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Stocks Mixed, Goldman Sees Recession Risk as Low

Barchart - Fri Apr 8, 2022

Morning Markets

June S&P 500 futures are mixed on some economic optimism.  A research note today from Goldman Sachs gave stocks a lift when it said a broader range of market indicators still implies a low recession risk. Goldman said that while their economists do see recession risks as above-average this year, they expect that any downturn would likely be mild “as the economy lacks major financial imbalances and labor markets remain strong.”

T-note yields continue to climb on expectations for the Fed to raise interest rates and cut its balance sheet aggressively.  As a result, the 10-year T-note yield today rose to a new 3-year high of 2.700%.

The Euro Stoxx 50 index today is up by +1.42%.  Dip-buying is supporting European stocks today after three straight days of losses. Gains in bank stocks led the overall market higher as Banco BPM SpA surged more than +10% after Credit Agricole SA bought a 9.2% stake in the Italian bank.  Another positive for European stocks was today’s data that showed Italy's Feb retail sales rose +0.7%m/m, stronger than expectations of +0.4% m/m.

The Bank of Russia today, in an unscheduled meeting, unexpectedly cut its key interest rate to 17% from 20%.  Russia is trying to cushion the economic blow from international sanctions imposed on the country after invading Ukraine.  Russia’s central bank cut rates after the ruble recovered nearly its entire plunge from the start of the war in Ukraine, as continuing inflows of energy revenues and tough capital controls have helped lift the ruble.

Asian markets today closed higher.  China’s Shanghai Stock Index closed up by +0.47%, and Japan’s Nikkei Stock closed up by +0.36%. Asian stocks recovered from early losses and posted moderate gains.  The Shanghai Composite recovered from a 1-1/2 week low and moved higher as Chinese property and infrastructure-related stocks rallied on hopes for fiscal and monetary easing as the government attempts to revive economic growth. 

Japan’s Nikkei Stock Index rebounded from a 3-week low and closed higher as a rally in technology stocks led the overall market higher.   Also, a decline in the yen to a 1-1/2 week low today boosted the shares of Japanese exporters.   The Nikkei Stock Index initially fell to a 3-week low today after the Japan Mar consumer confidence unexpectedly fell -2.4 to a 14-month low of 32.8, weaker than expectations of an increase to 36.8.

Pre-Market U.S. Stock Movers

CrowdStrike (CRWD) jumped more than +4% in pre-market trading after managementat its investor briefing set a framework to reach $5 billion in annual recurring revenue by 2026.

WD-40 (WDFC) rallied more than +9% in pre-market trading after Jeffries said the company produced a “solid” beat in Q2 and that its increased market share and new product launches would support volume growth of 3% in 2022.

Kroger (KR) climbed nearly +3% in pre-market trading after Bank of America raised its recommendation on the stock to buy from neutral with a price target of $75.

Kura Sushi (KRUS) climbed +4 in pre-market trading after it reported Q2 fiscal sales of $31.3 million, well above the $9.1 million in sales from Q2 2021.

Quidel (QDEL) rose more than +3% in pre-market trading after it reported preliminary Q1 revenue of $990 million to $1 billion, well above the consensus of $817.4 million. 

Alcoa (AA) dropped more than -1% in pre-market trading after Credit Suisse cut its recommendation on the stock to neutral.

ACM Research (ACMR) fell more than -4% in pre-market trading after it said its Q1 revenue would be “significantly below” expectations.  Wells Fargo cut its recommendation on the stock to underweight from equal weight.

United Parcel Service (UPS) and Union Pacific (UNP) slid more than -1% in pre-market trading after Bank of America downgraded both stocks to neutral from buy.

Today’s U.S. Earnings Reports (4/8/2022)

Chase Corp (CCF), Alexander's Inc (ALX), Brooklyn ImmunoTherapeutics In (BTX).

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