December S&P 500 futures (ESZ23) are trending up +0.06% this morning as investors looked ahead to comments from Fed Chair Jerome Powell for further clues on the U.S. central bank’s monetary policy path while also awaiting an earnings report from Disney.
In Tuesday’s trading session, the benchmark S&P 500 posted a 3-week high, and the blue-chip Dow and tech-heavy Nasdaq 100 notched 1-1/2 month highs. Datadog Inc (DDOG) surged over +28% and was the top percentage gainer on the Nasdaq 100 after the company reported upbeat Q3 results and raised its full-year revenue guidance. Also, megacap growth stocks gained ground, with Meta Platforms Inc (META), Apple Inc (AAPL), and Microsoft Corporation (MSFT) rising about +1%. In addition, Gen Digital Inc (GEN) climbed over +8% after the cybersecurity company posted record quarterly sales and experienced a sequential growth in its customers. On the bearish side, energy stocks retreated as the price of WTI crude dropped more than -4% to a 3-1/2 month low on mixed economic data from China.
Economic data on Tuesday showed that the U.S. September trade deficit increased to -61.50B, wider than expectations of -59.90B.
Chicago Fed President Austan Goolsbee said Tuesday that policymakers’ top priority is returning inflation to its target, and they don’t want to “pre-commit” decisions on interest rates. Also, Fed Governor Christopher Waller described the third-quarter U.S. economic growth as a “blowout” performance and emphasized that the central bank was closely monitoring these figures when thinking “about policy going forward.” In addition, Fed Governor Michelle Bowman said she continues to think the central bank will need to increase interest rates higher to curb inflation, but she also noted that a surge in Treasury yields since September has resulted in more restrictive financial conditions.
U.S. rate futures have priced in a 9.8% probability of a 25 basis point rate increase at the next central bank meeting in December and a 14.8% chance of a 25 basis point rate hike at the conclusion of the Fed’s January meeting.
Third-quarter earnings season rolls on, with investors awaiting fresh reports from notable companies today, including Disney (DIS), Warner Bros Discovery (WBD), Biogen (BIIB), and Take-Two Interactive (TTWO).
Meanwhile, Federal Reserve Chair Jerome Powell is set to deliver opening remarks before the Federal Reserve Division of Research and Statistics Centennial Conference later in the day and will participate in a panel discussion at the IMF’s annual research conference on Thursday. In addition, several other Fed officials will be making appearances today, including Williams, Barr, and Jefferson.
On the economic data front, investors will likely focus on U.S. Wholesale Inventories data due later in the day. Economists foresee this figure to stand at 0.0% m/m in September, compared to -0.1% m/m in August.
In the bond markets, United States 10-year rates are at 4.580%, up +0.20%.
The Euro Stoxx 50 futures are down -0.41% this morning as investors assessed economic data and more corporate earnings reports while cautiously awaiting remarks from Fed Chair Jerome Powell. Losses in utilities and insurance stocks are leading the overall market lower. The Federal Statistics Office said on Wednesday that German inflation fell in October to its lowest rate since August 2021, confirming preliminary data. Separately, Eurostat reported that Eurozone retail sales in September declined roughly in line with expectations, underscoring weak consumer demand and the potential for a recession. Meanwhile, the International Monetary Fund said on Wednesday that the ECB should maintain its key deposit rate at the historically high level of 4% throughout the entire upcoming year to extinguish inflationary pressures. In other news, an ECB survey showed that consumers in the Eurozone have increased their inflation expectations for the next 12 months to 4%. On the earnings front, Marks and Spencer Group Plc (MKS.LN) soared over +8% after the company reinstated a dividend and reported stronger-than-expected half-year profits. At the same time, ABN Amro Bank N.V. (ABN.NA) slid more than -8% after the Dutch lender’s Q3 net interest income missed expectations.
Germany’s CPI and Eurozone’s Retail Sales data were released today.
The German October CPI has been reported at 0.0% m/m and +3.8% y/y, in line with expectations.
Eurozone September Retail Sales stood at -0.3% m/m and -2.9% y/y, compared to expectations of -0.2% m/m and -3.1% y/y.
Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.16%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.33%.
China’s Shanghai Composite today closed slightly lower as concerns about the country’s economic outlook persisted due to a string of weak economic readings for October, even as Chinese authorities remained optimistic about the world’s second-largest economy. According to state media reports, China’s central bank governor, Pan Gongsheng, said at the Financial Street Forum on Wednesday that the country is expected to meet its annual growth target of 5%. Pan expressed his intention to push financial institutions to keep stable financing channels open through property credit and bonds to help address the challenges in the real estate sector. Meanwhile, media reports also said that Chinese regulators convened a symposium with several major property developers, such as China Vanke Co Ltd, Poly Real Estate Group Co Ltd, and Longfor Properties Co Ltd, to assess their financial positions in light of the ongoing downturn in the property market, boosting hopes that the government will provide more support to the struggling property sector. On the ground of this, mainland developers listed in Hong Kong climbed on Wednesday. Media and computer stocks also outperformed. In other news, the China Passenger Car Association said on Wednesday that China’s passenger vehicle sales rose 9.9% in October from a year earlier, helped by sales of new-energy vehicles and sales promotions. Investor focus is now squarely on Chinese inflation data for October, due on Thursday.
Japan’s Nikkei 225 Stock Index closed lower today, giving up early gains as investors continued to lock in profits after a recent sharp rally. Energy stocks led the declines on Wednesday as oil prices dropped to their lowest levels since late July, with Eneos Holdings Inc slumping over -6%. Bank stocks also retreated as decreasing bond yields dampened prospects for higher profitability, and investors opted to take profit from one of this year’s best-performing sectors. Meanwhile, Bank of Japan Governor Kazuo Ueda told parliament that the central bank doesn’t need to wait for real wages to become positive before exiting stimulus. In corporate news, Mazda Motor Corp soared over +10% after the automaker lifted its full-year operating profit forecast amid a weakened yen. Also, Nintendo climbed more than +6% after the gaming firm boosted its operating profit forecast by 11% for the financial year ending March. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +0.45% to 20.03.
“Investors sold shares that are linked to the economy, or value stocks, to lock in profits as they braced for an economic slowdown,” said Ikuo Mitsui, fund manager at Aizawa Securities.
Pre-Market U.S. Stock Movers
Upstart Holdings Inc (UPST) tumbled about -22% in pre-market trading after the company reported downbeat Q3 results and provided below-consensus Q4 revenue guidance.
Upwork Inc (UPWK) surged over +21% in pre-market trading after reporting upbeat Q3 results and raising its FY23 revenue guidance.
eBay Inc (EBAY) slumped more than -6% in pre-market trading after the company offered weaker-than-expected guidance for the holiday quarter.
Robinhood Markets Inc (HOOD) slid over -7% in pre-market trading after the company reported weaker-than-expected Q3 revenue and raised its expectations for FY23 total operating expenses.
Lucid Group Inc (LCID) fell over -3% in pre-market trading after the company posted mixed Q3 results and lowered its full-year production outlook.
NXP Semiconductors NV (NXPI) dropped more than -2% in pre-market trading after Citi downgraded the stock to Sell from Neutral.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Wednesday - November 8th
Walt Disney (DIS), TC Energy (TRP), Biogen (BIIB), Corteva (CTVA), Manulife Financial (MFC), Warner Bros Discovery (WBD), CGI Inc (GIB), Franco-Nevada (FNV), Take-Two (TTWO), Fair Isaac (FICO), HubSpot Inc (HUBS), Roblox (RBLX), Ke Hldg (BEKE), Kellanova (K), FleetCor (FLT), Royalty Pharma (RPRX), Atmos Energy (ATO), Applovin (APP), MGM (MGM), Endeavor Group (EDR), U-Haul Holding (UHAL), Twilio (TWLO), Performance Food Group Co (PFGC), Charles River Laboratories (CRL), Jazz Pharma (JAZZ), UWM Holdings (UWMC), Instacart (CART), Ralph Lauren A (RL), Duolingo (DUOL), NewYork Times (NYT), Affirm Holdings (AFRM), Kinross Gold (KGC), Genpact (G), ICL Israel Chemicals (ICL), Middleby Corp (MIDD), Starwood Property (STWD), New Fortress Energy (NFE), Owl Rock Capital (OBDC), Reynolds (REYN), Kinetik Holdings (KNTK), Natera Inc (NTRA), Ultrapar Participacoes (UGP), Southwest Gas Hold (SWX), B2Gold (BTG), LYFT (LYFT), Ashland Global (ASH), Shift4 Payments Inc (FOUR), Ormat (ORA), Helmerich Payne (HP), Enersys (ENS), Cactus (WHD), Installed Building (IBP), Amicus (FOLD), Adient (ADNT), Ginkgo Bioworks (DNA), Jackson Financial (JXN), Vishay Intertechnology (VSH), Playtika (PLTK), Diodes (DIOD), SeaWorld Entertainment (SEAS), Azenta (AZTA), Ziff Davis (ZD), Genworth (GNW), Lumentum Holdings Inc (LITE), Clear Secure (YOU), Hagerty (HGTY), Steven Madden (SHOO), Callaway Golf (MODG), Lifestance Health Group (LFST), IONQ (IONQ), Bloom Energy (BE), ViaSat (VSAT), Prospect Capital (PSEC), Sovos Brands (SOVO), Rocket Lab USA (RKLB), Envestnet (ENV), Nuvei (NVEI), Jamf (JAMF), Xenon Pharmaceuticals (XENE), Payoneer Global Inc (PAYO), Certara (CERT), Liveramp (RAMP), Marathon Digital (MARA), ODP (ODP), Vericel Corp Ord (VCEL), Siriuspoint (SPNT), Excelerate Energy (EE), Warby Parker (WRBY), AvidXchange Holdings (AVDX), GCM Grosvenor (GCMG), SFLoration Ltd (SFL), Fisker (FSR), Xpel (XPEL), Catalyst Pharmaceuticals (CPRX), Luminar Tech (LAZR), Hillman Solutions (HLMN), Kodiak Gas Services (KGS), Supernus (SUPN), Target Hospitality (TH), Taboola (TBLA), ANI Pharma (ANIP), Sphere Entertainment (SPHR), Ziprecruiter (ZIP), Sterling Check (STER), Cadre Holdings (CDRE), PDF Solutions (PDFS), Everi Holdings (EVRI), TTEC (TTEC), Magnite (MGNI).
More Stock Market News from Barchart
- Stocks Settle Higher on Strong Corporate Earnings and Lower Bond Yields
- 2 Fintech Stocks Warren Buffett and Cathie Wood Both Own
- 1 Stock Set to Fly on the Airline Supply Chain Crisis
