Markets Today: Stocks Rise on Strength in Energy Stocks and Lower Bond Yields
Morning Markets
December S&P 500 futures (ESZ22) this morning are up by +0.63%. Stock index futures shook off overnight losses after a jump of more than +4% in crude oil price sparked a rally in energy stocks. Also, lower T-note yields today are supportive for stocks, with the 10-year T-note yield down -12.8 bp at 3.700%.
December S&P 500 futures initially fell to a 1-3/4 nearest-futures low in overnight trading after Tesla slid more than -6% in pre-market trading when it announced that its Q3 worldwide auto deliveries fell short of expectations, citing logistics and shipment issues.
The Euro Stoxx 50 today is down by -0.22%. Weakness in European bank stocks is weighing on the overall market, led by an -11% plunge in Credit Suisse Group AG, which slumped on speculation about the company’s future and its requirement for fresh capital. Economic concerns also weighed on European stocks after the Eurozone Sep global manufacturing PMI was revised downward to a 2-1/4 year low. However, losses in European stocks were contained after the 10-year German bund yield fell to a 1-week low of 1.998%.
The Eurozone Sep global manufacturing PMI was revised downward by -0.1 to 48.4 from the previously reported 48.5, the weakest level in 2-1/4 years.
ECB Governing Council member Vasle said today that the ECB is likely to raise interest rates at its "next few" meetings as it confronts "double-digit" inflation. He also hinted the ECB would raise interest rates by 75 bp for the second straight meeting when he added, "we will most probably retain the pace" of tightening.
Asian markets today settled mixed. Chinese markets are closed this week for the Golden Week holidays. Hong Kong’s Hang Seng Index closed down -0.83%, and Japan’s Nikkei Stock Index closed up +1.07%.
Hong Kong’s Hang Seng Index today tumbled to an 11-year low and closed moderately lower. Asian part suppliers to electric vehicle makers declined today after Tesla’s worldwide deliveries missed forecasts for Q3 and the company warned of challenges in getting its cars to customers. Also, Asian chipmakers declined today after Toshiba’s Kioxia unit said it would cut new flash memory production volume by 30%.
Japan’s Nikkei Stock Index today recovered from a 3-1/4 month low and posted moderate gains. Comments from Japanese Prime Minister Kishida today weakened the yen and sparked a rally in Japanese exporters when he said he would "press ahead with strengthening an economic structure that capitalizes on the weak yen." Japanese stocks today initially moved lower on economic concerns after today’s economic news showed the Japan Q3 Tankan survey large manufacturing business conditions unexpectedly fell, and the Japan Sep Jibun bank manufacturing PMI was revised downward by -0.2 to a 20-month low.
The Japan Q3 Tankan survey large-manufacturing business conditions index unexpectedly fell -1 to 8, weaker than expectations of an increase to 10.
The Japan Sep Jibun bank manufacturing PMI was revised downward by -0.2 to a 20-month low of 50.8 from the previously reported 51.0.
Japan Sep vehicle sales rose +17.8% y/y, the largest increase in 15 months.
Pre-Market U.S. Stock Movers
Energy stocks and energy service providers are climbing in pre-market trading, with the price of WTI crude oil up more than +4% at a 1-week high. Chevron (CVX), ConocoPhillips (COP), Devon Energy (DVN), Diamondback Energy (FANG), Exxon Mobil (XOM), Haliburton (HAL), Schlumberger (SLB), and Valero Energy (VLO) are all up more than +2%.
Southwestern Energy (SWN) jumped +3% in pre-market trading after Truist Securities upgraded the stock to buy from hold on a potential boost from strong gas prices.
Wells Fargo (WFC) is up more than +1% in pre-market trading after Goldman Sachs upgraded the stock to buy from neutral.
CF Industries (CF) gained more than +3% in pre-market trading after RBC Capital Markets upgraded the stock to outperform from sector perform, citing a “favorable nitrogen market outlook and attractive energy spreads between the U.S. and international markets that may persist long-term.”
Livewire Group (LVWR) surged +65% in pre-market trading after the company raised more than $295 million after closing its merger with AEA-Bridges Impact Corp.
Myovant Sciences (MYOV) soared more than +25% in pre-market trading after a fully-owned subsidiary of Sumitomo Pharma offered to buy the remaining shares of Myovant for $22.75 a share in cash, 27% higher than last Friday’s closing price.
Tesla (TSLA) dropped more than -6% in pre-market trading after it said it delivered 343,830 cars worldwide in Q3, below the consensus of 358,000. Other electric vehicle makers are also falling on the news, with Lucid Group and Rivian Automotive down more than -1%.
Citigroup (C) is down more than -1% in pre-market trading after Goldman Sachs downgraded the stock to neutral from buy.
DocuSign (DOCU) tumbled more than -3% in pre-market trading after Morgan Stanley downgraded the stock to underweight from equal weight.
Intuit (INTU) fell more than -1% in pre-market trading after JPMorgan Chase downgraded the stock to neutral from rating suspended.
Today’s U.S. Earnings Reports (10/3/2022)
P3 Health Partners Inc (PIII).
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