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Morgan Stanley see “meaningful downside” for the S&P500
MS on the S&P500, analysts think the index has downside to at least 3800 in the ‘near term’ and possible to 3460
the 200 week moving average if forward 12 month EPS start to fall on margin and/or recession concerns
MS adds note the S&P 500 real earnings yield is the most negative since the 1950s and that to them thisS&P 500 futures 0.1% above fair value; Nasdaq 100 futures in-line with fair value; DJIA futures 0.3% above fair value
Key factors driving the futures market:
Mix of hope and fear about stock market’s near-term prospects
10-yr note yield backs down from 3.00% level (currently 2.96%)
Q1 earnings reports mostly better than expected
Some hesitation in front of Wednesday’s FOMC announcementPfizer (PFE) tops Q1 estimates, but lowers FY22 outlook; PFE down 1.4%
Avis Budget (CAR) surges 7.1% following much better than expected Q1 earnings resultU.S. suggests Russia could soon move to annex Donetsk, Luhansk, and Kherson in eastern Ukraine, according to Washington Post
Reserve Bank of Australia raises cash rate by 25 basis points to 0.35% (market had been expecting 15 basis point increase)
South Korea CPI +4.8% yr/yr in April, fastest pace since 2008
Eurozone PPI +36.8% yr/yr in MarchUpgrades: ARGX, IDA, JAKK, MMC, MHC, VRTX
Downgrades: AI, CVNA, CHGG, CHTR, CL, ED, DOCU, K, MTTR, TSNThe global equity markets are mixed on another holiday-laden day. S&P Futures are up about four points to trade around the 4155 area. The modest upward bias was contained to a range that saw a high of 4176.00 and a low of 4141.75.
In Asia, both China and Japan were closed for public holiday.
In Europe, the DAX and CAC are trading higher while the FTSE lags. Germany and France appear to be shrugging off another hotter than expected inflation report. The Eurozone’s March PPI rose 5.3% and well above the consensus of 5.0%. Financials are among the best performing sectors with lenders such as Deutsche Bank, BNP Paribas and Societe Generale up 2-3%.
Pfizer (PFE 48.00, -0.34): -0.7% after guiding FY22 EPS and revenue below consensus, overshadowing its beat on the top and bottom lines.
Estee Lauder (EL 235.00, -25.63): -9.8% after missing revenue estimates and guiding FY22 EPS below consensus.
Rockwell Automation (ROK 219.95, -30.09): -12.0% after missing top and bottom-line estimates and guiding FY22 EPS and revenue below consensus.
Chegg (CHGG 15.25, -9.73): -39.0% after guiding Q2 revenue below consensus and lowering its FY22 revenue guidance below consensus. Chegg beat EPS estimates.
Avis Budget (CAR 300.00, +19.44): +6.9% after beating top and bottom-line estimates.Equity indices in the Asia-Pacific region ended Tuesday on a mostly lower note while markets in China, Japan, Singapore, and India were closed for holidays.
Japan’s Nikkei: CLOSED
Hong Kong’s Hang Seng: +0.1%
China’s Shanghai Composite: CLOSED
India’s Sensex: CLOSED
South Korea’s Kospi: -0.3%
Australia’s ASX All Ordinaries: -0.5%.German Chancellor Scholz said that sanctions on Russia will not be lifted until the country signs a peace deal with Ukraine.
Italy’s Prime Minister Draghi indicated that another EUR14 bln will be spent on energy and will be financed by higher taxes on energy producers.
British Prime Minister Johnson rejected the idea of a windfall tax, saying that it would discourage investment.European bourses close:
Stoxx 600 +0.4%
DAX +0.6%
UK FTSE +0.1%
French CAC +0.6%
Spain IBEX +1.4%
Italy MIB +1.5%Bitcoin falls to the lows of the day through $38,000 to the lows of the day, down about 1.2%.
In the past few months, bitcoin has had a habit of moving ahead of broader risk trades.
Today’s markets were about value versus growth stocks, even more so after LYFT reported truly dreadful earnings and lost a third of its already depres
[See the full post at: Market Wrap – Markets Bounce Despite 10 Year Rates Surge May 3 2022]
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