Pre-Market Brief: Stocks Plunge As Fed Meeting Takes Centre Stage

Morning Markets

December S&P 500 futures (ESZ22) are down -0.87% this morning after three major US benchmark indices recorded their greatest weekly losses in 3 months, with investors remaining cautious amid the economic outlook ahead of the Fed’s two-day meeting and rate decision later this week. Three major U.S. stock indexes were weighted down primarily by losses in the Oil & Gas, Industrials, and Basic Materials sectors. 

“It’s been a tough week. It feels like Halloween came early,” said David Carter, a managing director at JPMorgan in New York. “We are facing in this toxic brew of high inflation, high-interest rates, and low growth, which isn’t good for stock or bond markets.”

Ahead in the week, investors will be closely monitoring the Federal Reserve’s interest rate decision amid hotter-than-expected CPI data. U.S. rate futures have priced in an 80% chance of a 75 basis point rate increase and a 20% chance of a super-sized 100-basis-point hike at this week’s meeting.

The stock market is down on a “growing concern that’s really starting to escalate that the Fed is going to make a mistake and overtighten,” said Jim Paulsen, a chief investment strategist at The Leuthold Group in Minneapolis.

Today, investors are likely to focus on Canada’s Raw Materials Price Index data, which stood at -7.4% m/m in July. Economists forecast the new figure to be +3.2% m/m.

In the bond markets, United States 10-Year rates are at 3.448%, up +0.02%.

The Euro Stoxx 50 is down -0.97% this morning as technology shares led declines ahead of the week’s central bank meetings, with activity likely to be limited with the U.K. on holiday for the funeral of Queen Elizabeth II. European stocks have received a negative handover from Wall Street after the major U.S. indices suffered heavy weekly losses, falling to two-month lows. Another negative factor for European stock futures is a drop in the French shares after two major TV groups known as TF1 (TFI.FP) and M6 fell after abandoning their merger plan. At the same time, Volkswagen Ag (VOW.D.DX) rose over 1% as it saw a valuation for luxury sportscar brand Porsche of up to 75 billion euros.

The European economic data slate is largely empty on Monday. 

Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.35%, while the Japanese market was closed for holidays. 

China’s Shanghai Composite today closed down following last week’s sizable losses on Wall Street, as investors prepared for another interest rate hike by the U.S. Fed. On the other hand, the People’s Bank of China cut the repo rate by 10 basis points to support its economy and increased cash injections into the economy. Moreover, China has started easing some COVID-19 restrictions in Chengdu, a southwestern city of more than 21 million people, which is expected to boost economic activity in the city.

Pre-Market U.S. Stock Movers

Cryptocurrency-exposed stocks are moving lower in pre-market trading, with the price of Bitcoin down more than -8%. Marathon Digital (MARA) is down more than -6%. Also, Hut 8 Mining (HUT) is down more than -2%, and Riot Blockchain (RIOT) is down more than -5%.  In addition, Coinbase Global (COIN) is down over -5%, and MicroStrategy (MSTR) is down about -4%.

Bluebird bio Inc (BLUE) gained over +17% in pre-market trading after the U.S. Food and Drug Administration granted accelerated approval for SKYSONA for early, active CALD.

Fidelity National Information Services Inc (FIS) dropped about -1% in pre-market trading after Keefe Bruyette downgraded the stock to market perform from outperform and lowered the price target from $120 to $98.

Innate Pharma (IPHA) plunged more than -14% in pre-market trading after Citi lowered the stock’s price target to $12 from $16.

Venator Materials PLC (VNTR) fell about -7% in pre-market trading after BMO Capital downgraded the stock to underperform from market perform and lowered the price target from $2 to $0.60.

Adobe Systems Incorporated (ADBE) dropped about -2% in pre-market trading after Wells Fargo downgraded the stock to equal weight from overweight.

Today’s U.S. Earnings Spotlight: Monday – September 19th

AutoZone (AZO), Aspen (AZPN), Sprott Physical Gold and Silver Trust (CEF), HeadHunter ADR (HHR), Skillsoft Corp Class A (SKIL), Cognyte Software (CGNT), Mesabi Trust (MSB), Niocorp Developments (NIOBF), Anixa Biosciences (ANIX), Bridgford (BRID), Champions Oncology (CSBR), Bancroft (BCV), Fonar (FONR), Natural Alternatives (NAII), AMREP (AXR), Kentucky First Federal (KFFB), PharmaCyte Biotech (PMCB), Renalytix AI Nas (RNLX), S&W Seed (SANW), Adocia ADR (ADOCY), CanAlaska Uranium (CVVUF), Espey Mfg&Electronics (ESP), US Gold (USAU), Applied Genetic (AGTC), Sears (SHLDQ), Paramount Gold Nevada (PZG), Coffee Holding (JVA), Aytu BioScience (AYTU), InMed Pharmaceuticals (INM), Silver Bull (SVBL), Sunwin Stevia International Inc (SUWN), JLM Couture (JLMC),  Jammin Java Corp (JAMN), Escalon Medical Corp (ESMC), Crowdgather Inc (CRWG), Christopher Banks (CBKCQ), Champion Ind (CHMP), Bon-Ton Stores (BONTQ), Reebonz (RBZHF), PreVu (PRVU), Signature Eyewear (SEYE).


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