Markets Today: Stocks Remain Under Pressure Ahead of FOMC Meeting

Rich Asplund - Barchart - Mon Sep 18, 2023

Morning Markets

December E-Mini S&P 500 futures (ESZ23) this morning are down -0.09%, and Dec Nasdaq 100 E-Mini futures (NQZ23) are down -0.21%.

Stock index futures this morning are trading mildly lower. Stocks continue to be undercut by the UAW strike, the possibility of a U.S. government shutdown on September 30, and mildly higher global bond yields.

Stocks are also trading lower on a cautious note ahead of the 2-day FOMC meeting on Tuesday and Wednesday. The markets are fully expecting the FOMC this week to leave its funds rate target unchanged at 5.25/5.50%. However, the markets are discounting a 31% chance that the FOMC will raise the funds rate by +25 bp at the next FOMC meeting on November 1, and a 15% chance for that 25 bp rate hike at the following meeting on December 13. The markets are then expecting the FOMC to begin cutting rates in 2024 in response to an expected slowdown in the U.S. economy.

Global bond yields this morning are mildly higher. The 10-year T-note yield is up +0.6 bp at 4.339%. The 10-year German bund yield is up +1.8 bp at 2.694%. The 10-year UK gilt yield is up +3.1 bp at 4.389%.

October WTI crude oil prices this morning are up +0.45 (+0.50%) at $91.22 per barrel, posting a new 11-month high. Oil prices have rallied sharply in the past two months on a tight supply situation through year-end and on announcements by Saudi Arabia and Russia that they will extend their production cuts through year-end. The continued rally in oil prices is putting upward pressure on inflation expectations.

Overseas stock markets are mixed today. The Euro Stoxx 50 is down -0.94%. China’s Shanghai Composite Index closed +0.26%. Japan was closed today for a national holiday.

Pre-Market U.S. Stock Movers

Apple (AAPL) is up +0.1% in pre-market trading on optimism about strong pre-orders for the company’s latest iPhone 15.

Micron (MU) is up +1.5% in pre-market trading on an upgrade to buy from hold by Deutsche Bank on the basis that DRAM chip prices are rising faster than expected. The news is supportive of other chipmakers.

Tesla (TSLA) is down -0.7% in pre-market trading despite a Wall Street Journal report that Tesla is in talks to open a factory in Saudi Arabia.

Disney (DIS) and Warner Bros Discovery (WBD) are both trading higher in pre-market trading after Raymond James initiated research coverage with an outperform recommendation on both stocks. Raymond James initiated coverage on Paramount Global (PARA) with a market perform.

L3Harris Technologies (LHX) is up +1.0% in pre-market trading on an upgrade to overweight from equal-weight by Wells Fargo due to an improved risk-reward.

Alteryx (AYX) is up +3.9% in pre-market trading on an upgrade to overweight from equal-weight by Morgan Stanley on the view of an attractive valuation versus its growth and profit potential.

PayPal Holdings (PYPL) is down -1.3% in pre-market trading on a downgrade to market-perform from outperform by MoffettNathanson as the analyst expected weak profit growth due to increased competition.

NetApp (NTAP) is down -2.5% in pre-market trading on a downgrade by William Blair to market-perform from outperform.

Carvana (CVNA) is up +1.1% in pre-market trading on an upgrade by Wedbush to neutral

from underperform.

Clorox (CLX) is down -1.5% in pre-market trading after the company said there was “unauthorized activity” on some of its IT systems in August that would negatively impact its fiscal Q1 results due to order processing delays.

(9/18/2023)

Stitch Fix Inc (SFIX), Veradigm Inc (MDRX).

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On the date of publication, Rich Asplund 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.