Markets Today: Stock Index Futures Drop as Global Bond Yields Climb

Morning Markets

March S&P 500 futures (ESH23) this morning are down -0.68% and March Nasdaq 100 E-Mini futures (NQH23) are down -0.92%.

U.S. stock index futures this morning are moderately lower as global bond yields climb after hawkish central bank comments bolstered expectations of higher interest rates.  The 10-year T-note yield jumped to a 3-1/4 month high today of 3.925% on negative carryover from Thursday when Cleveland Fed President Mester and St. Louis Fed President Bullard said they could support a 50 bp rate hike at the March FOMC meeting.  Also, the 10-year German bund yield today rose to a 7-week high of 2.568% after ECB Executive Board member Schnabel warned that markets risked underestimating inflation.

Today’s U.S. economic news on import prices was bearish for stocks and bonds after the Jan import price index ex-petroleum unexpectedly rose +0.2% m/m, stronger than expectations of a decline of -0.3% m/m.

Negative corporate news is also weighing on stock index futures.  Moderna tumbled more than -6% in pre-market trading after reporting mixed results in the Phase 3 trial of its mRNA-1010 flu shot.  Also, Cognex dropped more than -7% after forecasting weaker-than-expected Q1 gross margins.  In addition, Tesla is down more than -1%, adding to Thursday’s -5% plunge, after it recalled hundreds of thousands of cars over a crash risk in its automated-driving software.

On the positive side, Deere & Co and Applied Materials are up more than +1% after reporting stronger-than-expected Q1 net sales.  Also, DraftKings is up more than +7% after reporting better-than-expected Q4 revenue and raising its full-year revenue forecast.  In addition,  Coca-Cola and Roku are up more than +1% after being upgraded to buy.

Overseas markets are lower, with the Euro Stoxx 50 down -0.77%.  Also, China’s Shanghai Composite stock index closed down -0.77%, and Japan’s Nikkei Stock index closed down -0.66%. 

The Euro Stoxx 50 index today is moderately lower. Comments today from ECB Executive Board member Schnabel pushed European government bond yields higher and weighed on stocks when she warned that markets risked underestimating inflation and that the ECB “may have to act more forcefully" to bring inflation down. Her comments pushed the 10-year German bund yield up to a 7-week high of 2.568%.  Weakness in European airlines and travel stocks also weighed on the overall market after Germany canceled over 1,300 flights today after ground staff at Germany’s biggest airports headed out on strike over pay.  On the positive side, European automakers rose, led by a +2% gain in Mercedes-Benz after the company reported strong Q4 earnings and announced a 4-billion euro stock buyback plan.

ECB Executive Board member Schnabel warned that markets risked underestimating inflation.  She said the Eurozone economy's reaction to interest-rate increases may prove weaker than prior episodes, and if that transpires, "we may have to act more forcefully." 

German Jan PPI eased to +17.8% y/y from +21.6% y/y in Dec, the slowest pace of increase in 16 months.

China’s Shanghai Composite dropped to a 4-week low and closed moderately lower.  Weakness in Asian technology stocks led the market lower today, weighed down by Thursday’s comments from St. Louis Fed President Bullard and Cleveland Fed President Mester, who said they could support larger Fed rate hikes.   Weakness in Chinese bank stocks also weighed on the overall market after China Renaissance Holdings Ltd plunged by more than 28% after saying it could not contact the chairman and CEO of the Chinese investment bank, fueling speculation of a renewed crackdown on China’s finance industry. 

Japan’s Nikkei Stock Index today closed moderately lower on negative carryover from Thursday’s side in U.S. stocks.  Japanese technology stocks fell on concerns the Fed may raise interest rates by 50 bp at the March FOMC meeting.  Losses in the Nikkei Stock Index were limited due to strength in Japanese exporters after the yen fell to a 1-3/4 month low against the dollar. 

Pre-Market U.S. Stock Movers

Moderna (MRNA) tumbled more than -6% in pre-market trading after reporting mixed results in its Phase 3 trial of its mRNA-1010 flu shot. 

Cognex (CGNX) dropped more than -7% in pre-market trading after forecasting Q1 gross margin to be in the low-70% range, citing the significant premiums the company has paid to procure components previously destroyed by the fire.

Texas Roadhouse (TXRH) sank more than -6% in pre-market trading after reporting Q4 EPS of 89 cents, weaker than the consensus of $1.03. 

XP Inc (XP) plunged more than -11% in pre-market trading after Credit Suisse downgraded the stock to underperform from neutral.

Tesla (TSLA) fell more than -1% in pre-market trading, adding to Thursday’s -5% plunge after it recalled hundreds of thousands of cars over a crash risk in its automated-driving software. 

Deere & Co (DE) rose more than +2% in pre-market trading after reporting Q1 net sales of $11.40 billion, above the consensus of $11.23 billion, and raising its full-year net income forecast to $8.75 billion-$9.25 billion from a previous estimate of $8.0 billion-$8.5 billion. 

DoorDash (DASH) jumped more than +6% in pre-market trading after reporting Q4 revenue of $1.82 billion, stronger than the consensus of $1.77 billion, and authorizing a $750 million stock repurchase program.

Applied Materials (AMAT) rose more than +1% in pre-market trading after reporting Q1 net sales of $6.74 billion, better than the consensus of $6.69 billion. 

DraftKings (DKNG) rallied more than +7% in pre-market trading after reporting Q4 revenue of $855.1 million, stronger than the consensus of $798.6 million, and raising its full-year revenue forecast to $2.85 billion-$3.05 billion from a prior forecast of $2.8 billion-$3.0 billion, the midpoint above the consensus of $2.93 billion. 

Axalta Coating Systems Ltd (AXTA) gained more than +1% in pre-market trading after RBC Capital Markets upgraded the stock to outperform from sector perform. 

Coca-Cola (KO) rose more than +1% in pre-market trading after Citigroup initiated coverage of the stock with a buy recommendation and a price target of $68. 

Roku (ROKU) climbed more than +2% in pre-market trading after Bank of America Global Research upgraded the stock two notches to buy from underperform.

Today’s U.S. Earnings Reports (2/17/2023)

AutoNation Inc (AN), CenterPoint Energy Inc (CNP), Corebridge Financial Inc (CRBG), Deere & Co (DE), Liberty Broadband Corp (LBRDA), PPL Corp (PPL).

More Stock Market News from Barchart

• Bear Put Spread Screener Results For February 17th
• Futures are Signaling a Weak Open for Wall Street As Data Fuels Rate Hike Worries
• Stocks Slump as Fed Officials Mention Bigger Rate Hikes
• Profit Estimates for Tech Stocks Continue to Fall

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.