Five things you need to know before the market opens on Tuesday, October 25:
1. -- Stocks Futures Edge Lower With Big Tech Earnings On Tap
U.S. equity futures edged lower Tuesday as investors looked to a brief pause in Wall Street's solid October rally ahead of a parade of blue chip earnings before and after the closing bell.
A modest pullback in the U.S. dollar, which was marked 0.05% in overnight trading at 111.976, and a further easing in Treasury bond yields gave global stocks a boost, but with half a dozen S&P 500 earnings before the start of trading, and tech giants Alphabet (GOOGL) and Microsoft (MSFT) after the bell, investors look to be adopting a cautious tone heading into the opening bell.
Third quarter S&P 500 earnings are expected to rise by around 3.1% from last year, to a collective $458.9 billion, with forecasts for the final three months of the year indicating a growth rate of 4.4% and a collective total of $478.6 billion, according to data from Refinitiv.
Broader economic growth remains a larger question, however, following PMI data for October yesterday that showed business activity contracted for a fourth consecutive month, intensifying concerns that the world's largest economy is heading into recession.
That concern, as well as some dovish signaling from Federal Reserve officials, has lead to a pullback in bond yields, with benchmark 10-year Treasury notes pegged at 4.175% in overnight trading, down from a fifteen year high of 4.375% late last week.
Staying in Treasuries, benchmark 2-year notes were marked at 4.488% ahead of a $42 billion auction in new paper later this morning, with results expected at 1:00 pm Eastern time.
On Wall Street, futures contracts tied to the S&P 500, which is up 5.9% for the month and trading at a five-week high of 3,797.34 points, are indicating a modest 13 point pullback while those linked to the Dow Jones Industrial Average are priced for a 115 point decline. The tech-focused Nasdaq is priced for a 15 point dip.
In overseas markets, better-than-expected tech earnings and political stability with a new Prime Minister in the United Kingdom helped the region-wide Stoxx 600 to an early 0.24% gain in Frankfurt, with a firmer pound holding down the FTSE 100, which was marked 0.4% lower in London.
Overnight in Asia, stocks languished at the lowest levels in two years, following on a from a major sell-off in China stocks yesterday in reaction to Premier Xi Jinping's third term as President following the
The region-wide MSCI ex-Japan index was marked 0.04% lower heading into the close of trading, while Japan's Nikkei 225 gained 1.02% amid a modest nudge higher for the yen, which, at 148.90, is still within touching distance of the lowest levels in 32 years.
2. -- Microsoft Nudges Higher Ahead of Q1 Update After The Bell
Microsoft (MSFT) shares nudged higher in pre-market trading ahead of the tech giant's highly-anticipated first quarter earnings report after the closing bell.
Microsoft, which earlier this year forecast double-digit revenue and operating income growth in its current fiscal year, which ends in the summer of 2024, is expected to post a bottom line of $2.30 per share on overall sales of $49.61 billion.
The group's PC division, however, is likely to see a significant slump in post-pandemic demand, while its globally-focused cloud business - including Azure -- will take a hit from the ongoing surge in the dollar, which is trading near 20-year peaks against its global peers.
Microsoft said in July it expects a four-point impact from foreign currency headwinds for the fully year, with the bulk of it coming over the three months ending in September.
Microsoft shares were marked 0.1% in pre-market trading to indicate an opening bell price of $247.39 each, a move that would trim the stock's six month decline to around 11%.
3. -- General Motors Declares Dividend Ahead of Q3 Report
General Motors (GM) shares moved lower in pre-market trading after the automaker confirmed its dividend payout ahead a third quarter earnings update prior to the opening bell.
GM, which brought back it quarterly dividend over the summer -- following a two-year suspension linked to the Covid pandemic -- declared another payout of 9 cents per share last night, payable on December 15 to shareholders of record on December 2.
Analysts expect GM to post September quarter earnings of $1.88 per share, a 23.7% increase from last year, on revenues of $25.32 billion.
GM sold just under 555,600 cars over the three months ending in September, a 24% from last year and a tally that reclaimed the nine-month U.S. lead over Toyota TM - which bested both Ford F and GM in total 2021 sales for the first time since 1931.
General Motors shares were marked 0.8% lower in pre-market trading to indicate an opening bell price of $35.44 each.
4. -- General Electric Earnings On Deck With Split Plans In Focus
General Electric (GE) shares were marked modestly higher in pre-market trading ahead of the industrial group's third quarter earnings later this morning.
GE, which is planning to split into three separate companies -- GE Healthcare, a power and renewables business and an aviation specialist -- is expected to report a 19.3% decline in third quarter earnings of 46 cents per share, with revenues rising around 1% from last year to $18.623 billion.
Last month, GE CFO Carolina Dybeck Happe said supply chain disruptions have extended into the back half of the year, affecting everything from labor to parts and materials, making it difficult to deliver products to customers. Some orders and now being pushed into the fourth quarter, Dybeck Happe said, putting pressure on current quarter cash flows, which were forecast to in-line, or slightly better, than the Q2 tally of $162 million.
GE shares, which have fallen nearly 24% so far this year, were marked 0.05% higher in pre-market trading to indicate an opening bell price of $73.38 each.
5. -- Adidas Reportedly Prepared to Cut Ties With Kanye West
Adidas AG traded firmly lower in Frankfurt Tuesday as the world's second-largest sportswear group continued to deal with the cultural and social media blowback from its business ties with American music artist Kanye West.
West, who goes by the name of Ye, has been widely criticized for a series of anti-Semitic comments made through his verified social media accounts, two of which -- Twitter and Instagram -- have been subsequently suspended. Ye signed a collaborative agreement with Adidas in 2013 which eventually lead to the creation of the lucrative Yeezy brand, estimated to be worth around $2 billion in annual sales
Bloomberg news reported Tuesday, however, that Adidas -- which said it was reviewing its relationship with the artist on October 6 -- is ready to cut ties with West, and could announce the decision as early as today.
Amazon shares were marked 3.2% lower in early Frankfurt trading to change hands at €100.46 each.
