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Daily Markets: Stocks Try to Rebound Ahead of Friday’s CPI

The big picture today

Asia-Pacific equity indices ended today’s session lower except for India’s Sensex which rose 0.77% and Japan’s Nikkei which gained 0.04%. South Korea’s KOSPI also flirted with neutral, falling 0.03%, while Taiwan’s TAIEX fell 0.29%, Hong Kong’s Hang Seng fell 0.66% and the Shanghai Chinese composite lost 0.76%. Australia’s ASX All Ordinaries led the way, closing down 1.45% on the day. By midday, European equity indices are down across the board and US futures are pointing to a modest open later this morning.

Like yesterday, we face another quiet day on the economic and earnings front, but investor conference season continues to heat up. Markets have essentially bided their time until tomorrow when we have May CPI and Core CPI (excluding food and energy) – more details below. Given where we are in the quarter and following sobering comments from Intel (INTC) yesterday on the macro environment saying it is weaker than expected, investors should be wary of similar comments as well as lowered expectations for the current quarter.

Data download

International economy

China released annual import and export figures for May, with exports posting 16.9% growth, massively surprising from estimates of 5.8% and up fourfold from 3.9 % previously announced. Imports also surprised with 4.1% year-on-year growth, easily beating estimates of 1.8% and flat activity (0%). As the country continues to reopen from its Zero Covid policy, these numbers and many more will continue to normalize.

7:45 a.m. ET will see the announcement of the interest rate decision from the European Central Bank (ECB). The bank is expected to end its asset purchase program and announce a plan to raise interest rates. The ECB lending rate has been kept at zero since 2016 while deposit rates have been negative since 2014.

Domestical economy

8:30 a.m. ET will see the release of initial jobless claims which are expected to rise slightly to 205,000 from the 200,000 previously reported.

As mentioned above, tomorrow we will finally have the May CPI and the Core CPI (excluding food and energy). A slight decline to 8.2% is expected from the previously announced 8.3%. The outcome of this report could influence the speed of rate hikes, leading to either a tumultuous close if the data is hotter than expected, or a sigh of relief if it confirms that inflation has already peaked. It’s also quite possible that we could get a “split decision” between the headline CPI figure and the base figure given the influence of record gasoline prices during the month, which only increase so far in June.

Markets

Markets traded yesterday as investors reassessed the state of the economy as 10-year Treasury yields rose above 3% again and West Texas Intermediate (WTI) rose above $120 a barrel. The Nasdaq Composite fell 0.73%, the Dow Jones fell 0.81%, the S&P 500 was down 1.08% and the Russel 2000 led the way, closing at 1.49%. Including yesterday’s moves, here’s how the major market indicators stack up year-to-date:

  • Dow Jones Industrial Average: -9.43%
  • S&P 500: -13.65%
  • Nasdaq compound: -22.75%
  • Russell 2000: -16.79%
  • Bitcoin (USD-BTC): -36.55%
  • Ether (ETH-USD): -52.40%

Stocks to Watch

Prior to the start of trading for stocks listed in the United States, Fuel Cell Energy (FCEL) and Signet Jewelers (GIS) are supposed to publish quarterly results.

Shares of Metaplatforms will start trading under the symbol “META” today, moving away from the stock symbol FB.

Nio (NIO) announced deliveries for the March quarter increased 28.5% year-on-year to 25,768 vehicles, including 4,341 ES8s, 13,620 ES6s, 7,644 EC6s and 163 ET7s.

Shares of Intel (INTC) fell more than 5% yesterday following the company’s comments that the macroeconomic environment was weaker than expected and “circumstances at this point are much worse than we had anticipated at the start of the quarter.” These comments will further emphasize what AMD (AMD) has to say at its 2022 Financial Analyst Day which begins at 12:30 p.m. ET today.

Shares of Scotts Miracle-Gro (SMG) sank yesterday as the company cut its 2022 EPS outlook well below the current consensus estimate. Scotts noted that its fixed cost structure had come under much greater pressure due to restock orders from its retail partners that were not what it expected since mid-May.

Discount retailer stocks Five under (FIVE) are under pressure this morning following narrow failures at the top and bottom following the 3.6% year-over-year decline in its comp sales for the quarter. Along with comments that the macro environment will “remain challenging” throughout the year, Five Below’s guidance for the current quarter was well below consensus expectations for revenue and EPS.

IPOs

No new IPOs are expected to start trading this week. Readers who want to dig deeper into the schedule of upcoming IPOs should visit Nasdaq’s Latest and Upcoming IPOs page.

After today’s market close

Comtech Telecom (CMTL), DocuSign (DOCU), Stitch Fix (SFIX) and Vail Resorts (MTN) are expected to release their quarterly results after the shares halt trading today. Those interested in learning more about which companies release their reports when head to the Nasdaq earnings calendar.

on the horizon

friday june 10

  • Japan: PPI – May
  • China: CPI, PPI – May
  • Italy: Industrial production – April
  • United States: Consumer Price Index – May
  • United States: consumer sentiment and inflation expectations – June

Thought of the day

“Storms make trees root deeper.” ~Dolly Parton

Disclosures

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.