Markets Today: Stock Index Futures Climb on Strong Corporate Earnings Results

Morning Markets

March E-Mini S&P 500 futures (ESH24) are up +0.32%, and March Nasdaq 100 E-Mini futures (NQH24) are up +0.43%. 

Stock index futures this morning are moderately higher on some strong earnings results.  Ford Motor is up more than +6% in pre-market trading after reporting better-than-expected Q4 adjusted Ebitda and forecasting 2024 adjusted Ebitda above consensus.  Also, Fortinet is up more than +8% after reporting Q4 billings above consensus. In addition, Chipotle Mexican Grill is up more than +2% after reporting Q4 revenue above consensus.

On the negative side, VF Corp tumbled more than -8% in pre-market trading after reporting Q3 revenue below consensus.   Also, Snap plunged more than -30% after reporting weaker-than-expected Q4 revenue.

This morning's comments from Minneapolis Fed President Kashkari were slightly hawkish when he said, "we can take time to assess data before cutting interest rates," and he sees two to three 25 bp rate cuts this year as appropriate right now.

The U.S. Dec trade deficit widened to -$62.2 billion, a larger deficit than expectations of -$62.0 billion and a negative factor for Q4 GDP.

The markets are discounting the chances for a -25 bp rate cut at 25% at the March 19-20 FOMC meeting and 80% for that -25 bp rate cut at the following meeting April 30-May 1.

U.S. and European government bond yields today are higher.  The 10-year T-note is up +1.3 bp at 4.113%.  The 10-year German bund yield is up +1.7 bp at 2.309%.  The 10-year UK gilt yield is up +3.4 bp at 3.984%.  

Overseas stock markets are mixed.  The Euro Stoxx 50 is down -0.09%.  China’s Shanghai Composite Index closed up +1.44%.  Japan’s Nikkei Stock Index closed down -0.11%.

The Euro Stoxx 50 today fell back from a 23-year high and is slightly lower.  Weaker-than-expected industrial activity in Germany undercut stocks after German Dec industrial production fell by the most in 9 months. Also, hawkish ECB Comments pushed European government bond yields higher and weighed on stocks after ECB Executive Board member Schnabel cautioned against cutting interest rates too soon. Corporate news today was mixed.  TotalEnergies SE fell more than -1% after reporting a drop in profit, while Carlsberg AS climbed more than +4% after boosting its long-term outlook. 

ECB Executive Board member Schnabel said that because of sticky services inflation, a resilient labor market, a notable loosening of financial conditions, and tensions in the Red Sea, "this cautions against adjusting the policy stance too soon."

German Dec industrial production fell -1.6% m/m, weaker than expectations of -0.5% m/m and the biggest decline in 9 months.

Swaps are pricing in the chances for a -25 bp rate cut by the ECB at 13% for its next meeting on March 7 and at 66% at the following meeting on April 11.

China’s Shanghai Composite Index today extended Tuesday’s sharp rally on optimism that Chinese authorities will make more forceful efforts to stabilize equity markets. The state-sponsored Xinhua News Agency reported that President Xi Jinping is replacing the Chairman and head securities regulator of the China Securities Regulatory Commission. Chinese stocks also rose on expectations for additional state buying of shares after Central Huijin Investment, whose subsidiaries include Chinese state-owned banks, announced that it would expand its purchases of stock index funds.  Gains in the overall market were limited as real estate stocks declined after Morgan Stanley cut its price targets on Chinese property developers by an average of 30% on prolonged weak sales and margin compression. 

Japan’s Nikkei Stock Index today posted modest losses.  Weakness in technology stocks weighed on the overall market as technology stocks slid on negative carryover from a -1% fall in the U.S. Philadelphia Semiconductor index on Tuesday.  Corporate earnings results were mixed as Daikin Industries fell more than -7% after reporting weaker-than-expected Q3 operating income. However, Mitsubishi Corp rallied more than +9% to a record high after it reported better-than-expected Q3 net income and said it would buy back up to 10% of its shares.  Japanese stocks also found support on some positive economic news after the Dec leading index CI rose more than expected to a 14-month high.

The Japan Dec leading index CI rose +1.9 to a 14-month high of 110.0, stronger than expectations of 109.3.

Swaps are pricing in the chances for a +10 bp rate increase by the BOJ at 26% for its next meeting on March 19 and at 79% for the following meeting on April 26.

Pre-market U.S. Stock Movers

Ford Motor (F) climbed more than +6% in pre-market trading after reporting Q4 adjusted Ebitda of $1.10 billion, stronger than the consensus of $997.4 million, and forecast 2024 adjusted Ebitda of $10 billion-$12 billion, above the consensus of $9.24 billion.  

Fortinet (FTNT) rallied more than +8% in pre-market trading after reporting Q4 billings of $1.86 billion, better than the consensus of $1.62 billion. 

Sonos (SONO) jumped more than +10% in pre-market trading after reporting Q1 adjusted EPS of 84 cents, well above the consensus of 58 cents. 

Yum China (YUMC) surged more than +13% in pre-market trading after reporting Q4 comparable sales rose +4%, stronger than the consensus of +3.24%. 

Chipotle Mexican Grill (CMG) climbed more than +2% in pre-market trading after reporting Q4 revenue of $2.52 billion, above the consensus of $2.49 billion.

Azek (AZEK) jumped more than +9% in pre-market trading after raising its full-year consolidated net sales forecast to $1.39 billion-$1.43 billion from a previous estimate of $1.34 billion-$1.40 billion, stronger than the consensus of $1.38 billion. 

XPO Inc (XPO) rose more than +60% in pre-market trading after reporting Q4 revenue of $1.94 billion, better than the consensus of $1.92 billion. 

VF Corp (VFC) tumbled more than -8% in pre-market trading after reporting Q3 revenue of $2.96 billion, weaker than the consensus of $3.24 billion. 

Snap (SNAP) plunged more than -30% in pre-market trading after reporting Q4 revenue of $1.36 billion, below the consensus of $1.38 billion.

Triumph Group (TGI) sank more than -17% after cutting its full-year net sales forecast to $1.17 billion-$1.20 billion from a previous forecast of $1.43 billion-$1.47 billion, well below the consensus of $1.46 billion. 

Cognizant Technology (CTSH) dropped more than -6% in pre-market trading after forecasting full-year revenue of $19.0 billion-$19.8 billion, the midpoint below the consensus of $19.76 billion. 

Mercury Systems (MRCY) tumbled more than -7% in pre-market trading after cutting its full-year revenue forecast to $800 million-$850 million for a previous forecast of $950 million-$1.0 billion, weaker than the consensus of $953.6 million. 

Aptiv Plc (APTV) slid more than -2% in pre-market trading after Morgan Stanley downgraded the stock to underweight from equal weight with a price target of $74.

Perion Network Ltd (PERI) sank more than -8% in pre-market trading after forecasting full-year revenue of $860 million-$880 million, below the consensus of $886.4 million. 

Earnings Reports (2/7/2024)

Allstate Corp/The (ALL), Bunge Global SA (BG), CDW Corp/DE (CDW), CVS Health Corp (CVS), Dayforce Inc (DAY), Emerson Electric Co (EMR), Equifax Inc (EFX), Everest Group Ltd (EG), FleetCor Technologies Inc (FLT), Fox Corp (FOXA), Globe Life Inc (GL), Hilton Worldwide Holdings Inc (HLT), McKesson Corp (MCK), Mid-America Apartment Communities (MAA), Monolithic Power Systems Inc (MPWR), News Corp (NWSA), O'Reilly Automotive Inc (ORLY), Paycom Software Inc (PAYC), PayPal Holdings Inc (PYPL), STERIS PLC (STE), Uber Technologies Inc (UBER), Walt Disney Co/The (DIS), Wynn Resorts Ltd (WYNN), 

Yum!  Brands Inc (YUM).

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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.