Morning Markets
The S&P 500 Index ($SPX) (SPY) is up +0.28%, the Dow Jones Industrials Index ($DOWI) (DIA) up +0.21%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.77%.
Stocks this morning are higher. This is despite comments Monday night from Minneapolis Fed President Kashkari dampened hopes that the Fed was done raising interest rates.
China Oct exports fell more than expected. Today’s economic news showed the U.S. Sep trade deficit widened more than expected, a negative factor for GDP.
On the positive side, Datadog and TransMedics Group are up more than +22% in pre-market trading after reporting stronger-than-expected Q3 revenue and raising their full-year revenue forecasts. Also, RingCentral is up more than +6% after reporting better-than-expected Q3 adjusted EPS and raising guidance on full-year adjusted EPS.
Monday evening, Minneapolis Fed President Kashkari said that while there have been three months of promising data on inflation, it isn’t enough, and "we need to let the data keep coming to us to see if we really have got the inflation genie back in the bottle."
Chicago Fed President Goolsbee said policymakers' top priority is returning inflation to its target, and they don't want to "pre-commit" decisions on interest rates.
The U.S Sep trade deficit increased to -$61.5 billion from -$58.7 billion in Aug, wider than expectations of -$59.8 billion.
The markets are discounting a 10% chance for a +25 bp rate hike at the next FOMC meeting on Dec 12-13 FOMC and a 16% 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 government bond yields today are moving lower. The 10-year T-note yield is down by -2.7 bp at 4.616%. The 10-year German bund yield is down -4.8 bp at 2.691%. The 10-year UK gilt yield is down -6.4 bp at 4.313%.
Overseas stock markets are lower. The Euro Stoxx 50 is down -0.42%. China’s Shanghai Composite Index today closed down -0.04%. Japan’s stock market today closed down -1.34%.
The Euro Stoxx 50 today is moderately lower. Worries about economic growth overshadowed some positive corporate earnings results. German Sep industrial production fell more than expected, and the German S&P Oct construction PMI contracted by the most on record. On the positive side, government bond yields declined as producer price pressures eased after Eurozone Sep PPI fell -12.4% y/y, the most on record. Also, bank stocks moved higher, led by a +3% jump in UBS Group AG after it reported $22 billion of new money in Q3, well above the consensus of $14 billion.
Eurozone Sep PPI fell by a record -12.4% y/y, the most since data began in 1982.
German Sep industrial production fell -1.4% m/m, a bigger decline than expectations of -0.1% m/m.
The German S&P Oct construction PMI fell -1.0 to 38.3, a record pace of contraction.
China’s Shanghai Composite today retreated from a 2-1/2 week high and closed slightly lower. A steeper-than-expected decline in China’s Oct exports weighed on stocks as it underscores the country’s fragile recovery. Chinese pharmaceutical stocks declined today after a report from the China Securities Journal showed the government has driven down drug costs by 58% on average in preliminary results. On the positive side, Chinese imports in October unexpectedly rose by the most in 10 months, a positive factor for domestic demand. Also, Chinese stocks related to the short video market rallied after China Securities said the market is estimated to hit 20 billion-30 billion yuan this year and may see continued “exponential growth.”
Chinese trade data was mixed. China Oct exports fell -6.4% y/y, weaker than expectations of -3.5% y/y. However, Oct imports unexpectedly rose +3.0% y/y versus expectations of a -5.0% y/y decline and the biggest increase in 8 months.
Japan’s Nikkei Stock Index posted moderate losses today. Fresh doubts about whether the Federal Reserve has finished raising interest rates weighed on Japanese stocks today after Minneapolis Fed President Kashkari said Monday night that it’s “too soon” to declare victory over inflation. Also, mixed Japanese economic news weighed on stocks as Japan Sep household spending fell less than expected, but Sep real cash earnings fell more than expected. In addition, the larger-than-expected decline in China’s Oct exports raised concerns about global growth and weighed on stocks.
Japan Sep household spending fell -2.8% y/y, a smaller decline than expectations of -2.9% y/y.
Japan Sep real cash earnings fell -2.4% y/y, weaker than expectations of -2.3% y/y.
Pre-Market U.S. Stock Movers
Emerson Electric (EMR) dropped more than -3% in pre-market trading after reporting Q4 net sales of $4.09 billion, weaker than the consensus of $4.20 billion.
Fidelity National Information Services (FIS) tumbled more than -3% in pre-market trading after reporting Q3 revenue of $2.49 billion, well below the consensus of $3.66 billion.
Air Products and Chemicals (APD) fell more than -5% in pre-market trading after reporting Q4 sales of $3.19 billion, below the consensus of $3.34 billion.
Welltower Inc (WELL) slid more than -4% in pre-market trading after announcing the sale of 17.5 million shares of its common stock to Bank of America Securities and Goldman Sachs.
Shockwave Medical (SWAV) fell more than -2% in pre-market trading after forecasting full-year revenue of $725 million-$730 million, the midpoint below the consensus of $728.8 million.
Uber Technologies (UBER) slid more than -1% in pre-market trading after reporting a Q3 revenue of $9.29 billion, weaker than the consensus of $9.53 billion.
TripAdvisor (TRIP) jumped more than +9% in pre-market trading after reporting Q3 adjusted EPS of 52 cents, above the consensus of 46 cents.
TransMedics Group (TMDX) soared more than +30% in pre-market trading after reporting Q3 revenue of $66.4 million, well above the consensus of $49.2 million, and raising its full-year revenue forecast to $222 million-$230 million from a previous estimate of $180 million-$190 million, stronger than the consensus of $194 million.
Datadog (DDOG) surged more than +22% in pre-market trading after reporting Q3 revenue of $547.5 million, better than the consensus of $523.5 million, and raising its full-year revenue forecast to $2.10 billion-$2.11 billion from a previous estimate of $2.05 billion-$2.06 billion, above the consensus of $2.06 billion.
Coterra Energy (CTRA) rallied more than +3% in pre-market trading after reporting Q3 cash flow from operations of $758 million, stronger than the consensus of $642.4 million.
RingCentral (RNG) jumped more than +6% in pre-market trading after reporting Q3 adjusted EPS of 78 cents, above the consensus of 75 cents, and raising its full-year adjusted EPS estimate to $3.19-$3.20 from a previous estimate of $3.11-$3.25, stronger than the consensus of $3.14.
Alteryx (AYX) surged more than +15% in pre-market trading after reporting Q3 revenue of $232 million, stronger than the consensus of $210.1 million, and forecasting full-year revenue of $953 million-$959 million, well above the consensus of $934.8 million.
DigitalOcean Holdings (DOCN) climbed more than +7% in pre-market trading after Goldman Sachs double-upgraded the stock to buy from underweight with a price target of $33.
Earnings Reports (11/7/2023)
Air Products and Chemicals Inc (APD), Akamai Technologies Inc (AKAM), Axon Enterprise Inc (AXON), DaVita Inc (DVA), Devon Energy Corp (DVN), DR Horton Inc (DHI), eBay Inc (EBAY), Emerson Electric Co (EMR), Evergy Inc (EVRG), Expeditors International of Washington (EXPD), Extra Space Storage Inc (EXR), Fidelity National Information (FIS), Gen Digital Inc (GEN), Gilead Sciences Inc (GILD), Jack Henry & Associates Inc (JKHY), Mosaic Co/The (MOS), Occidental Petroleum Corp (OXY), STERIS PLC (STE), Viatris Inc (VTRS), Waters Corp (WAT), Zimmer Biomet Holdings Inc (ZBH).
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