What you need to know…
The S&P 500 Index ($SPX) (SPY) this morning is down -0.90%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.30%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -1.44%.
U.S. stock indexes this morning are moderately lower, with the S&P 500 posting a 3-month low, the Dow Jones Industrials posting a 1-1/2 month low, and the Nasdaq 100 posting a 3-1/4 month low. Today, a more than -23% plunge in Netflix is leading technology stocks and the overall market lower after the company forecast fewer than expected streaming customers in Q1. Also, disappointing quarterly earnings results today from PPG and CSX are weighing on the overall market. In addition, long liquidation is pressuring stocks ahead of next week’s FOMC meeting when the Fed may announce its plans to start raising interest rates.
Today’s U.S. economic data was bullish for stocks after U.S. Dec leading indicators rose +0.8% m/m, right on expectations and the biggest increase in 5 months.
Today’s stock movers…
Netflix (NFLX) is down more than -23% today to lead losers in the S&P 500 and Nasdaq 100 trading after it forecast 2.5 million Q1 streaming paid memberships, well below the consensus of 6.26 million. The plunge in Netflix also weighs on other stocks across the streaming-video space, with Disney (DIS) down more than -6% to lead losers in the Dow Jones Industrials and Roku (ROKU) down more than -3%.
CSX (CSX) is down more than -4% today after it reported Q4 operation ratio of 60.1%, higher than the consensus of 58.6%, a sign of weaker efficiency.
Huntington Bancshares (HBAN) is down more than -9% today after it reported Q4 revenue of $1.65 billion, weaker than the consensus of $1.69 billion.
Ecolab (ECL) is down more than -5% today after RBC Capital Markets downgraded the stock to sector perform from outperform, citing raw material headwinds.
Devon Energy (DVN) is down more than -3% today after Goldman Sachs cut its recommendation on the stock to neutral from buy.
Procter & Gamble (PG) is up more than +2% today to lead gainers in the Dow Jones Industrials after RBC Capital Markets raised its price target on the stock to $160 from $150.
Across the markets…
March 10-year T-notes (ZNH22) this morning are up +22 ticks, and the 10-year T-note yield is down -4.9 bp at 1.755%. T-notes are rallying today, and yields are falling as a rout in global equity markets has sparked safe-haven demand for T-notes. Falling inflation expectations are also bullish for T-notes as the 10-year breakeven inflation rate tumbled to a 3-3/4 month low today at 2.321%.
The dollar index (DXY00) this morning is down -0.23%. The dollar index this morning is weaker as falling T-note yields undercut the dollar. Losses in the dollar are contained as a slump in stocks has increased the liquidity demand for the dollar.
EUR/USD (^EURUSD) this morning is up +0.35%. EUR/USD recovered from a 1-week low today and is moving moderately higher on dollar weakness. EUR/USD initially fell to a 1-week low in overnight trade on rising geopolitical concerns in eastern Europe on a report that said the U.S. is allowing some Baltic states to send U.S.-made weapons to Ukraine.
USD/JPY (^USDJPY) this morning is down -0.32%. A sell-off in global equity markets today has boosted the safe-haven demand for the yen and pushed USD/JPY lower. Also, lower T-note yields today are supporting the yen. Further losses in USD/JPY may be limited on reduced price pressures in Japan after today’s data showed Japan Dec national CPI ex-fresh food & energy fell -0.7% y/y, weaker than expectations of -0.6% y/y. Also, comments today from BOH Governor Kuroda were bearish for the yen when he said the BOJ must continue with an extremely easy policy with the inflation rate “far below” the BOJ’s 2% target.
February gold (GCG22) this morning is down -1.8 (-0.10%), and March silver (SIH22) is down -0.151 (-0.61%). A decline in inflation expectations is bearish foo gold demand as a hedge against inflation after the U.S. 10-year breakeven inflation rate dropped to a 3-3/4 month low today. Losses in metals were limited today due to a weaker dollar and falling stocks, which boosts the safe-haven demand for precious metals. Gold prices also have support today from falling global bond yields.
