Stocks Climb on Leadership from Apple and European Stocks

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Morning Markets

September S&P 500 futures (ESU22) this morning are up +0.42% at a 2-week high.  Apple is up more than +1% today in pre-market trading to lift technology stocks as pre-order data for the latest versions of its iPhone point to strong interest and demand.  Also, lower T-note yields are a supportive factor for stocks today, with the 10-year T-note yield down -2.5 bp at 3.285%. 

Optimism that inflation has peaked is giving stock index futures a boost today.  Expectations are for Tuesday’s U.S. August CPI report to slow to 8.0% y/y from 8.5% in July.

In a note to clients today, Goldman Sachs said, “despite concerns that investors have about the U.S. equity market, we believe it offers greater absolute and risk-adjusted return potential than recession-plagued European markets.”

The Euro Stoxx 50 today is up +1.48% at a 1-1/2 week high.  Strength in retailers is leading the overall market higher today amid optimism that the EU’s energy plans will provide some relief for consumers and businesses.  European stocks also rose on improved market sentiment as Ukraine forces continued their counter-offensive and reclaimed more territory in the Kharkiv region as Russian forces retreated.  EUR/USD jumped to a 3-1/2 week high today on hawkish comments from ECB Governing Council member and Bundesbank President Nagel and ECB Executive Board member Elderson. 

An easing of energy crisis concerns is positive for European equities and EUR/USD.  European nat-gas prices are down more than -6% today at a 1-month low as the markets await the details of the European Union’s plan to address the energy crisis. European Commission President Ursula von der Leyen has called for “emergency intervention” to rein in energy costs and provide liquidity to the market.  Europe is also adding more facilities to receive liquified natural gas (LNG), with a new terminal opening last week in the Netherlands.  European nat-gas storage sites are about 84% full ahead of the winter season, slightly above the five-year average.

ECB Governing Council member and Bundesbank President Nagel said the ECB would be required to continue raising interest rates if the current trend in consumer prices continues.

ECB Executive Board member Elderson said that more interest rate hikes by the ECB will come “as it’s very important that the expectations that the people have on how inflation will develop in the medium to long term will not become de-anchored.” 

Italy’s July industrial production rose +0.4% m/m, stronger than expectations of unchanged.

Asian markets today closed mostly higher.  Chinese markets were closed today for the Mid-Autumn Festival holiday. 

Japan’s Nikkei Stock Index closed up +1.16%.  Japan’s Nikkei Stock Index today climbed to a 2-week high on strength in technology stocks after Taiwan Semiconductor Manufacturing reported that August sales rose +59% y/y.   Also, Japanese stocks tied to tourism rose after the Nikkei reported that Japan is making arrangements to end its daily limit on arrivals from overseas by October and will also consider removing other remaining barriers to foreign tourism.

Today’s Japanese economic news showed Japan Aug machine tool orders rose +10.7% y/y.

Pre-Market U.S. Stock Movers

Apple (AAPL) is up +1% in pre-market trading as pre-order data for the latest versions of its iPhone point to strong interest and demand.

Bristol Myers Squibb (BMY) climbed +6% in pre-market trading after its drug “deucravatinib” received approval from the FDA for the treatment of moderate-to-severe psoriasis with no “black box” warnings.

Carvana (CVNA) jumped more than +7% in pre-market trading after Piper Sandler upgraded the stock to overweight from neutral.

Bill.com Holdings (BILL) rose more than +2% in pre-market trading after Morgan Stanley initiated coverage of the stock with an overweight rating.  

Cryptocurrency-exposed stocks are climbing in pre-market trading, with the price of Bitcoin up more than +4% at a 3-week high.   Riot Blockchain (RIOT) is up more than +3%.  Marathon Digital (MARA) and Coinbase Global (COIN) are up more than +2%.  Block (SQ) and MicroStrategy (MSTR) are up more than +1%.

Union Pacific (UNP) rose more than +1% in pre-market trading after Bank of America upgraded the stock to buy from neutral. 

APA Corp (APA) rose more than +2% in pre-market trading after Citigroup upgraded the stock to buy from neutral.

Adobe (ADBE) slid more than -1% in pre-market trading after Mizuho Securities downgraded the stock to neutral from buy.

Roblox (RBLX) dropped -2% in pre-market trading after Cowen initiated coverage of the stock with an underperform rating, saying the current valuation factors in the metaverse future “far too aggressively.”

Oak Street Health (OSH) fell nearly -2% in pre-market trading after Goldman Sachs cut its recommendation on the stock to neutral from buy.

Today’s U.S. Earnings Reports (9/12/2022)

Akoustis Technologies Inc (AKTS), Latch Inc (LTCH), Oracle Corp (ORCL), Planet Labs PBC (PL), Rent the Runway Inc (RENT).

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