Morning Markets
December E-Mini S&P 500 futures (ESZ23) are up +0.89%, and the Dec Nasdaq 100 E-Mini futures (NQZ23) are up +1.28%, both at 1-week highs.
Stock index futures this morning are higher on hopes that global central banks are nearing the end of their interest rate increases. Wednesday’s comments from Fed Chair Powell suggested the Fed might be done raising rates when he said, "Given how far we have come, along with the uncertainties and risks we face, the FOMC is proceeding carefully." Also, the Bank of England (BOE) today kept its benchmark lending rate unchanged. Stock index futures extended their gains on this morning’s news, showing Q3 nonfarm productivity and weekly jobless claims rose more than expected, dovish factors for Fed policy.
Better-than-expected corporate earnings results are also supportive for stocks, with Qualcomm up more than +5% in pre-market trading after reporting Q4 adjusted revenue above consensus. Also, PayPal Holdings is up more than +6% after reporting stronger-than-expected Q3 adjusted EPS, and Starbucks is up more than +4% after reporting Q4 comparable sales above the consensus.
On the negative side, Confluent slumped more than -30% in pre-market trading after forecasting Q4 total revenue well below consensus. Also, Etsy is down more than -4% after forecasting Q4 adjusted Ebitda below consensus, and Moderna is down more than -5% after reporting an unexpected Q3 loss after including a $3.1 billion charge for resizing and tax allowances.
U.S. weekly initial unemployment claims rose +5,000 to 217,000, showing a slightly weaker labor market than expectations of no change at 210,000. Also, weekly continuing claims rose +35,000 to 1.818 million, showing a weaker labor market than expectations of 1.800 million.
U.S. Q3 nonfarm productivity rose +4.7%, stronger than expectations of +4.3% and the most in 3 years. Also, Q3 unit labor costs unexpectedly fell -0.8%, weaker than expectations of +0.3%, which was a positive inflation development.
The markets are discounting a 19% chance for a +25 bp rate hike at the next FOMC meeting on Dec 12-13 FOMC and a 27% chance for that +25 bp rate hike at the following FOMC meeting on Jan 30-31, 2024. The markets are then expecting the FOMC to begin cutting rates later in 2024 in response to an expected slowdown in the U.S. economy.
U.S. and European bond yields are lower. The 10-year T-note yield dropped to a 2-1/2 week low of 4.653% and is down -7.7 bp at 4.657%. The 10-year German bund yield fell to a 1-1/4 month low of 2.674% and is down -8.3 bp at 2.681%. The 10-year UK gilt fell to a 3-week low of 4.328% and is down -15.6 bp at 4.343%.
The Bank of England (BOE) today voted 6-3 to keep its key interest rate unchanged at 5.25% and said a "restrictive" policy is likely needed for an extended period to curb inflation. BOE Governor Baily said policymakers are watching to see if more rate increases are needed, and it's "much too early" to be thinking about rate cuts.
Overseas stock markets are mixed. The Euro Stoxx 50 is up +1.98%. China’s Shanghai Composite Index today closed down -0.45%. Japan’s Nikkei 225 today closed up +1.10%.
The Euro Stoxx 50 today rallied to a 2-1/2 week high and is moderately higher. Interest rate-sensitive real estate stocks are moving higher today on a drop in European government bond yields. The 10-year German bund yield dropped to a 1-1/4 month low, and the 10-year UK gilt yield fell to a 3-week low today on the heels of a drop in T-note yields on hopes the Fed is done raising interest rates. Some positive corporate news is also giving stocks a boost, with Novo Nordisk up more than +2% after reporting its Q3 sales surged for its blockbuster obesity and diabetes drugs. Shell Plc is up more than +2% after accelerating the pace of its share buybacks as its Q3 profit rose.
Comments from ECB Governing Council member Knot suggest he favors pausing ECB rate hikes when he said, "I see the current level of our policy rate as a good cruising altitude where they can remain for some time."
The Eurozone Oct S&P manufacturing PMI was revised upward by +0.1 to 43.1 from the previously reported 43.0.
German Oct unemployment rose +30,000, above expectations of +14,000 and a sign of a weaker labor market. The Oct unemployment rate rose +0.1 to 5.8%, right on expectations and the highest in 2-1/4 years.
China’s Shanghai Composite Stock Index today fell back from a 2-week high and closed moderately lower. Chinese cosmetics makers retreated today on the heels of the plunge in Estee Lauder Wednesday after it cut its full-year outlook. Also, Chinese stocks remain under pressure as China’s property debt crisis shows no sign of ending. Today’s news showed the outstanding amount of loans to the property sector fell -100 billion yuan to 53.19 trillion yuan ($7.3 trillion) at the end of September compared with the level a year earlier, according to the PBOC. That is the first year-on-year drop in data going back to 2005.
Foreign investors continue to flee Chinese stocks as overseas funds sold 44.8 billion yuan ($6.1 billion) of mainland shares in October, the third consecutive month of foreign outflows. Over the past three months, foreign investors have liquidated a record 172 billion yuan of mainland Chinese stocks.
Japan’s Nikkei Stock Index today climbed to a 2-week high and closed moderately higher. Japanese stocks rallied today on positive carryover from Wednesday’s rally in U.S. stocks as T-note yields fell on hopes the Fed is close to ending its interest rate hiking campaign. Japanese semiconductor stocks moved higher as market sentiment improved for the sector after Advanced Micro Devices provided an upbeat forecast for its new AI processor chip. Japanese stocks also found support after Prime Minister Kishida announced a larger-than-expected 17 trillion yen stimulus package that aims to boost economic growth.
Pre-Market U.S. Stock Movers
Qualcomm (QCOM) climbed more than +5% in pre-market trading after reporting Q4 adjusted revenue of $8.67 billion, stronger than the consensus of $8.51 billion.
PayPal Holdings (PYPL) jumped more than +6% in pre-market trading after reporting Q3 adjusted EPS of $1.30, better than the consensus of $1.23.
Palantir Technologies (PLTR) rallied more than +12% in pre-market trading after reporting Q3 revenue of $558.2 million, above the consensus of $555.8 million, and raising its full-year revenue forecast to $2.22 billion from a previous forecast of $2.21 billion.
Elf Beauty (ELF) jumped more than +13% in pre-market trading after reporting Q2 net sales of $215.5 million, stronger than the consensus of $197.2 million, and raising its full-year net sales forecast to $896 million-$906 million from a previous forecast of $792 million-$802 million, well above the consensus of $855.1 million.
Starbucks (SBUX) rose more than +4% in pre-market trading after reporting Q4 comparable sales rose +8.00%, stronger than the consensus of +6.31%.
DoorDash (DASH) rallied more than +8% in pre-market trading after reporting Q3 revenue of $2.16 billion, above the consensus of $2.10 billion, and forecasting Q4 Marketplace gross order value of $17 billion-$17.4 billion, stronger than the consensus of $16.35 billion.
Clorox (CLX) jumped more than +11% in pre-market trading after reporting Q1 net sales of $1.39 billion, above the consensus of $1.30 billion.
Camping World Holdings (CWH) climbed more than +7% in pre-market trading after reporting Q3 revenue of $1.73 billion, better than the consensus of $1.70 billion.
Confluent (CFLT) slumped more than -30% in pre-market trading after forecasting Q4 total revenue of $204 million-$205 million, weaker than the consensus of $212.3 million. Bank of America Global Research then downgraded the stock to underperform from neutral with a price target of $24.
Etsy (ETSY) tumbled more than -4% in pre-market trading after forecasting Q4 adjusted Ebitda margin of 26% to 27%, weaker than the consensus of 27.8%.
Moderna (MRNA) fell more than -5% in pre-market trading after reporting a Q3 loss per share of -$9.53 after including a $3.1 billion charge for resizing and tax allowances.
Airbnb (ABNB) slid more than -1% in pre-market trading after forecasting Q4 revenue of $2.13 billion-$2.17 billion, weaker than the consensus of $2.18 billion.
Mariott International (MAR) dropped more than -2% in pre-market trading after forecasting Q4 adjusted Ebitda of $1.12 billion-$1.15 billion, weaker than the consensus of $1.17 billion.
Tempur Sealy International (TPX) tumbled more than -7% in pre-market trading after reporting Q3 net sales of $1.28 billion, below the consensus of $1.31 billion.
Crocs Inc (CROX) plunged more than -15% in pre-market trading after cutting its full-year revenue forecast to $3.91 billion-$3.94 billion from a prior forecast of $4.00 billion-$4.07 billion, weaker than the consensus of $4.00 billion.
Earnings Reports (11/2/2023)
Alliant Energy Corp (LNT), American Electric Power Co Inc (AEP), Apple Inc (AAPL), Aptiv PLC (APTV), Ball Corp (BALL), Baxter International Inc (BAX), Booking Holdings Inc (BKNG), BorgWarner Inc (BWA), Broadridge Financial Solutions (BR), Cencora Inc (COR), Cigna Group/The (CI), ConocoPhillips (COP), Consolidated Edison Inc (ED), Cummins Inc (CMI), DENTSPLY SIRONA Inc (XRAY), Duke Energy Corp (DUK), Eli Lilly & Co (LLY), EPAM Systems Inc (EPAM), Exelon Corp (EXC), Expedia Group Inc (EXPE), Federal Realty Investment Trust (FRT), Fortinet Inc (FTNT), Fox Corp (FOXA), Howmet Aerospace Inc (HWM), Huntington Ingalls Industries (HII), Insulet Corp (PODD), Intercontinental Exchange Inc (ICE), Iron Mountain Inc (IRM), Live Nation Entertainment Inc (LYV), Marriott International Inc/MD (MAR), Microchip Technology Inc (MCHP), Moderna Inc (MRNA), Molson Coors Beverage Co (TAP), Monster Beverage Corp (MNST), Motorola Solutions Inc (MSI), NRG Energy Inc (NRG), Paramount Global (PARA), Parker-Hannifin Corp (PH), Pinnacle West Capital Corp (PNW), Pioneer Natural Resources Co (PXD), PPL Corp (PPL), Quanta Services Inc (PWR), Regency Centers Corp (REG), Regeneron Pharmaceuticals Inc (REGN), Rockwell Automation Inc (ROK), S&P Global Inc (SPGI), SBA Communications Corp (SBAC), Sealed Air Corp (SEE), Skyworks Solutions Inc (SWKS), Southern Co/The (SO), Starbucks Corp (SBUX), Stryker Corp (SYK), Targa Resources Corp (TRGP), Teleflex Inc (TFX), Ventas Inc (VTR), Zoetis Inc (ZTS).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
