December S&P 500 E-Mini futures (ESZ24) are up +0.10%, and December Nasdaq 100 E-Mini futures (NQZ24) are up +0.16% this morning as market participants looked ahead to earnings reports from a stellar lineup of companies, key economic data releases, and comments from Federal Reserve officials.
In Friday’s trading session, Wall Street’s major averages closed higher, with the benchmark S&P 500 and blue-chip Dow notching new all-time highs. Fastenal (FAST) surged over +9% and was the top percentage gainer on the Nasdaq 100 after the company reported stronger-than-expected Q3 results. Also, JPMorgan Chase (JPM) advanced more than +4% and was the top percentage gainer on the Dow after the biggest U.S. bank by assets posted upbeat Q3 results and raised its full-year net interest income forecast. In addition, Wells Fargo & Co. (WFC) climbed over +5% after reporting better-than-expected Q3 EPS. On the bearish side, Tesla (TSLA) slid more than -8% and was the top percentage loser on the S&P 500 and Nasdaq 100 after unveiling a prototype of its much-anticipated “Cybercab” robotaxi, which analysts said was “light on details.”
Economic data released on Friday showed that the U.S. producer price index for final demand came in at 0.0% m/m and +1.8% y/y in September, compared to expectations of +0.1% m/m and +1.6% y/y. Also, core PPI, which excludes volatile food and energy costs, rose +0.2% m/m and +2.8% y/y in September, compared to expectations of +0.2% m/m and +2.7% y/y. In addition, the University of Michigan’s U.S. October consumer sentiment index unexpectedly fell to 68.9, weaker than expectations of 70.9.
Dallas Fed President Lorie Logan reiterated on Friday that interest rates should be lowered gradually to a more normal level. While Logan described the economy as “strong and stable,” she also highlighted “meaningful” risks on the horizon. “It’s really important to look ahead as we chart this path toward neutral, and that we do so in a very gradual way to balance the risks that we have,” Logan said.
Meanwhile, U.S. rate futures have priced in an 88.2% probability of a 25 basis point rate cut and an 11.8% chance of no rate change at the November FOMC meeting.
Earnings season heats up this week, with results expected from several more big banks, including Goldman Sachs (GS), Bank of America (BAC), Morgan Stanley (MS), and Citigroup (C). Also, notable companies, including Netflix (NFLX), UnitedHealth (UNH), Johnson & Johnson (JNJ), United Airlines (UAL), Abbott Laboratories (ABT), Alcoa (AA), Procter & Gamble (PG), and American Express (AXP), are set to post quarterly results this week. According to Bloomberg Intelligence, companies in the S&P 500 are expected to post an average +4.2% increase in quarterly earnings for Q3 compared to the previous year, down from +7.9% growth projected in mid-July.
“We expect earnings season to be solid, including the big banks,” said Michael Landsberg, chief investment officer at Landsberg Bennett Private Wealth Management. “Credit card delinquencies are still very low and increased economic activity should drive bank revenues.”
Investors will also be monitoring a spate of economic data releases this week, including U.S. Retail Sales, Core Retail Sales, the NY Empire State Manufacturing Index, the Export Price Index, the Import Price Index, Initial Jobless Claims, the Philadelphia Fed Manufacturing Index, Industrial Production, Manufacturing Production, Business Inventories, Crude Oil Inventories, Building Permits (preliminary), and Housing Starts.
In addition, several Fed officials will be making appearances throughout the week, including Waller, Kashkari, Daly, Kugler, Bostic, and Goolsbee.
The U.S. economic data slate is mainly empty on Monday.
U.S. bond markets are closed today in observance of the Columbus Day holiday.
The Euro Stoxx 50 futures are up +0.02% this morning as investors weighed the impact of new Chinese stimulus, with attention turning to the earnings season and the European Central Bank’s policy meeting later in the week. Technology and telecom stocks outperformed on Monday, while travel and leisure stocks lost ground. Also, luxury stocks exposed to China slumped as the country’s stimulus plans failed to impress investors. Meanwhile, market participants are awaiting the ECB’s monetary policy decision on Thursday, with the central bank widely expected to deliver another 25-basis-point rate cut. In corporate news, Flutter Entertainment Plc (FLTR.LN) slid over -7% and Entain Plc (ENT.LN) plunged more than -12% following a Guardian report that the U.K. government may double taxes on online casinos and bookmakers.
The European economic data slate is empty on Monday.
China’s Shanghai Composite Index (SHCOMP) closed up +2.07%, while Japanese markets were closed for a holiday.
China’s Shanghai Composite Index closed higher today as investors assessed the impact of measures unveiled by the Finance Ministry to shore up the economy. Software stocks led the gains on Monday. Property stocks also advanced. Data from the National Bureau of Statistics released on Sunday showed that China’s consumer inflation unexpectedly slowed in September, while producer deflation deepened, indicating persistent deflationary pressures due to sluggish domestic demand. At a highly anticipated Saturday news conference, China’s Finance Minister Lan Fo’an pledged to bolster the property market, increase debt to support the economy, enhance banks’ capital to stimulate lending, and provide subsidies to low-income individuals, among other measures. However, he did not announce a headline monetary stimulus figure. Meanwhile, Goldman Sachs estimated that measures announced last week and on Saturday could potentially boost growth next year by 0.4 percentage points, leading the bank’s analysts to upgrade China’s real GDP growth forecast for 2025 from 4.3% to 4.7%. It also raised a 2024 real GDP growth forecast from 4.7% to 4.9%. In corporate news, GalaxyCore climbed over +6% after shipping its 50-megapixel image sensor products. Investor attention is currently centered on the release of Chinese third-quarter GDP figures as well as the next batch of data for September, including fixed asset investment, unemployment, industrial production, and retail sales, scheduled for Friday.
The Chinese September CPI has been reported at 0.0% m/m and +0.4% y/y, weaker than expectations of +0.4% m/m and +0.6% y/y.
The Chinese September PPI arrived at -2.8% y/y, weaker than expectations of -2.5% y/y.
Japan’s Nikkei 225 Stock Index was closed today for the Health-Sports Day holiday. The markets will reopen on Tuesday.
Pre-Market U.S. Stock Movers
Caterpillar (CAT) fell over -2% in pre-market trading after Morgan Stanley downgraded the stock to Underweight from Equal Weight with a price target of $332.
Applovin (APP) slid more than -3% in pre-market trading after Goldman Sachs downgraded the stock to Neutral from Buy.
SentinelOne (S) climbed over +4% in pre-market trading after Piper Sandler upgraded the stock to Overweight from Neutral with a price target of $32.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Monday - October 14th
Karooooo (KARO).
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