December S&P 500 futures (ESZ23) are up +0.50%, and December Nasdaq 100 E-Mini futures (NQZ23) are up +0.70% this morning as market participants weighed the possible peak of the Federal Reserve’s historic tightening campaign and looked ahead to an earnings report from Apple.
As widely expected, the Federal Reserve kept its policy rate in a range of 5.25% to 5.50% for the second consecutive meeting and the third time this year on Wednesday. The committee said in a post-meeting statement that “tighter financial and credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation.” In his post-monetary policy meeting press conference, Federal Reserve Chair Jerome Powell stated that officials are “proceeding carefully,” without ruling out the possibility of another rate hike, and he emphasized that the Fed is not currently discussing rate cuts. “We’re not talking about rate cuts. We’re still very focused on the first question, which is, ‘Have we achieved a stance of monetary policy that’s sufficiently restrictive to bring inflation down to 2% over time, sustainably?’ That is the question we’re focusing on,” Powell said.
“The Federal Reserve held off on another interest rate hike but is keeping their options open to raise rates at an upcoming meeting should conditions warrant. The rise in long-term interest rates in recent months has had the same desired effect of monetary tightening, effectively doing some of the Fed’s dirty work for them,” said Greg McBride, chief financial analyst at Bankrate.
In Wednesday’s trading session, the benchmark S&P 500 and tech-heavy Nasdaq 100 notched 1-week highs, and the blue-chip Dow posted a 1-1/2 week high. Generac Holdings Inc (GNRC) climbed over +14% after the maker of backup generators and solar equipment reported upbeat Q3 results. Also, Advanced Micro Devices Inc (AMD) surged more than +9% after the semiconductor company said its new AI chip would generate $2 billion in sales next year. In addition, Kraft Heinz Co (KHC) gained over +2% after reporting better-than-expected Q3 adjusted EPS and raising its full-year adjusted EPS guidance. On the bearish side, Estee Lauder Companies Inc (EL) plunged more than -18% after the beauty products maker slashed its annual profit forecast, citing a slower pace of recovery in net sales and margins.
The ADP National Employment report on Wednesday showed private payrolls rose by 113K jobs in October, weaker than expectations of 150K. Also, the U.S. October ISM manufacturing index unexpectedly fell to 46.7, weaker than expectations of 49.0. At the same time, U.S. JOLTs job openings rose to a 4-month high of 9.553M in September, stronger than expectations of 9.250M.
Meanwhile, the U.S. Treasury’s latest quarterly refunding announcement showed Wednesday a deceleration in the pace of increase in long-term debt sales. The Treasury said it would sell $112 billion of longer-term 3-year, 10-year, and 30-year securities at its upcoming quarterly refunding auctions, below expectations of $114 billion.
Third-quarter earnings season continues in full flow, and investors await new reports from big-name companies today, including Apple (AAPL), Eli Lilly (LLY), Starbucks (SBUX), Booking (BKNG), and Shopify Inc (SHOP). Analysts expect corporate earnings from S&P 500 companies to rise 5% year-over-year for the quarter.
Today, all eyes are focused on U.S. Initial Jobless Claims data in a couple of hours. Economists, on average, forecast that Initial Jobless Claims will come in at 210K, compared to last week’s value of 210K.
Also, investors will likely focus on U.S. Unit Labor Costs preliminary data, which came in at +2.2% q/q in the second quarter. Economists foresee the third-quarter figure to be +0.7% q/q.
U.S. Nonfarm Productivity preliminary data will be reported today. Economists foresee this figure to stand at +4.1% q/q in the third quarter, compared to the second-quarter number of +3.5% q/q.
U.S. Factory Orders data will be reported today as well. Economists expect September’s figure to be +2.4% m/m, compared to the previous number of +1.2% m/m.
In the bond markets, United States 10-year rates are at 4.722%, down -1.40%.
The Euro Stoxx 50 futures are up +1.32% this morning as investors digested a slew of upbeat earnings reports, while hopes that the Federal Reserve’s rate-hiking cycle is over also boosted sentiment. Rate-sensitive real estate and technology stocks led the advance on Thursday. A survey showed on Thursday that the Eurozone manufacturing activity downturn deepened in October, with new orders contracting at one of the steepest rates since data collection began in 1997. Meanwhile, the Bank of England is scheduled to announce its interest rate decision later in the session, with investors expecting the BoE to keep rates on hold at a 15-year high of 5.25%. In corporate news, Novo Nordisk A/S (NOVOB.C.DX) rose over +2% after the drugmaker reported a surge in Q3 sales. Also, Shell Plc (SHEL.LN) gained more than +1% after accelerating the pace of share buybacks, supported by its rising third-quarter profit.
Spain’s Manufacturing PMI, Italy’s Manufacturing PMI, France’s Manufacturing PMI, Germany’s Manufacturing PMI, Germany’s Unemployment Change, Germany’s Unemployment Rate, and Eurozone’s Manufacturing PMI data were released today.
The Spanish October Manufacturing PMI has been reported at 45.1, weaker than expectations of 47.0.
The Italian October Manufacturing PMI came in at 44.9, weaker than expectations of 46.2.
The French October Manufacturing PMI stood at 42.8, stronger than expectations of 42.6.
The German October Manufacturing PMI arrived at 40.8, stronger than expectations of 40.7.
The German October Unemployment Change came in at 30K, weaker than expectations of 15K.
The German October Unemployment Rate was at 5.8%, in line with expectations.
Eurozone October Manufacturing PMI stood at 43.1, stronger than expectations of 43.0.
Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.45%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +1.10%.
China’s Shanghai Composite today closed lower as investors maintained a degree of caution due to concerns about a fragile economic recovery. A string of weak Purchasing Managers Index readings this week have indicated that China’s manufacturing sector contracted in October, casting doubts on the possibility of an economic rebound this year. Meanwhile, new energy and alcohol stocks underperformed on Thursday, while media stocks gained ground. In addition, tech giants listed in Hong Kong soared as investors speculated that U.S. interest rates have reached their peak and that rate cuts may be on the horizon.
Japan’s Nikkei 225 Stock Index closed higher today, driven by expectations of the Federal Reserve’s monetary tightening cycle coming to an end and a potential peak in U.S. yields. Chip-related stocks were among the top gainers on Thursday, with Advantest surging about +10% and Tokyo Electron Ltd rising more than +3%. Utilities, industrial, and consumer cyclical stocks also outperformed. Meanwhile, Japanese Prime Minister Fumio Kishida announced on Thursday that the government will allocate more than 17 trillion yen (approximately $113 billion) in a set of measures aimed at mitigating the economic impact of increasing inflation, which will include tax cuts. In other corporate news, Shin-Etsu Chemical Co Ltd climbed over +4% after being singled out by Saxo Bank’s chief investment officer, Steen Jakobsen, due to its significant role in the semiconductor supply chain. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -4.44% to 20.01. Japanese markets will be closed for a public holiday on Friday.
Pre-Market U.S. Stock Movers
Qualcomm Incorporated (QCOM) rose over +5% in pre-market trading after the semiconductor company reported upbeat Q4 results and offered solid Q1 guidance.
Roku Inc (ROKU) surged about +19% in pre-market trading after the company posted better-than-expected Q3 revenue and provided an upbeat Q4 net revenue forecast.
DoorDash Inc (DASH) climbed more than +9% in pre-market trading after reporting stronger-than-expected Q3 revenue and delivering above-consensus full-year guidance.
PayPal Holdings Inc (PYPL) gained over +5% in pre-market trading after the payment tech company reported upbeat Q3 results and raised its FY23 adjusted profit guidance.
Confluent Inc (CFLT) tumbled more than -33% in pre-market trading after narrowing its full-year sales forecast.
Amazon.com Inc (AMZN) rose about +0.6% in pre-market trading after HSBC initiated coverage of the stock with a Buy rating.
Chevron Corp (CVX) gained over +1% in pre-market trading after Bernstein upgraded the stock to Outperform from Market Perform.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Thursday - November 2nd
Apple (AAPL), Eli Lilly (LLY), ConocoPhillips (COP), S&P Global (SPGI), Starbucks (SBUX), Stryker (SYK), Booking (BKNG), Cigna (CI), Regeneron Pharma (REGN), Southern (SO), EOG Resources (EOG), Zoetis Inc (ZTS), Canadian Natural (CNQ), Duke Energy (DUK), Shopify Inc (SHOP), ICE (ICE), Pioneer Natural (PXD), Marriott Int (MAR), Monster Beverage (MNST), Parker-Hannifin (PH), Motorola (MSI), Atlassian Corp Plc (TEAM), Fortinet (FTNT), Cheniere Energy (LNG), American Electric Power (AEP), Exelon (EXC), Cencora Inc (COR), Palantir (PLTR), Consolidated Edison (ED), Cummins (CMI), Rockwell Automation (ROK), Moderna (MRNA), Barrick Gold (GOLD), Chunghwa Telecom (CHT), Block (SQ), Aptiv (APTV), Quanta Services (PWR), SBA Communications (SBAC), Broadridge (BR), Alnylam (ALNY), Targa Resources (TRGP), Coinbase Global (COIN), Cloudflare (NET), ChipMOS Tech (IMOS), PPL (PPL), Live Nation Entertainment (LYV), Howmet (HWM), Blue Owl Capital (OWL), Iron Mountain (IRM), Ventas (VTR), Pembina Pipeline (PBA), Baxter (BAX), Ball (BALL), Westlake Chemical (WLK), Skyworks (SWKS), AMH 4 Rent (AMH), Expedia (EXPE), Entegris (ENTG), Dynatrace Holdings (DT), DraftKings (DKNG), Molson Coors Brewing B (TAP), Alliant Energy (LNT), EPAM Systems (EPAM), Ryan Specialty Group Holdings (RYAN), Godaddy Inc (GDDY), Hyatt (H), Regency Centers (REG), Credicorp (BAP), HF Sinclair (DINO), Reinsurance of America (RGA), NRG (NRG), Insulet (PODD), Bill Com (BILL), Paylocity Holdng (PCTY), Dropbox (DBX), Huntington Ingalls Industries (HII), Floor & Decor (FND), Teleflex (TFX), BorgWarner (BWA), Pinnacle West (PNW), ADS (WMS), Omega Healthcare (OHI), Lamar (LAMR), Bruker (BRKR), Southwestern Energy (SWN), KBR (KBR), ITT (ITT), CubeSmart (CUBE), Federal Realty (FRT), Penumbra Inc (PEN), Americold Realty (COLD), Murphy Oil (MUR), Paramount Global B (PARA), OGE Energy (OGE), Tempur Sealy International (TPX), Acadia Healthcare (ACHC), Cyberark Software (CYBR), Dentsply (XRAY), Universal Display (OLED), Ionis Pharma (IONS), Karuna Therapeutics (KRTX), Arrow Electronics (ARW), Jones Lang LaSalle (JLL), Api Group Corp (APG), PBF Energy (PBF), Qualys (QLYS), Crocs (CROX), Spirit Realty (SRC), ADT (ADT), Insight Enterprises (NSIT), Essent Group Ltd (ESNT), Altair Engineering (ALTR), Carvana (CVNA), Gildan Activewear (GIL), IDACORP (IDA), ATI Inc (ATI), Intracellular Th (ITCI), Allegro (ALGM), SM Energy (SM), Lancaster Colony (LANC), Apartment (AIRC), Vontier (VNT), Beacon Roofing (BECN), Schneider National (SNDR), Lantheus Holdings Inc (LNTH), Clearway Energy C (CWEN), Sealed Air (SEE), Colliers International (CIGI), Haemonetics (HAE), Crescent Point Energy (CPG), 10X Genomics (TXG), Madison Square Garden Sports (MSGS), Five9 (FIVN), The Wendy’s Co (WEN), Technip Energies NV (THNPY), EngageSmart LLC (ESMT), MDU Resources (MDU), Organon Co (OGN), Stericycle (SRCL), Baytex Energy Corp (BTE), SPX Corp (SPXC), Cirrus (CRUS), Euronav (EURN), Grand Canyon Education (LOPE), Enerplus (ERF), Federal Signal (FSS), Fox Factory (FOXF), Acushnet Holdings (GOLF), Cytokinetics Inc (CYTK), Cable One Inc (CABO), Allete (ALE), Moelis & Co (MC), Bombardier Inc (BDRBF).
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