Daily Markets: Stocks Seem to Recover at Weekend
The big picture today
Asia-Pacific equity indices ended today’s session up across the board. Taiwan’s TAIEX gained 0.78%, Australia’s ASX All Ordinaries rose 1.20%, Japan’s Nikkei gained 1.27% while China’s Shanghai Composite and Korea’s KOSPI rose 1.60 respectively % and 1.81%. Leading were India’s Sensex, up 2.91%, and Hong Kong’s Hang Seng, which closed up 2.96%. By midday, European equity indices are up across the board, and US futures are indicating something of a reprieve with a strong open indicated later this morning.
With a barren U.S. economic calendar and only a handful of new earnings reports this morning, absent major developments elsewhere, investors are likely to remain focused on the week’s disappointing earnings reports and international economic data. ‘today. Seasoned investors will recognize that even in a bear market, there can be powerful upside moves. After the tumultuous week for equities, it would be nice to end on a high note. However, ahead of next week’s Flash PMI data for May as well as the latest data from the Fed’s preferred inflation measure, the PCE price index, we should consider the possibility that a strong start to US trading in ‘today may fade late in the day as short-term profits are reserved and more defensive positions are put into play. The sobering view is that the turbulent market environment is likely to be with us until we have a higher degree of confidence in the Fed’s tightening efforts and its impact on the US economy.
Friends, summer is about to be long and hot, but there could be some wonderful bargains along the way.
Last night April CPI year-on-year data for Japan was released, with the top reading coming in line with expectations at 2.5%, more than double the previous figure of 1.2%. Core CPI (ex-Fuel and Food) printed at 0.80%, which is the first positive Core CPI print since July 2020.
Germany’s year-on-year PPI for April came in at 33.5%, slightly warmer than expectations of 31.4% and also above the previous print of 30.9%, as energy costs continue to put pressure on manufacturing.
Annual UK retail sales growth for April has been released, showing a contraction of 4.9%. Although stronger than the expectation for a 7.2% contraction, it is approaching levels not seen since January last year and compares poorly to the previous reading showing 1.3% growth.
10:00 a.m. ET will see the release of preliminary Eurozone consumer confidence for May with expectations of -21.4 compared to the previous reading of -22.0.
Count on your blessings as no strong or soft US economic data is expected to be released today. Enjoy the break because next week we’ll get a first look at how the manufacturing and services economies performed in May when we receive S&P Global’s Flash PMI reports for the US, UK, Eurozone. euro and Japan.
The outlook for growth and earnings came into question again yesterday after another round of disappointing earnings reports as the price of oil rose to $110 a barrel, leading to what may be characterized as a choppy trading day. The S&P 500 lost 0.58% while the Nasdaq Composite ended the day down 0.26%. The Dow Jones Industrial Average lost 0.75% on the day while the Russell 2000 added 0.8%. Eight of the 11 S&P 500 sectors closed lower, led by consumer staples, information technology and industrials. Including yesterday’s moves, here’s how the major market indicators stack up year-to-date:
- Dow Jones Industrial Average: -13.99%
- S&P 500: -18.16%
- Nasdaq compound: -27.21%
- Russell 2000: -20.84%
- Bitcoin (USD-BTC): -36.73%
- Ether (ETH-USD): -46.64%
Stocks to Watch
Prior to the start of trading for stocks listed in the United States, Booz Allen Hamilton (BAH), Deere & Co. (DE), and Foot Locker (FL) are supposed to publish their quarterly results.
Ross Stores (ROST) fell short of consensus expectations for its April quarter with EPS of $0.97 per share while revenue in the quarter fell 4.1% year-over-year to $4.33 billion from $4.54 billion expected. Comparable store sales for the April quarter were down -7%, and the company sees them falling 4% to 6% in the current quarter and 2% to 4% for its full year . That led Ross Stores to guide its current-quarter and full-year EPS below consensus expectations, sending ROST shares lower in post-sale trading last night.
VF Corp. (VFC) also failed with its March quarter results with EPS of $0.45 versus consensus of $0.47 while revenue for the quarter grew 9.4% year-on-year to $2.82 billion. dollars, slightly below the consensus of $2.83 billion. For its full fiscal year, VF sees revenue grow 7% year-over-year in constant currency, implying about $12.67 billion versus consensus of $12.7 billion. The company now expects revenue to grow by at least 7% for the year ahead, driven by low double-digit and mid-digit gains in North Face and Van.
Results for the March quarter of Exterior Decks (DECK) easily exceeded consensus expectations with revenue growing 31.1% year-over-year to $736 million. For its full year, the company forecasts revenue of $3.45-3.50 billion versus consensus of $3.44 billion with EPS of $17.40-18.25 versus guidance. consensus forecast of $18.11.
While Applied Materials (AMAT) missed April quarter expectations and issued a lower guidance for its July quarter, citing China’s lockdown and supply chain issues, it also shared that its 2022 backlog is full. This led the company to share that it sees a stronger year in 2023 compared to 2022, as it sees unlimited demand for wafer fabrication equipment at over $100 billion.
April quarter revenue and EPS beat cybersecurity firm’s consensus expectations Palo Alto Networks (PAWN) billings for the quarter increased 40% year-on-year to $1.8 billion. The company guided its July quarter revenue between $1.53 billion and $1.55 billion versus $1.39 billion for the April quarter and consensus of $1.53 billion. For the current quarter, Palo Alto is targeting billings of $2.32 billion to $2.35 billion.
Canada bans Chinese Huawei technologies and ZTE Corp. (ZTCOY) to provide 5G and 4G services) in the country. Service providers who have already installed the equipment will also be required to remove it without compensation or reimbursement. 5G machines must be removed by June 2024, while companies using related 4G equipment must remove them from their networks by the end of 2027.
Yesterday, Boeing (BA) and NASA successfully launched the long-delayed Starliner space capsule on a test flight without astronauts.
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
No company is supposed to publish its quarterly results. Investors should be on the lookout for companies that announce their March quarter results in advance. Those interested in learning more about which companies release their reports when head to the Nasdaq earnings calendar.
on the horizon
Monday May 23
- Germany: current Ifo assessment, business climate and expectations – May
tuesday 24 may
- Japan: Markit/JMMA PMI Manufacturing (preliminary) – May
- Eurozone: S&P Global Markit Composite PMI (preliminary) – May
- UK: CIPS Manufacturing & Services PMI (preliminary) – May
- United States: S&P Global Composite PMI (preliminary) – May
- United States: sales of new homes – April
Wednesday May 25
- Japan: leading index (final) – March
- Germany: GDP (final) – 1Q 2022
- Germany: Gfk Consumer Confidence – June
- France: Consumer confidence – May
- US: Weekly MBA Mortgage Applications
- United States: sustainable orders – April
- United States: EIA Weekly Crude Oil Inventories
- United States: May 2022 FOMC Meeting Minutes
Thursday May 26
- United States: Initial and Continuing Weekly Unemployment Claims
- United States: GDP (second preliminary reading) – 1st quarter 2022
- United States: pending home sales – April
- United States: EIA Weekly Natural Gas Inventories
Friday May 27
- United States: personal consumption and income – April
- United States: Michigan Sentiment Index (final) – May
Thought of the day
“Brilliant thinking is rare, but courage is even rarer than genius.” ~ Pierre Thiel
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.