Morning: Modest losses indicated as earnings season kicks into high gear

The S&P 500 futures trade nine points, or 0.2%, below fair value following yesterday’s unprovoked rebound. Investors have been busy reviewing a huge batch of earnings reports.

First-quarter results remained mostly better than expected, including from 3M ( MMM 149.75, +1.15, +0.8%), UPS ( UPS 193.79, +4.15, +2.2%), General Electric ( GE 86.79, -3.09, -3.4%), and PepsiCo ( PEP 174.27, +0.53, +0.3%). Note, GE is trading lower after saying it expects full-year earnings to be at the low end of its previous guidance range.

Growth concerns remain in the mix after Beijing initiated a massive COVID-19 testing campaign, stirring lockdown fears; and Russian Foreign Minister Lavrov, according to Bloomberg , warned western countries that there is a “considerable” chance of nuclear war if weapon deliveries to Ukraine continue.

Treasury yields are down for the second straight day. The 2-yr yield is down four basis points to 2.59%, and the 10-yr yield is down four basis points to 2.79%. The U.S. Dollar Index is up 0.1% to 101.90. WTI crude futures are up 0.8% to $99.32/bbl.

On the data front, prior to the open, investors will receive Durable Goods Orders for March ( consensus 1.1%) at 8:30 a.m. ET, followed by the S&P Case-Shiller Home Price Index for February ( consensus 18.9%) and the FHFA Housing Price Index for February at 9:00 a.m. ET.

After the open, New Home Sales for March ( consensus 770,000) and the Conference Board’s Consumer Confidence Index for April ( consensus 106.0) will be released at 10:00 a.m. ET.

In U.S. Corporate news:

  • 3M (MMM 149.75, +1.15): +0.8% after beating EPS estimates and reaffirming its FY22 EPS guidance.
  • UPS (UPS 193.79, +4.15): +2.2% after beating top and bottom-line estimates and reaffirming its FY22 revenue guidance.
  • General Electric (GE 86.79, -3.09): -3.4% despite beating EPS estimates. GE’s CEO said the company is currently trending toward the low end of its previous guidance range issued in January.
  • PepsiCo (PEP 174.27, +0.53): +0.3% after beating top and bottom-line estimates and guiding FY22 revenue above consensus. Pepsi guided FY22 EPS below consensus.
  • Sherwin-Williams (SHW 262.00, +13.98): +5.6% after beating top and bottom-line estimates and reaffirming its FY22 EPS guidance.

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Tuesday on a mostly higher note. Japan’s Nikkei: +0.4% Hong Kong’s Hang Seng: +0.3% China’s Shanghai Composite: -1.4% India’s Sensex: +1.4% South Korea’s Kospi: +0.4% Australia’s ASX All Ordinaries: -2.1%.

    • In economic data:

      • Japan’s March Unemployment Rate 2.6% (expected 2.7%; last 2.7%) and March BoJ Core CPI 1.1% yr/yr (last 1.0%)
      • South Korea’s Q1 GDP 0.7% qtr/qtr (expected 0.6%; last 1.2%); 3.1% yr/yr (expected 2.8%; last 4.2%)
      • Singapore’s March Industrial Production -12.6% m/m (expected -3.9%; last 16.6%); 3.4% yr/yr (expected 3.5%; last 17.6%)
    • In news:

      • The People’s Bank of China lowered the foreign exchange deposit reserve ratio to 8.0% from 9.0%. The cut will be effective on May 15.
      • The People’s Bank of China also pledged to increase support for the economy via monetary policy.
      • South Korea’s incoming Finance Minister reportedly supports a cut to the corporate tax rate.
  • Major European indices trade in the green. STOXX Europe 600: +0.7% Germany’s DAX: +1.0% U.K.'s FTSE 100: +0.9% France’s CAC 40: +1.1% Italy’s FTSE MIB: +0.5% Spain’s IBEX 35: +0.2%.

    • In economic data:

      • U.K.'s March Public Sector Net Borrowing GBP17.32 bln (last GBP9.85 bln) and Public Sector Net Cash Requirement -GBP2.416 bln (last GBP2.346 bln)
      • Swiss March trade surplus CHF2.988 bln (last surplus of CHF5.882 bln)
    • In news:

      • Goldman Sachs has pulled forward its forecast for the initial rate hike from the European Central Bank to July from September.
      • ECB policymaker Kazaks said that he would prefer to see the first hike in July and two to three hikes being priced in by the market.
      • UBS reported better than expected results for Q1.
      • The U.K. will hold four additional auctions this year after increasing its net financing requirement for the fiscal year by GBP13.80 bln to GBP161.70 bln.

U.S. equity futures:

  • S&P 500 Futures: -13 @ 4,283
  • DJIA Futures: -122 @ 33,928
  • Nasdaq 100 Futures: -45 @ 13,488


  • Europe: DAX +1.0%, CAC +1.1%, FTSE +0.9%
  • Asia: Nikkei +0.4%, Hang Seng +0.3%, Shanghai Composite -1.4%


  • Crude Oil +0.71 @ 99.25
  • Nat Gas +0.269 @ 7.074
  • Gold +8.50 @ 1904.50
  • Silver +0.077 @ 23.747
  • Copper +0.0325 @ 4.5045
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