VFC) rose more than +2% in pre-market trading after Edward Jones upgraded the stock to buy from hold.

DraftKings (DKNG) gained more than +1% in pre-market trading after BNP Paribas Exane upgraded the stock to neutral from underperform.

Crispr Therapeutics (CRSP) climbed more than +2% in pre-market trading after Cantor Fitzgerald initiated coverage of the stock with a recommendation of overweight. 

Sportsman’s Warehouse Holdings (SPWH) slumped more than -15% in pre-market trading after reporting Q4 net sales of $379.3 million, weaker than the consensus of $379.8 million, and forecasting Q1 net sales of $265 million-$270 million, well below the consensus of $324.5 million.

Fastenal (FAST) dropped more than -3% in pre-market trading after reporting March daily sales growth of 6.8%, weaker than previous months. 

Exxon Mobil (XOM) fell nearly -1% in pre-market trading after Scotiabank downgraded the stock to sector perform from sector outperform. 

LSB Industries (LXU) slid more than -2% in pre-market trading after Jeffries downgraded the stock to hold from buy.   

Today’s U.S. Earnings Reports (4/13/2023)

Bed Bath & Beyond Inc (BBBY), Delta Air Lines Inc (DAL), Edgio Inc (EGIO), Fastenal Co (FAST), Sunlight Financial Holdings In (SUNL), Veradigm Inc (MDRX), Washington Federal Inc (WAFD), Winmark Corp (WINA).

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