Stock Indexes Modestly Higher on Strength in Energy Stocks

Morning Markets

September S&P 500 futures (ESU22) this morning are up +0.12%.  Strength in energy stocks in pre-market trading is giving the overall market a boost, with WTI crude prices climbing to a 3-week high. Also, technology stocks are getting a lift from better-than-expected quarterly earnings from Intuit, which is up more than +5% in pre-market trading.  Stock indexes are also seeing support from today’s stronger-than-expected U.S. July core capital goods orders report. 

Higher T-note yields today are limiting the upside in stocks.  The 10-year T-note yield today rose to a 1-1/2 month high at 3.087%.  T-note yields are rising as the market braces for the possibility of hawkish comments from the Fed at Friday’s annual Fed symposium at Jackson Hole, Wyoming.  Recent Fed commentary signals the Fed will continue its aggressive rate-hike plan to tame inflation. 

The Euro Stoxx 50 today recovered from a 3-1/2 week low and is up +0.29%.  European stocks shook off early losses and are moderately higher. M&A activity gave stocks a lift as Richemont rose +3% after it sold a stake in its online retail business to Farfetch Ltd.  European stocks today initially moved lower on concern higher bond yields and energy prices would curb economic growth.  The 10-year German bund yield today climbed to a 7-week high of 1.382%, and the 10-year UK gilt yield rose to a 2-month high of 2.659%.  Also, European nat-gas prices are up more than +5% today, just below Monday’s 5-1/2 month high.

Asian markets today closed lower.  China’s Shanghai Composite index fell to a 2-1/2 week low and closed down -1.86%, and Japan’s Nikkei index dropped to a 1-1/2 week low and closed down -0.49%. 

China’s Shanghai Composite retreated today, led by losses in electric-vehicle companies after CATL reported weaker battery margins. Also, a drought in China has reduced hydroelectric power output and led to power shortages in the country that has forced some factories to close.  Tesla has warned of disruptions in the supply chain for its Shanghai plant, and Toyota Motor and Contemporary Amperex Technology, the world’s biggest maker of batteries for electric vehicles, have shuttered factories.  China’s yuan dropped to a nearly 2-year low today against the dollar of 6.8695 yuan/USD.

Japanese stocks today erased early gains and posted moderate losses on concern that hawkish rhetoric at this Friday’s annual Fed symposium at Jackson Hole, Wyoming, will push bond yields higher worldwide and choke off global growth.  The Japan JGB bond yield climbed to a 1-month high today of 0.237%.  Japan’s Nikkei Stock Index initially moved higher today on strength in utility stocks and power operators as Prime Minister Kishida is said to back the restarting of idled nuclear reactors and the development and construction of new reactors as Japan aims to cut its reliance on energy imports. 

Pre-Market U.S. Stock Movers

Intuit (INTU) jumped more than +5% in pre-market trading after reporting Q4 net revenue of $2.41 billion, better than the consensus of $2.34 billion. 

Bed Bath & Beyond (BBBY) surged more than +15% in pre-market trading after the Wall Street Journal reported that the company had secured a loan deal from JPMorgan Chase.

Energy stocks and energy service providers are climbing in pre-market trading, with WTI crude up more than +1% at a 3-week high.  Devon Energy (DVN), Diamondback Energy (FANG), Marathon Oil (MRO), Occidental Petroleum (OXY), ConocoPhillips (COP), Schlumberger (SLB), Exxon Mobil (XOM), and Haliburton (HAL) are all up more than +1%.

Frontier Group Holdings (ULCC) is up more than +4% in pre-market trading after Morgan Stanley resumed coverage of the stock with an overweight rating, saying the company is “the quintessential ultra-low-cost carrier” and has attractive margins.

Tattooed Chef (TTCF) surged 20% in pre-market trading after the company said it expanded its distribution agreement with Walmart.

Centennial Resource Development (CDEV) climbed more than +5% in pre-market trading after Truist Securities raised its recommendation on the stock to buy from hold.

Nordstrom (JWN) plunged -14% in pre-market trading after it cut its full-year 2023 adjusted EPS forecast to $2.30-$2.60 from a prior estimate of $3.20-$3.50, weaker than the consensus of $3.08.

Petco (WOOF) tumbled -8% in pre-market trading after reporting Q2 comparable sales rose +3.80%, below the consensus of +4.35%, and cut its full-year net revenue estimate to $5.98 billion-$6.05 billion from a prior estimate of $6.15 billion-$6.25 billion, weaker than the consensus of $6.11 billion.    

Today’s U.S. Earnings Reports (8/24/2022)

Autodesk Inc (ADSK), NetApp Inc (NTAP), NVIDIA Corp (NVDA), Salesforce Inc (CRM).

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