Markets Today: Stocks Rebound from Tuesday’s Slump as Bond Yields Decline

Rich Asplund - Barchart - Wed Feb 14, 7:49AM CST

Morning Markets

March E-Mini S&P 500 futures (ESH24) are up +0.45%, and March Nasdaq 100 E-Mini futures (NQH24) are up +0.58%.

Stock index futures this morning are moderately lower as they recovered some of Tuesday’s slump. A decline in T-note yields today is supportive of stocks. Also, some positive corporate news is bullish for stocks, with Lyft surging more than +20% in pre-market trading after reporting stronger-than-expected Q4 gross bookings and forecasting Q1 gross bookings above consensus. Also, Progressive Corp is up more than +2% after reporting Jan net premiums rose +3.1% y/y to $5.50 billion.

The weekly U.S. MBA mortgage applications index fell -2.3% in the week ended Feb 9. The home-purchase sub-index fell -2.5% to a 5-week low, and the refinancing sub-index fell -2.1%. The average 30-year fixed rate mortgage rate rose +7 bp to a 2-month high of 6.87%.

The markets are discounting the chances for a -25 bp rate cut at 11% for the March 19-20 FOMC meeting and 42% for the following meeting on April 30-May 1.

U.S. and European government bond yields today are lower. The 10-year T-note fell back from a 2-1/2 month high of 4.330% and is down -1.8 bp at 4.297%. The 10-year German bund yield is down -2.8 bp at 2.365%. The 10-year UK gilt yield is down -7.5 bp at 4.076%.

Overseas stock markets are mixed. The Euro Stoxx 50 is up +0.39%. China’s Shanghai Composite Index was closed for a holiday. Japan’s Nikkei Stock Index closed down -0.69%.

The Euro Stoxx 50 today is moderately higher, although well below Tuesday’s 23-year high. Strength in bank stocks is positive for the overall market, led by a +5% jump in ABN Amro Bank NV after it unveiled a 500-million-euro stock repurchase plan. Also, some positive economic news was bullish for stocks after Eurozone Dec industrial production unexpectedly rose by the most in 16 months. On the negative side, Heineken NV fell more than -5% after warning that persistent inflation and economic worries will weigh on demand this year.

ECB Vice President Guindos said, "It will take some time before we have the necessary information to confirm that inflation is sustainably returning to our 2% target."

Eurozone Dec industrial production unexpectedly rose +2.6% m/m, stronger than expectations of -0.2% m/m and the biggest increase in 16 months.

Swaps are pricing in the chances for a -25 bp rate cut by the ECB at 8% for its next meeting on March 7 and 54% at the following meeting on April 11.

China’s Shanghai Composite Index today was closed for the week-long Lunar New Year holiday. Chinese markets will reopen on Monday, February 19.

Japan’s Nikkei Stock Index today posted moderate losses. Japanese stocks fell back on negative carryover from Tuesday’s slide in U.S. stocks after U.S. Jan CPI rose more than expected. Also, a jump in government bond yields weighed on stocks after the 10-year JGB bond yield rose to a 2-month high of 0.772%. The yen also rose today and weighed on exporter stocks after Japanese officials jawboned the yen higher following its decline to a 2-1/2 month low Tuesday. The yen strengthened after Japan’s top currency chief, Kanda, and finance minister Suzuki, warned that authorities stand ready to take steps in the forex market if excessive moves in the yen are seen.

Japan’s top currency chief Masato Kanda, vice finance minister for international affairs, said, “Recent moves by the yen have been pretty rapid, and authorities are on call 24 hours a day, 365 days a year, and will take appropriate steps as needed.”

Swaps are pricing in the chances for a +10 bp rate increase by the BOJ at 35% for its next meeting on March 19 and at 73% for the following meeting on April 26.

Pre-market U.S. Stock Movers

Lyft (LYFT) surged more than +20% in pre-market trading after reporting Q4 gross bookings of $3.72 billion, stronger than the consensus of $3.67 billion, and forecasting Q1 gross bookings of about $3.5 billion-$3.6 billion, above the consensus of $3.48 billion.

Uber Technologies (UBER) climbed more than +6% in pre-market trading after unveiling a stock buyback plan totaling as much as $7 billion in shares.

IQVIA Holdings (IQV) rallied more than +5% in pre-market trading after reporting Q4 revenue of $3.87 billion, above the consensus of $3.80 billion.

Progressive Corp (PGR) rose more than +2% in pre-market trading after reporting Jan net premiums written rose +3.1% y/y to $5.50 billion.

SentinelOne (S) jumped more than +4% in pre-market trading after Bank of America upgraded the stock to buy from neutral with a price target of $35.

Cryptocurrency-linked stocks are moving higher in pre-market trading, with the price of Bitcoin up more than +3% at a 2-year high. As a result, Coinbase Global (COIN), Marathon Digital (MARA), MicroStrategy (MSTR), and Riot Platforms (RIOT) are up more than +6%.

Generac Holdings (GNRC) dropped more than -7% in pre-market trading after reporting Q4 net sales of $1.06 billion, weaker than the consensus of $1.09 billion.

Maplebear (CART) tumbled more than -5% in pre-market trading after reporting Q4 total revenue of $803 million, below the consensus of $804.7 million.

MGM Resorts International (MGM) fell more than -3% in pre-market trading after reporting Q4 regional operations net revenue of $873.4 million, weaker than the consensus of $875.8 million.

Kraft Heinz (KHC) slid more than -1% in pre-market trading after reporting Q4 net sales of $6.86 billion, below the consensus of $6.98 billion.

GlobalFoundries (GFS) slid more than -1% in pre-market trading after Susquehanna Financial cut its price target on the stock to $65 from $74.

Upstart Holdings (UPST) sank more than -17% in pre-market trading after forecasting Q1 revenue of $125 million, well below the consensus of $146.6 million.

Earnings Reports (2/14/2024)

Albemarle Corp (ALB), American Water Works Co Inc (AWK), Antero Midstream Corp (AM), Antero Resources Corp (AR), AppLovin Corp (APP), Arch Capital Group Ltd (ACGL), Avantor Inc (AVTR), CF Industries Holdings Inc (CF), Charles River Laboratories Int (CRL), Chemours Co/The (CC), Cisco Systems Inc (CSCO), CME Group Inc (CME), CNH Industrial NV (CNHI), Crane NXT Co (CXT), Curtiss-Wright Corp (CW), Equinix Inc (EQIX), Eversource Energy (ES), Generac Holdings Inc (GNRC), Global Payments Inc (GPN), HubSpot Inc (HUBS), Informatica Inc (INFA), IQVIA Holdings Inc (IQV), Kraft Heinz Co/The KHC),

Lithia Motors Inc (LAD), Louisiana-Pacific Corp (LPX), Martin Marietta Materials Inc (MLM), MSA Safety Inc (MSA), NCR Atleos Corp (NATL), Occidental Petroleum Corp (OXY), Owens Corning (OC), Pegasystems Inc (PEGA), QuantumScape Corp (QS), Rollins Inc (ROL), Royal Gold Inc (RGLD), Ryder System Inc (R), Seaboard Corp (SEB), SiteOne Landscape Supply Inc (SITE), Sonoco Products Co (SON), TripAdvisor Inc (TRIP), Twilio Inc (TWLO), Tyler Technologies Inc (TYL), Ventas Inc (VTR), Westinghouse Air Brake Technol (WAB), Williams Cos Inc/The (WMB), Wyndham Hotels & Resorts Inc (WH).

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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.