Pre-Market Brief: Stocks Set to Open Higher as Weak U.S Payrolls May Slow Fed Tapering

Morning Markets

Dec S&P 500 futures this morning are up by +0.40%.  Stock indexes jumped this morning after a smaller-than-expected increase in U.S. Nov nonfarm payrolls and Nov hourly earnings bolstered speculation the Fed won’t rush to accelerate tapering of bond purchases. 

An easing of omicron variant concerns is also boosting stocks today after BioNTech said that current Covid vaccines will probably still protect against severe disease from the variant.  

U.S. stock indexes also garnered support after the Senate on Thursday night passed a stopgap spending bill to avert a U.S. government shutdown.  President Biden is expected to sign the bill into law today. 

U.S. Nov nonfarm payrolls rose +210,000, weaker than expectations of +550,000 and the smallest increase in 11 months.  The Nov unemployment rate fell -0.4 to a 1-3/4 year low of 4.2%, showing a stronger labor market than expectations of 4.5%.

U.S. Nov avg hourly earnings rose +0.3% m/m and +4.8% y/y, weaker than expectations of +0.4% m/m and +5.0% y/y.

The Euro Stoxx 50 index today is up by +0.26%.  Improved confidence in the economic outlook gave European stocks a boost today from Morgan Stanley said, “at this stage, we don’t have enough evidence to suggest that the omicron variant will derail our base case view on European equities.”  Goldman Sachs also said that European equities are “particularly attractive compared with bonds.” However, gains in stocks were limited after Eurozone Oct retail sales rose +0.2% m/m, weaker than expectations of +0.3% m/m.  Also, the Eurozone Nov Markit composite PMI was revised downward by -0.4 to 55.4 from the previously reported 55.8.  

Stocks in Asia closed higher.  China’s Shanghai Composite closed up +0.94%, and Japan’s Nikkei Stock Index closed up +1.00%.  The Shanghai Composite rallied to a 1-1/4 month high today on signs that China will ease monetary policy after Chinese Premier Li Keqiang said today that China would cut the reserve requirement ratio at the appropriate time to aid smaller firms.  Japanese stocks rose on signs of strength in Japan’s economy after the Japan Nov Jibun Bank services PMI was revised upward by +0.9 to 53.0 from the previously reported 52.1, the strongest pace of expansion in 2-1/4 years.

Pre-Market U.S. Stock Movers

Ulta Beauty (ULTA) climbed more than +5% in pre-market trading after it raised its full-year 2022 net sales forecast to $8.4 billion to $8.5 billion from a prior view of $8.1 billion to $8.3 billion, higher than the consensus of $8.35 billion. 

Marvel Technology (MRVL) surged +18% in pre-market trading after it reported Q3 adjusted EPS of 43 cents, well above the consensus of 25 cents, and forecast Q4 adjusted EPS of 45 cents-51 cents, higher than the consensus of 42 cents.

Zillow Group (ZG) climbed nearly +9% in pre-market trading after announcing a $750 million share repurchase program and said it has made “significant progress” on Zillow Offers inventory wind-down.

National Beverage Corp. (FIZZ) rose more than +7% in pre-market trading after it announced a special dividend of $3 a share to shareholders of record on Dec 13.

Fastly (FSLY) gained +6% in pre-market trading after Raymond James raised its recommendation of the stock to outperform from market perform, citing recent traffic trends and improved valuation.

UiPath (PATH) rallied more than +4% in pre-market trading after Morgan Stanley raised its recommendation of the stock to overweight from equal weight.

DocuSign (DOCU) plunged -70% in pre-market trading after it reported Q3 billings of $565.2 million, below the consensus of $586.9 million, and JPMorgan Chase and Piper Sandler cut ratings on the stock.

Ollie’s Bargain Outlet Holdings (OLLI) sank -20% in pre-market trading after it reported Q3 adjusted EPS of 34 cents, weaker than the consensus of 47 cents, and forecast full-year net sales of $1.76 billion to $1.77 billion, below the consensus of $1.83 billion.

Big Lots (BIG) fell -4% in pre-market trading after it forecast Q4 EPS of $2.05-$2.20, below the consensus of $2.39. 

Smith & Wesson Brands (SWBI) tumbled -19% in pre-market trading after it reported Q2 net sales of $230.5 million, weaker than the consensus of $265.3 million.

Today’s U.S. Earnings Reports (12/3/2021)

Big Lots Inc (BIG), Genesco Inc (GCO), Hibbett Inc (HIBB), IES Holdings Inc (IESC), Village Super Market Inc (VLGEA).