See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium.  CLICK HERE to learn more and start your trial.

“I could stand in the middle of 5th Avenue and shoot somebody, and I wouldn’t lose voters.” – Donald Trump

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

Just kidding.  We’ll keep the political discussion to a minimum. While last night’s verdict in the Trump hush money trial made for a big news event, its impact on the market has been negligible. Futures are modestly lower in the pre-market, but that’s likely more a factor of the 16% decline in Dell (DELL). There are also several notable economic reports at 8:30, including Personal Income, Personal Spending, and the PCE Deflator. Then, at 9:45 we’ll get a read of the manufacturing sector in May with the Chicago PMI.   How these reports shake out relative to expectations will have a larger impact on the last trading day of May than last night’s verdict.

The verdict is only 15 hours old, but Trump’s odds of winning the November election have only declined modestly according to the site electionbettingodds.com.  He still holds a 50.1% to 40.9% lead over President Biden in a head-to-head matchup, but on a generic party vote, the betting markets are much closer at 52.1% to 46.9%.  These numbers are still very close, and the betting markets have about as much accuracy as Fed forecasts, so keep that in mind. However, whether you find yourself ecstatic or downtrodden over the results, there are still 158 days between now and Election Day, so find a hobby to keep yourself occupied.

Yesterday, Salesforce (CRM) had a reservation with the woodshed, and today it is DELL’s turn as the stock plunged over 15% in reaction to its earnings report after the close. At current levels, it ranks as the sixth worst one-day reaction among S&P 500 companies to earnings since earnings season started in April.

Concerning DELL itself, if the current pre-market decline holds, this will be the stock’s worst one-day reaction to earnings since May 2012.  If it declines just a little bit more during the trading day, it could go down as the worst one-day reaction to earnings for the stock in its history as a public company since 2001.

CRM’s decline exacerbated what was already a period of weakness for the stock, but shares of DELL were on fire heading into the report. The stock had doubled since late February and was trading at ‘extreme’ overbought levels, so expectations were lofty, to say the least.  Even after today’s decline, it is still well above its 50 and 200-day moving averages and is only back to levels it was trading at last week.

To continue reading the rest of today’s morning note, where you’ll find much more analysis of global equities and economic readings released this morning, read today’s full Morning Lineup with a two-week Bespoke Premium trial.

See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium.  CLICK HERE to learn more and start your trial.

“Finally, The End of Software is here.” – Marc Benioff, 2008

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

If you’re just looking at futures on the major indices, things look a lot worse than they seem. That’s because a 15% decline in Salesforce (CRM) following its earnings results after the close yesterday makes its presence felt, especially on the Dow (more on that below).  Outside of that report, investors remain defensive following a surge in rates earlier this week. Rates are lower this morning, but until we get through this week’s inflation data, it will be hard for investors to breathe any easier.  In Europe this morning, stocks are generally higher led higher by Spain while the overnight tone in Asia was weaker with both the Nikkei and Hang Seng down over 1%.

A lot of economic data just hit the tape including GDP, Personal Consumption, PCE, and Jobless Claims.  Overall, there were no major surprises, and on a positive note, the inflation aspects of the data were generally lower than expected.

Earnings season may have unofficially ended two weeks ago when Walmart (WMT) reported earnings on 5/16, but there have still been plenty of notable reports. Yesterday’s report from Salesforce (CRM) may have been one of the most notable. While the company reported better-than-expected earnings, it had a rare revenue miss and lowered guidance. The revenue miss was the first time the company missed since 2006! That was enough to send the stock plunging after hours, exacerbating what has already been a steady downtrend since its peak in early March. With the stock down over 15% in the pre-market, CRM is poised to close the gap higher from when it reported earnings late last November.

Within the S&P 500, CRM’s weight is just under 0.60%, so even with a decline of 15% in the pre-market, its impact on the index will be a negative hit of around 0.1%. Where CRM’s decline hurts, though, is on the performance of the Dow where its 4.6% weighting will cause a negative hit of around 275 points, or around 0.7%. As we noted yesterday, the DJIA is already underperforming the S&P 500 by a historically large margin YTD, so today’s move will widen the gap even more.

With today’s decline, CRM is also on pace to have its second-worst one-day reaction to earnings as a public company.  The worst drop occurred in response to an earnings report in August 2008. Furthermore, the stock has only declined by 10% or more in reaction to earnings four other times in the last 20 years.

While it is not uncommon to see smaller companies react poorly in reaction to earnings, it’s unusual among large-cap companies in the S&P 500. Since the start of April, CRM will be just the 24th S&P 500 company to decline more than 10% in reaction to earnings and just the tenth to fall more than 15% if its current declines hold into the close. Of those companies listed below, though, CRM would be just the fifth to gap down more than 15% on its earnings reaction day.

To continue reading the rest of today’s morning note, where you’ll find much more analysis of global equities and economic readings released this morning, read today’s full Morning Lineup with a two-week Bespoke Premium trial.