Morning Minutes

Stocks Stage a Small Rebound Despite Weakening Corporate Guidance

Bond

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Stock markets around the world have been trying to bounce back from yesterday’s selloff but have only been able to claw back some of their losses. NASDAQ futures are up about , which is encouraging but less than yesterday’s 2.8% plunge. Similarly, Dow futures are up 0.4% compared with a decline yesterday of 1.6%.

With the US 10-year treasury note yield levelling off near 1.50% the US Dollar has backed off slightly enabling the Euro to rebound 0.2%, gold to bounce back 0.4% and Bitcoin to recover 1.9% of their recent losses. Commodities, however, remain under pressure. WTI crude oil is down 0.5% and natural gas is down 2.0% as energy contracts return some of their recent gains, while copper is down 0.4%. Last night API reported a 4.1 mmbbl increase in its weekly US oil inventories. DOE weekly oil inventories are due at 10:30 am EDT with the street expecting a 1.6 mmbbl drawdown, so there is potential for a negative surprise.

Canada industrial prices (-0.3% vs previous -0.4%) and raw material prices (-2.4% vs previous +2.2%) indicate that inflation pressures may be starting to ease a bit. US pending home sales (street 14.5%) are due at 10:00 am EDT.

With tomorrow being the last trading day of the month and the quarter, we may see investors repositioning their portfolios over the next couple of days. China Manufacturing PMI (street 50.1 unchanged) and China Non-Manufacturing PMI (street 52.7 vs previous 47.5) are due overnight tonight.   

Overnight corporate news has been somewhat disappointing and has raised some questions about corporate growth momentum. Memory chip producer Micron posted strong earnings per share ($2.42 vs street $2.33), but its shares are down 3.6% in premarket trading as investors focused more on management’s guidance for slowing lower shipments in the coming quarter and expectations for price growth to slow.

Meanwhile paint producer Sherwin-Williams is down 2.0% premarket today after management put out a profit warning overnight. The company cut its 2021 full year EPS forecast to $8.35-$8.45 from $9.45; the street had been expecting $9.26. Management blamed higher costs, problems getting raw materials and extended hurricane related supply chain disruptions for its reduced outlook.

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

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