Notes from the markets

  • Tech leads on Wednesday after Tuesday sell-off
  • MSFT and GOOGL top earnings, MSFT shares jump
  • JCI call volume soars, new positions in June options

The US stock market attempted to rebound yesterday after First Republic Bank (FRC) fell nearly 50% on Tuesday, rekindling concerns about the banking sector and giving bears the upper hand for the day. But Wednesday was an uphill battle for the bulls: The S&P 500 (SPX) failed to hold on to an early rally, and FRC fell more than 30% intraday.

But Alphabet (GOOGL) and Microsoft (MSFT) both jumped in after-hours trading on Tuesday after releasing their earnings, and the bullish tech mood spilled over into Wednesday’s trading: MSFT rallied nearly 9% intraday to a new 52-week high of $299.57, giving a big boost to the Nasdaq 100 (NDX), which was the only major US index to close up for the day.

LiveAction hits: Johnson Controls (JCI) slipped to a seven-day low on Wednesday, but it was near the top of the LiveAction scan for unusual call volume, which was more than 39 times the daily average:

Chart 1: LiveAction scan: Unusual call volume, 4/26/23. Call volume more than 39x average.

Source: Power E*TRADE. (For illustrative purposes. Not a recommendation.)

Almost all that volume was in the June $62.50 calls—10,300 contracts vs. open interest of just 788 contracts, suggesting at least some of the activity represented new positions.

Market Mover Update: XPO (XPO) slipped for a third-straight day since hitting a 10-week high last Friday (see “Price surge meets resistance?”).

After trading as much as 26% higher and 12% lower on Tuesday after releasing clinical trial results for its colitis drug, Morphic (MORF) rallied more than 7% intraday on Wednesday before closing lower (see “Notes from the markets” from last week).

June WTI crude oil futures (CLM3) tumbled more than 3% intraday, falling below $75 to their lowest level of the month.    

Morgan Stanley research: FRC was a reminder that the bank story isn’t necessarily over, and Morgan Stanley & Co. provides a breakdown of the potential longer-term effects it may have on credit—and the stock market—in “Credit Crunch in the U.S. Equity Markets.”

Today’s numbers include (all times ET): Q1 GDP (8:30 a.m.), Weekly Jobless Claims (8:30 a.m.), Pending Home Sales Index (10 a.m.), EIA Natural Gas Report (10:30 a.m.).

Today’s earnings include: American Airlines (AAL), AbbVie (ABBV), Baxter (BAX), Bristol-Myers Squibb (BMY), Caterpillar (CAT), Honeywell (HON), Hershey (HSY), Keurig Dr. Pepper (KDP), Eli Lilly (LLY), Southwest Airlines (LUV), Mastercard (MA), Merck (MRK), Newmont (NEM), Northrop Grumman (NOC), Rockwell Automation (ROK), Amazon (AMZN), First Solar (FSLR), Intel (INTC), SkyWest (SKYW), Snap (SNAP), United States Steel (X).


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1 Dow Jones Newswires. Morphic Shares Surge After Promising Drug-Trial Results. 4/25/23.

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