Headline News: The S&P 500 futures are up 47 points and trade 1.2% above fair value at the end of a tough week in which the benchmark index is down 3.1%. Risk sentiment has been aided by a strong showing in foreign markets, including Chinese markets following an unexpected move by China’s central bank. Specifically, the People’s Bank of China unexpectedly cut its five-year prime rate by 15 basis points to 4.45% while leaving its key one-year lending rate steady at 3.7%. China’s Shanghai Composite rose 1.6% on Friday. The Europe Stoxx 600 is currently up 1.6%. The futures market is overlooking disappointing earnings results and guidance from another retailer, Ross Stores (ROST 67.05, -25.65, -27.7%), which is down 28% in pre-market action, as well as disappointing results and guidance from semiconductor company Applied Materials (AMAT 109.50, -1.24, -1.1%). The Treasury market, meanwhile, is a bit more reserved right now. The 2-yr yield is up two basis points to 2.63%, and the 10-yr yield is unchanged at 2.86%. The U.S. Dollar Index is up 0.2% to 102.95. WTI crude is up 0.1% to $110.00/bbl. (Michael Gibbs, Director of Equity Portfolio & Technical Strategy) Markets: The S&P 500 remained above… Read More
Headline News: The S&P 500 futures trade 31 points, or 0.8%, below fair value as the market remains pressured by downside momentum, concerns about inflation, profit margins, and growth prospects, and expectations for a more hawkish Fed. After hearing disappointing earnings news from high-profile consumer companies this week, technology giant Cisco (CSCO 42.90, -5.46, -11.3%) has followed a similar path with a miss on revenue estimates and downside guidance for its fiscal Q4. CSCO shares are down 11% in pre-market action. Cisco’s fiscal quarter ended in April, and the company said it expects the supply challenges that it experienced in that quarter to continue into its July quarter. Other negative-sounding headlines include news that COVID-19 cases continue to rise in the U.S. with 32% of Americans in areas with medium to high transmission, a report indicating that gasoline could reach an average of $5/gallon in the U.S. this summer, and Sri Lanka defaulting on its debt for the first time ever. Demand for Treasuries and gold ($1829.70/ozt, +13.80, +0.8%) has increased amid the disappointing price action in equity futures. The 2-yr yield is down five basis points to 2.63%, and the 10-yr yield is down five basis points to 2.84%.… Read More
Headline News: The S&P 500 futures trade 31 points, or 0.8%, below fair value as inflation concerns pressure risk sentiment following a big rally effort yesterday. Target (TGT 166.80, -48.48, -22.5%) is setting the negative tone with a 22.5% decline in pre-market action after missing EPS estimates on above-consensus revenue, citing “unusually high costs” that impacted profitability. The disappointing news mirrors Walmart (WMT 128.75, -2.60, -2.0%) yesterday and has overshadowed Lowe’s (LOW 188.50, -5.53, -2.9%) earnings beat today. Interestingly, TJX Co. (TJX 57.00, +0.81, +1.8%) is trading higher despite missing revenue estimates and issuing downside Q2 EPS guidance. Persistently high oil prices ($114.42/bbl, +2.01, +1.8%) have added to inflation concerns while an uptick in long-term interest rates has dovetailed with the inflation-expectations narrative. The 10-yr yield is up three basis points to 3.00%. The 2-yr yield is up three basis points to 2.70%. The U.S. Dollar Index is up 0.3% to 103.63. On the data front, investors will receive Housing Starts (Briefing.com consensus 1.775 million) and Building Permits (Briefing.com consensus 1.820 million) for April at 8:30 a.m. ET. Earlier, the weekly MBA Mortgage Applications Index dropped 11.0% following a 2.0% increase in the prior week. (Michael Gibbs, Director of Equity Portfolio… Read More
Headline News: The S&P 500 futures are up 67 points and trade 1.7% above fair value amid dip-buying activity, including in some of the beaten-down mega-caps. The tech-heavy Nasdaq 100 futures trade 1.9% above fair value. Risk sentiment has also been supported by positive earnings results and guidance from Home Depot (HD 306.00, +10.01, +3.4%), an improved unit revenue outlook for Q2 from United Airlines (UAL 45.50, +1.96, +4.5%), and yesterday’s news of Shanghai planning to relax COVID restrictions. Hong Kong is also planning to relax restrictions. Walmart (WMT 138.28, -9.93, -6.7%), however, has dropped 7% in pre-market action on mixed earnings results/guidance in addition to an observation of changes in consumer behavior due to inflation. Investors will get another update on the consumer through the Retail Sales report for April (Briefing.com consensus 0.9%) at 8:30 a.m. ET. Also on the market’s radar is Fed Chair Powell’s conversation at a Wall Street Journal event at 2:00 p.m. ET. Industrial Production (Briefing.com consensus 0.5%) and Capacity Utilization (Briefing.com consensus 78.6%) data for April will be released at 9:15 a.m. ET, followed by Business Inventories for March (Briefing.com consensus 1.9%) and the NAHB Housing Market Index for May (Briefing.com consensus 75) at… Read More
Headline News: The S&P 500 futures trade 26 points, or 0.7%, below fair value in a carryover of selling momentum, particularly in the mega-cap stocks. The tech-heavy Nasdaq 100 futures underperform and trade 1.0% below fair value. The futures market continues to grapple with growth concerns attributed in part to the Fed’s aggressive tightening plans in the face of slowing economic growth and high inflation. After a relatively disappointing April CPI report yesterday, investors will see what producer inflation was in April. Specifically, the Producer Price Index for April (Briefing.com consensus 0.5%) will be released at 8:30 a.m. ET alongside the weekly Initial Claims (Briefing.com consensus 191,000) and Continuing Claims report. There is renewed hope that inflation rates could be peaking, which could be driving another eight-basis-point decline in the 10-yr yield to 2.84%. At the same time, though, growth concerns and some safe-haven positioning could be in the mix, too. The 2-yr yield is down five basis points to 2.59%. The U.S. Dollar Index is up 0.6% to 104.44. WTI crude futures are down 1.4%, or $1.50, to $104.21/bbl. Separately, shares of Walt Disney (DIS 100.85, -4.36, -4.1%) are down 4% in pre-market action after the Dow component missed… Read More
Headline News: The S&P 500 futures trade 35 points, or 0.9%, above fair value as the market tries to bounce from an oversold condition. The benchmark index enters the session down 16.3% for the year and below the 4,000 level. A supportive factor has been the price action in the 10-yr yield, which is currently down seven basis points to 3.01% after hitting 3.20% in overnight trade on Monday. The 2-yr yield is down two basis points to 2.58%. The U.S. Dollar Index is flat at 103.65. WTI crude is down 0.6% to $102.46/bbl. Separately, there will be a bunch of Fed speakers today, starting with New York Fed President Williams (FOMC voter) at 7:40 a.m. ET, Atlanta Fed President Bostic (non-voter) at 8:30 a.m. ET, and Richmond Fed President Barkin (non-voter) at 9:15 a.m. ET. After the open, Minneapolis Fed President Kashkari (non-voter) will speak at 1:00 p.m. ET, followed by Cleveland Fed President Mester (FOMC voter) at 3:00 p.m. ET. Today’s economic data will be limited to the NFIB Small Business Optimism Index for April, which was unchanged at 93.2. Investors will receive no other economic data today. (Michael Gibbs, Director of Equity Portfolio & Technical Strategy) … Read More
Headline News: The S&P 500 futures are down another 69 points to trade 1.7% below fair value after the 10-yr yield hit 3.20% earlier this morning. The tech-sensitive Nasdaq 100 futures underperform and trade 2.5% below fair value. The 10-yr yield is currently up five basis points to 3.17%, which after starting the year at 1.51%, has exerted key pressure on the growth stocks in pre-market action. The 2-yr yield is currently up a mere one basis point to 2.68%. Separately, after the April employment report showed a decline in the labor force participation rate last Friday, the market is now hearing of a “complicated and grave” employment situation in China due to the COVID lockdowns, according to Bloomberg, citing Chinese Premier Li Keqiang. With equity futures, Treasuries, oil prices ($107.05, -2.70, -2.5%), and even gold futures (18.59, -23.70, -1.3%) trading lower, investors are de-risking into cash and hedging against further equity losses. The U.S. Dollar Index is up 0.2% to 103.82. The CBOE Volatility Index is up 13.0% to 34.12. Today’s economic data, meanwhile, will be limited to Wholesale Inventories for March (Briefing.com consensus 2.3%) at 10:00 a.m. ET. The key report this week will be the Consumer… Read More
Headline News: The S&P 500 futures are peeling back yesterday’s relief rally and currently trade 20 points, or 0.5%, below fair value. Yesterday, the market was relieved to hear that the Fed was not considering hiking rates by 75 basis points in coming meetings, preferring instead 50-basis-point increases in the next two meetings. On a related note, the Bank of England on Thursday increased its Bank Rate by 25 basis points to 1.00%, as expected. Some of the enthusiasm has been dialed back this morning, partly because of profit-taking interest from cautious-minded investors and an understanding that the Fed is more concerned with inflation than economic growth right now. In addition, Treasury yields are creeping higher after dropping in yesterday’s session while investors digest some mixed earnings news, including disappointments from eBay (EBAY 50.22, -4.20, -7.7%) and Etsy (ETSY 95.50, -13.83, -12.7%). The 2-yr yield is up seven basis points to 2.68%, and the 10-yr yield is up four basis points to 2.96%. The U.S. Dollar Index is up 0.6% to 103.22. WTI crude futures are up 0.8% to $108.57/bbl in front of an OPEC+ production decision. On the data front, investors will receive the weekly Initial Claims (Briefing.com consensus… Read More
Headline News: The S&P 500 futures trade 23 points, or 0.6%, above fair value as buying interest from the prior two days carries over in front of the FOMC policy decision this afternoon. The Fed is expected to raise the target range for the fed funds rate by 50 basis points and formally present a plan to reduce its balance sheet. The policy statement will be released at 2:00 p.m. ET, followed by Fed Chair Powell’s press conference at 2:30 p.m. ET, which investors will tune in for any hints on how aggressive the Fed plans to be in the future with its tightening plans. In the meantime, there’s been a bunch of earnings news to sift through. Advanced Micro Devices (AMD 96.62, +5.49, +6.0%), Airbnb (ABNB 152.56, +7.56, +5.2%), Starbucks (SBUX 79.06, +4.73, +6.4%), and Moderna (MRNA 158.50, +11.96, +8.2%) are some of the standouts. Lyft (LYFT 23.08, -7.68, -25.0%), on the other hand, has tanked 25% in pre-market action on downside Q2 revenue guidance. On the data front, investors will receive the ADP Employment Change report for April (Briefing.com consensus 390,000) at 8:15 a.m. ET, the Trade Balance for March (Briefing.com consensus -$97.5 bln) at 8:30 a.m. ET,… Read More
Headline News: The S&P 500 futures trade roughly in line with fair value in a meek start to the month following the beatdown in April. Growth concerns continue to linger after China’s April Manufacturing PMI (47.4) contracted more than expected and Beijing tightened COVID restrictions, but the market might be drawing support from new inflows on the first trading day of the month. The 3% markdown in oil prices ($101.63, -3.09, -3.0%) is reflecting reduced demand expectations. There might also be some hesitation about the FOMC’s policy decision on Wednesday, the vast amount of earnings news throughout the week, and key economic data starting with the April ISM Manufacturing Index (Briefing.com consensus 57.9%) at 10:00 a.m. ET and culminating with the April employment report on Friday. The Construction Spending report for March (Briefing.com consensus 0.8%) will be released concurrently with the ISM report, which will be preceded by the final IHS Markit Manufacturing PMI for April at 9:45 a.m. ET. The Treasury market has softened up this morning, pushing yields slightly higher. The 2-yr yield is up three basis points to 2.72%, and the 10-yr yield is up three basis points to 2.92%. The U.S. Dollar Index is up… Read More
