Daily Markets: Stocks Look to Recover in Holiday-Shortened Week

Today’s Big Picture

Asia-Pacific equity indexes ended today’s session up, except for China’s Shanghai Composite which closed down 0.26% on continued covid uncertainty. South Korea’s KOSPI gained 0.75%, Australia’s ASX All Ordinaries rose 1.38%, India’s Sensex advanced 1.81% and Japan’s Nikkei and Hong Kong’s Hang Seng closed up 1.84% and 1.87%, respectively. Taiwan’s TAIEX led the way up ending the day 2.35% higher as the index continues to bounce off sub 15,500 lows. By mid-day trading, European equity indices are up across the board and U.S. futures point to a strong open later this morning.

Coming off last week’s interest rate hikes from central bankers, we have a quiet start to a compressed week. Given the limited number of earnings releases coming out this week and a relatively quiet economic calendar, investor conferences will probably be a focal point for investors. With the Fed’s June monetary policy meeting behind us, the two next known hurdles for the market will be the start of the June quarter earnings season and the Fed’s next monetary policy meeting on July 26-27. Setting the stage for both will be the Flash June PMI data for the U.S. and Eurozone that will be published on Thursday, June 23. Until then, given the lack of fresh data, we suspect stocks will look to recover some of the ground they lost last week, one of its toughest since March 2020.

Data Download

International Economy

The Confederation of British Industry's (CBI) industrial order book fell to 15 in June from 26 in the previous month, missing the expected reading of 22. Manufacturing output growth slowed in the three months to June (25 vs 30 in May), and growth is expected to ease further in the three months ahead.

Domestic Economy

At 8:30 AM ET, the latest Chicago Fed National Activity Index will be published, and expectations are the May figure will come in at 0.32 vs. April’s reading of 0.47.

May Existing Home Sales data will be published at 10 AM ET with the consensus seeing a month over month slowing to 5.4 million homes vs. 5.61 million in April. 

Markets

The long weekend has given markets a chance to recover from last week’s volatility that ended with energy names giving back some ground, most notably to communications services and consumer discretionary stocks. This was evident in the major indexes as the Dow declined 0.13% while the S&P 500 closed 0.22% higher, the Russell 2000 gained 0.96%, and the Nasdaq Composite jumped 1.43% on the day. Weekend news that Germany is planning on restarting coal-fired electricity generating plants isn’t seen by many as the best solution to its energy problems, but it might help to reduce demand for fuel, which may help tamp down energy prices and in turn, put some pressure on those names. Here’s how the major market indicators stack up year-to-date:

• Dow Jones Industrial Average: -17.75%
• S&P 500: -22.90%
• Nasdaq Composite: -30.98% 
• Russell 2000: -25.81%
• Bitcoin (BTC-USD): -55.61%
• Ether (ETH-USD): -69.31%

Stocks to Watch

Before trading kicks off for U.S.-listed equities, Lennar (LEN) is expected to report their latest quarterly results. 

Tesla (TSLA) is cutting its salaried workforce by about 10% over the next three months, resulting in an overall reduction of some 3.5% in total headcount, given that hourly staff numbers are still expected to grow.

Macau casino stocks fell yesterday after the city reported more than two dozen Covid-19 infections over the weekend, its first outbreak in eight months. This led to more border restrictions from mainland China and Macau is closed to the rest of the world, while 10-day quarantines are required for travelers from Hong Kong, Taiwan, and Portugal. 

Raising fresh questions over consumer appetites, JD.com’s (JD) midyear June 18 e-commerce shopping festival, which is the second-largest online shopping event by sales after Alibaba’s (BABA) Singles Day on November 11, booked its slowest level of sales growth in the last five years. 

Fabless semiconductor manufacturer Himax Technologies (HIMX) reduced its revenue and EPS expectations for the current quarter citing the weaker macro environment and slowing end market demands, resulting from recent interest rate hikes and inflationary pressure. Revenues are expected to decrease 22% - 27% sequentially, lower than the previous guidance of 16% - 20% sequential decline issued on May 12. 

Shares of the Trade Desk (TTD) are moving higher this morning after the ad-tech firm announced a partnership with Albertsons Media Collective, the retail media arm for Albertsons Companies (ACI).

Arrival (ARVL) announced its Arrival Van achieved EU certification and received European Whole Vehicle Type Approval (EUWVTA), a key step toward starting trials with customers in the coming months.

The Spirit Airlines (SAVE) Board of Directors will work with its financial and legal advisors to evaluate JetBlue’s (JBLU) revised proposal of $33.50 per SAVE share and pursue the course of action it determines to be in the best interests of Spirit and its stockholders.

Mondelez International (MDLZ) announced an agreement to acquire Clif Bar & Company, leading U.S. maker of nutritious energy bars with organic ingredients, for $2.9 billion with additional contingent earnout consideration.

RADA Electronic Industries (RADA) & Leonardo DRS agree to all-stock merger, combining the defense technology companies into a company focused on advanced sensing and force protection.

Regarding the planned IPO for its E-Mobility business, ABB (ABB) shared recent market conditions have made it challenging to proceed with a planned share offering in the second quarter of 2022. The company shared it still intends to IPO the business, but it will do so when market conditions are “constructive.”

IPOs

Shares of autonomous system control and related cybersecurity technologies company Mobilicom (MOB) are expected to begin trading on June 23. Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.

After Today’s Market Close

La-Z-Boy (LZB) expected to report its quarterly results after equities stop trading today. Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar. 

On the Horizon

Wednesday, June 22

• UK: Consumer Price Index, Producer Price Index – May
• Eurozone: Consumer Confidence - June
• US: Weekly MBA Mortgage Applications

Thursday, June 23

• Korea: Producer Price Index – May
• Japan: Flash Manufacturing PMI – June
• Eurozone: Flash Manufacturing & Composite PMI – June
• US: Weekly Initial & Continuing Jobless Claims 
• US: Flash Manufacturing and Composite PMI – June
• US: Weekly EIA Natural Gas Inventories 
• US: Weekly EIA Crude Oil Inventories 

Friday, June 24

• Japan: Consumer Price Index – May
• UK: Retail Sales – May
• Germany: Ifo Business Climate Index, Business Expectations, Current Assessment - June
• US: New Home Sales – May 
• US: University of Michigan Consumer Sentiment Index (Final) - June

Thought for the Day

 “Look at the world around you. It may seem like an immovable, implacable place. It is not. With the slightest push—in just the right place—it can be tipped.” — Malcolm Gladwell

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

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Stocks Economy Coronavirus Earnings Central Banks Smart Investing