Morning Markets

September E-Mini S&P 500 futures (ESU23) this morning are up +0.54%, and Sep Nasdaq 100 E-Mini futures (NQU23) are up +0.80%.

Stock indexes this morning are moderately higher after the weaker-than-expected U.S. Jul CPI report bolstered the outlook for the Fed to pause its interest rate hike campaign.  Also, a jump in U.S. weekly jobless claims to a 5-week high knocked T-note yields lower and is bullish for stocks.  In addition, M&A activity supports equities after Tapestry agreed to acquire Capri Holdings for $8.5 billion.

U.S July CPI rose +3.2% y/y, weaker than expectations of +3.3% y/y.  Jul CPI ex-food and energy eased to +4.7% y/y from +4.8% y/y in Jun, right on expectations.

U.S. weekly initial unemployment claims rose +21,000 to a 5-week high of 248,000, showing a weaker labor market than expectations of 230,000.

The markets are discounting the odds at 16% for a +25 bp rate hike at the September 20 FOMC meeting and 36% for that +25 bp rate hike at the November 1 FOMC meeting. 

Global bond yields are mixed.  The 10-year T-note yield fell to a 1-week low of 3.942% and is down -1.7 bp at 3.992%. The 10-year German bund yield is up +1.9 bp at 2.516%.  The 10-year UK gilt yield is up +0.7 bp at 4.372%.  

Overseas stock markets are higher.  The Euro Stoxx 50 is up +0.92%.  China’s Shanghai Composite Index today closed up +0.31%.  Japan’s Nikkei Stock Index closed up +0.84%.

The Euro Stoxx 50 today climbed to a 1-week high and is moderately higher.  Strength in European travel and luxury stocks are leading the overall market higher on speculation companies will benefit from an increase in Chinese tourism spending after the Chinese government lifted travel curbs.  According to estimates from Goldman Sachs, buyers from China account for about 25% of European luxury goods sales, including purchases made by tourists.  On the negative side, Novo Nordisk A/S/ fell more than -2% after it said the supply of its new obesity drug Wegovy will continue to be restricted in the U.S. as it struggles to expand production. 

China’s Shanghai Composite today recovered from a 1-1/2 week low and closed moderately higher.  Chinese stocks rebounded from early losses as travel and tourism stocks surged after the Chinese government lifted a ban on group travel to a slew of countries, including Australia, several countries in Europe, Japan, South Korea, the UK, and the U.S.  Also, property stocks jumped in late trading on a report that the Chian Securities Regulatory Commission plans to meet with some property developers and financial institutions virtually on Friday morning.

China’s Ministry of Culture and Tourism said it would lift a group travel ban to countries including the U.S., UK, Australia, South Korea, and Japan.  Group tours will start immediately on Thursday, and the easing applies to all travel agencies and online platforms across China.

Japan’s Nikkei Stock Index today recovered from early losses and closed moderately higher.  Japanese stocks related to travel and tourism rallied today after the Chinese government said it would permit group tours beginning today.  Also, Japanese retail and cosmetic stocks rose today on optimism of increased sales after China lifted the group travel ban.  In addition, an easing of price pressures in Japan knocked the yen down to a 1-month low against the dollar and sparked a rally in exporter stocks after Japanese producer prices in July rose at the slowest pace in more than two years. 

Japan's Jul PPI eased to +3.6% y/y from +4.3% y/y in Jun, the slowest pace of increase in 2-1/4 years.

Pre-Market U.S. Stock Movers

Walt Disney (DIS) rose more than +2% in pre-market trading after it said it expects a better improvement in its direct-to-consumer losses in mid-fiscal 2024 and lowered its 2023 capital expenditures estimate from a prior forecast. 

Sonos (SONO) jumped more than +7% in pre-market trading after reporting Q3 revenue of $373.4 million, well above the consensus of $334.3 million.

Capri Holdings Ltd (CPRI) soared more than +30% in pre-market trading after the Wall Street Journal reported that Tapestry was close to a deal to acquire the company. 

Kenvue (KVUE) rose more than +1% in pre-market trading after Dow Jones Indices said the company would be added to the S&P 500 on a date to be announced conditioned upon the successful completion of a voluntary exchange offer being conducted by Johnson & Johnson. 

CyberArk Software Ltd (CYBR) climbed more than +6% in pre-market trading after reporting an unexpected Q3 EPS profit of +3 cents, stronger than the consensus of a -13 cents EPS loss.

AppLovin (APP) surged more than +25% in pre-market trading after reporting Q2 EPS of 22 cents, well above the consensus of 8.4 cents.

Wynn Resorts Ltd (WYNN) rose more than +2% in pre-market trading after reporting Q2 operating revenue of $1.60 billion, stronger than the consensus of $1.53 billion. 

Mirati Therapeutics (MRTX) climbed more than +2% in pre-market trading after Citigroup upgraded the stock to buy from neutral with a price target of $48. 

Trade Desk (TTD) fell more than -4% in pre-market trading even after reporting better-than-expected Q2 earnings as analysts said the earnings did not live up to lofty expectations, with the stock up more than 80% this year.

Illumina (ILMN) tumbled more than -5% in pre-market trading after SVB Financial cut its price target on the stock to $225 from $250.

Genpact Ltd (G) fell more than -1% in pre-market trading after reporting Q2 revenue of $1.11 billion, weaker than the consensus of $1.12 billion, and lowered its full-year revenue estimate to $4.59 billion-$4.64 billion from a previous estimate of $4.64 billion-$4.71 billion, below the consensus of $4.65 billion.

Plug Power (PLUG) tumbled more than -9% in pre-market trading after reporting Q2 gross margin of -30%, much weaker than the consensus of -9.2%. 

Wolverine World Wide (WWW) plunged more than -20% in pre-market trading after reporting Q2 adjusted EPS of 19 cents, weaker than the consensus of 20 cents, and cutting its full-year adjusted EPS forecast to 45 cents-55 cents from a prior view of $1.40-$1.60, well below the consensus of $1.43.  

Penn Entertainment (PENN) slid more than -1% in pre-market trading after Truist Securities downgraded the stock to hold from buy. 

TaskUS (TASK) sank by more than -11% in pre-market trading after cutting its full-year revenue forecast to $900 million-$910 million from a previous forecast of $925 million-$950 million, weaker than the consensus of $932.1 million. 

Today’s U.S. Earnings Reports (8/10/2023)

Capri Holdings Ltd (CPRI), Flowers Foods Inc (FLO), News Corp (NWSA), Ralph Lauren Corp (RL), US Foods Holding Corp (USFD), YETI Holdings Inc (YETI).

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