December S&P 500 futures (ESZ23) are down -0.44%, and December Nasdaq 100 E-Mini futures (NQZ23) are down -0.47% this morning as market participants geared up for the Federal Reserve’s interest rate decision while also awaiting the release of fresh labor market data.
In Tuesday’s trading session, Wall Street’s major indexes ended higher. Pinterest Inc (PINS) surged over +19% after the image-sharing platform posted upbeat Q3 results. Also, Arista Networks (ANET) climbed more than +14% after the company reported better-than-expected Q3 results and provided upbeat Q4 revenue guidance. In addition, Chewy Inc (CHWY) gained over +4% after Morgan Stanley upgraded the stock to Overweight from Equal Weight. On the bearish side, Caterpillar Inc (CAT) plunged more than -6% after the construction equipment maker’s quarterly results signaled slowing demand.
Economic data on Tuesday showed that the U.S. CB consumer confidence index dropped to a 5-month low of 102.6 in October, although it exceeded expectations of 100.0. Also, the U.S. October Chicago PMI unexpectedly fell to 44.0, weaker than expectations of 45.0. In addition, the U.S. employment cost index came in at +1.1% q/q in Q3, stronger than expectations of +1.0% q/q. Finally, the U.S. August S&P/CS HPI composite - 20 n.s.a. stood at +2.2% y/y compared to the forecasted +1.6% y/y figure.
Third-quarter earnings season continues in full force, with investors awaiting new reports from notable companies today, including Qualcomm (QCOM), CVS Health Corp (CVS), Airbnb (ABNB), PayPal Holdings Inc (PYPL), and Kraft Heinz (KHC). Analysts expect aggregate S&P 500 earnings to notch a 4.9% year-over-year growth for the quarter.
Today, all eyes are focused on the U.S. Federal Reserve’s monetary policy decision later in the day. U.S. rate futures have priced in a 99.7% chance for the Fed to keep its federal funds rate range unchanged at 5.25-5.50%. In addition, market participants will be closely observing Fed Chair Jerome Powell’s post-decision press conference for clues about the central bank’s path forward with rates.
“The Fed will keep the option of future rate hikes firmly on the table until the labor market cools considerably and inflationary pressures ease. Chairman Powell will also argue that the lagged effects of past hikes have not fully impacted the economy and that patience is prudent,” said Erik Weisman, chief economist and portfolio manager at MFS Investment Management.
Also, investors will likely focus on the U.S. ISM Manufacturing PMI, which came in at 49.0 in September. Economists foresee the new figure to be 49.0.
U.S. ADP Nonfarm Employment Change data will be reported today. Economists foresee this figure to stand at 150K in October, compared to 89K in September.
U.S. JOLTs Job Openings data will come in today. Economists expect September’s figure to be 9.250M, compared to August’s value of 9.610M.
U.S. S&P Global Manufacturing PMI will also be in focus today. Economists foresee this figure to stand at 50.0 in October, compared to the previous number of 49.8.
U.S. Crude Oil Inventories data will be reported today as well. Economists estimate this figure to be +1.261M, compared to last week’s value of +1.371M.
In the bond markets, United States 10-year rates are at 4.908%, up +0.64%.
The Euro Stoxx 50 futures are up +0.34% this morning as investors digested positive corporate earnings reports while awaiting the U.S. Federal Reserve’s interest rate decision. Gains in retail stocks are leading the overall market higher, with Next Plc (NXT.LN) climbing over +3% after the British clothing and homeware chain boosted its profit guidance for the fourth time in recent months. Healthcare and automobile stocks also gained ground on Wednesday, while utilities and energy stocks underperformed. Meanwhile, ECB vice-president Luis de Guindos welcomed the fall in Eurozone’s inflation on Tuesday, particularly in underlying measures, but policymaker Joachim Nagel emphasized the importance of maintaining interest rates at a sufficiently high level for an extended period. In other corporate news, Gsk Plc (GSK.LN) gained more than +1% after the U.K. drugmaker raised its earnings forecast.
U.K.’s Nationwide HPI and U.K.’s Manufacturing PMI data were released today.
U.K. October Nationwide HPI has been reported at +0.9% m/m and -3.3% y/y, stronger than expectations of -0.4% m/m and -4.8% y/y.
U.K. October Manufacturing PMI stood at 44.8, weaker than expectations of 45.2.
Asian stock markets today settled in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.14%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +2.41%.
China’s Shanghai Composite today closed slightly higher as investors maintained a cautious stance in light of data indicating a somewhat uneven economic recovery in the world’s second-largest economy. A private survey showed on Wednesday that China’s factory activity experienced an unexpected contraction in October, indicating the persistence of economic challenges despite Beijing’s recent measures to support growth. Meanwhile, China on Tuesday revealed its intentions to establish a mechanism for resolving local debt risks and managing government debt following a twice-a-decade financial policy meeting held by the country’s top leaders on October 30th-31st. In corporate news, Kweichow Moutai Co., Ltd. climbed over +5% following the announcement from the Chinese liquor giant that it would raise the prices of its signature alcoholic beverages for the first time in six years. On the geopolitical front, the White House has stated that U.S. President Joe Biden and Chinese President Xi Jinping are aiming to have a “constructive conversation” during the Asia Pacific Economic Cooperation forum in San Francisco scheduled for mid-November.
The Chinese October Caixin Manufacturing PMI came in at 49.5, weaker than expectations of 50.8.
Japan’s Nikkei 225 Stock Index closed sharply higher today, posting its biggest rise in three weeks as investors scooped up stocks after the Bank of Japan largely maintained its ultra-dovish monetary policy stance a day earlier. A survey showed on Wednesday that Japan’s factory activity contracted for a fifth consecutive month in October. Meanwhile, the yen strengthened from near its weakest level this year after Japan’s foreign exchange chief indicated readiness for potential intervention. In corporate news, Advantest plunged over -5% after the chip-testing equipment maker lowered its annual operating profit forecast. On the positive side, Toyota Motor Corp climbed more than +4% after reporting strong earnings and announcing a 100 billion yen buyback. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -4.95% to 20.94.
“Investors who braced for a hawkish shift in the BOJ’s policy were relieved and bought back stocks to cover their short positions,” said Shigetoshi Kamada, general manager of the research department at Tachibana Securities.
The Japanese October Manufacturing PMI arrived at 48.7, stronger than expectations of 48.5.
Pre-Market U.S. Stock Movers
Paycom Soft (PAYC) tumbled over -36% in pre-market trading after the payment software company reported weaker-than-expected Q3 revenue and provided soft Q4 revenue and adjusted EBITDA guidance.
Yum China Holdings Inc (YUMC) plunged more than -12% in pre-market trading after the restaurant operator posted downbeat Q3 results.
Advanced Micro Devices Inc (AMD) fell over -2% in pre-market trading after the semiconductor company issued weak Q4 guidance due in part to gaming weakness.
Caesars Entertainment Corporation (CZR) rose more than +4% in pre-market trading after reporting better-than-expected Q3 results.
First Solar Inc (FSLR) climbed over +4% in pre-market trading after the company posted stronger-than-expected Q3 earnings and raised the lower end of its full-year earnings guidance.
Ford Motor Company (F) gained more than +2%, and General Motors Company (GM) rose over +1% in pre-market trading after Barclays upgraded the stocks to Overweight from Equal Weight.
Boeing Co (BA) rose more than +1% in pre-market trading after Goldman Sachs upgraded the stock to Conviction Buy from Buy.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Wednesday - November 1st
Qualcomm (QCOM), Mondelez (MDLZ), CVS Health Corp (CVS), Airbnb (ABNB), Humana (HUM), MercadoLibre (MELI), McKesson (MCK), PayPal Holdings Inc (PYPL), Aflac (AFL), Estee Lauder (EL), MetLife (MET), Apollo Global Management A (APO), AIG (AIG), Trane Technologies (TT), Williams (WMB), Energy Transfer (ET), Kraft Heinz (KHC), TE Connectivity (TEL), Yum! Brands (YUM), Electronic Arts (EA), DuPont De Nemours (DD), Allstate (ALL), IDEXX Labs (IDXX), Prudential Financial (PRU), IQVIA Holdings (IQV), Verisk (VRSK), DoorDash (DASH), CDW Corp (CDW), Coca-Cola European (CCEP), Nutrien (NTR), Martin Marietta Materials (MLM), Ingersoll Rand (IR), American Water Works (AWK), Entergy (ETR), DTE Energy (DTE), Garmin (GRMN), PTC (PTC), Marathon Oil (MRO), Tyler Technologies (TYL), CF Industries (CF), Biomarin Pharma (BMRN), Albemarle (ALB), Clorox (CLX), Texas Pacific (TPL), Builders FirstSource (BLDR), Super Micro Computer (SMCI), Trimble (TRMB), Renaissancere (RNR), Host Hotels Resorts (HST), EXACT Sciences (EXAS), Gfl Environmental (GFL), NiSource (NI), United Therapeutics (UTHR), Western Midstream Partners (WES), Ceridian HCM (CDAY), CH Robinson (CHRW), Boston Properties (BXP), American Financial (AFG), Zillow C (Z), Zillow Group Inc (ZG), Procore Technologies (PCOR), Confluent (CFLT), Qorvo Inc (QRVO), Roku (ROKU), Clean Harbors (CLH), SCI (SCI), Regal Beloit (RRX), Murphy USA Inc (MUSA), Etsy Inc (ETSY), Curtiss-Wright (CW), Royal Gold (RGLD), Chord Energy (CHRD), BWX Tech (BWXT), Exelixis (EXEL), Avis (CAR), Selective (SIGI), Siteone Landscape Supply (SITE), Sarepta (SRPT), Parsons (PSN), MicroStrategy (MSTR), Axalta Coating Systems (AXTA), Watts Water Technologies (WTS), Norwegian Cruise Line (NCLH), Apellis Pharma (APLS), Bausch + Lomb (BLCO), Wingstop Inc (WING), Informatica (INFA), DT Midstream (DTM), Generac (GNRC), ELF Beauty (ELF), Timken (TKR), Wayfair Inc (W), Axis Capital (AXS), Tenable (TENB), Magnolia Oil (MGY), Remitly Global (RELY), National Fuel Gas (NFG), Frontier Communications Parent (FYBR), Enact Holdings (ACT), MKS Instruments (MKSI), Clearwater Analytics Holdings (CWAN), Casella (CWST), Bright Horizons (BFAM), Avnet (AVT), Sunoco LP (SUN), Axcelis (ACLS), DXC Technology (DXC), Cerevel Therapeutics Holdings (CERE), Quidel (QDEL), Radian (RDN), Summit Materials Inc (SUM), Northern Oil&Gas (NOG), Dun And Bradstreet (DNB), Rayonier (RYN), Janus Henderson (JHG), Alight (ALIT), Lincoln National (LNC), California Resources (CRC), National Storage Affiliates Trust (NSA), Joby Aviation (JOBY), Sotera Health (SHC), Inari Med (NARI), Arcosa (ACA), Glaukos Corp (GKOS), Marriot Vacations Worldwide (VAC), Black Hills (BKH), Corcept (CORT), Rapid7 Inc (RPD), SSR Mining (SSRM), Broadstone Net (BNL), Digitalbridge Group (DBRG), Extreme (EXTR), FormFactor (FORM), LivaNova PLC (LIVN), Callon Petroleum (CPE), Aurora Innovation (AUR), Warrior Met Coal (HCC), Park Hotels & Resorts (PK), Scotts Miracle-Gro (SMG), Avista (AVA), Vermilion Energy (VET), Spirit Aerosystems (SPR), Jfrog (FROG), Werner (WERN), Frontdoor (FTDR), NMI Holdings (NMIH), Sitime Corp (SITM), Resideo Tech (REZI).
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