December S&P 500 futures (ESZ23) are up +0.21%, and December Nasdaq 100 E-Mini futures (NQZ23) are up +0.25% this morning as market participants looked ahead to more corporate earnings reports and Federal Reserve Chair Jerome Powell’s speech later in the week.
In Friday’s trading session, Wall Street’s major averages ended in the green. Expedia Inc (EXPE) surged over +18% and was the top percentage gainer on the benchmark S&P 500 after the company reported stronger-than-expected Q3 results and announced a $5B share buyback program. Also, Block Inc (SQ) soared more than +10% after the company posted upbeat Q3 results, announced a $1B stock buyback program, and boosted its annual adjusted profit forecast. In addition, Paramount (PARA) gained over +15% after the media and entertainment company reported better-than-expected Q3 results thanks to positives in its streaming business. On the bearish side, Fortinet Inc (FTNT) plunged more than -12% after the cybersecurity firm provided downbeat Q4 billings and revenue guidance.
The U.S. Labor Department’s report on Friday showed that the U.S. economy added 150K jobs last month, versus an expected figure of 180K and significantly lower than the 297K jobs added in September. Also, U.S. October average hourly earnings came in at +0.2% m/m and +4.1% y/y, compared to expectations of +0.3% m/m and +4.0% y/y. In addition, the U.S. unemployment rate ticked up to a 1-3/4 year high of 3.9% in October from 3.8% in September. Finally, the U.S. October ISM services index dropped to a 5-month low of 51.8, weaker than expectations of 53.0.
“From a policy perspective this gives confidence the Fed remains on hold for the foreseeable future and only really hikes again if growth or inflation accelerates from here,” said Matt Palazzolo, senior investment strategist at Bernstein Private Wealth Management.
Minneapolis Fed President Neel Kashkari stated on Friday that while a hiring slowdown is seen as positive news for the central bank, he doesn’t want to overreact to the data from just one month. Richmond Fed President Thomas Barkin had similar thoughts on the recent jobs data, indicating that his decision on whether to raise rates further will be more influenced by inflation reports.
U.S. rate futures have priced in a 9.6% probability of a 25 basis point rate hike at the December meeting and a 16.3% chance of a 25 basis point rate increase at the January meeting.
Third-quarter earnings season rolls on, and investors await new reports from major global companies this week, including Walt Disney (DIS), Gilead Sciences (GILD), Uber Technologies (UBER), eBay (EBAY), and Warner Bros. Discovery (WBD).
Meanwhile, Federal Reserve Chairman Jerome Powell will speak at a panel at the IMF’s annual research conference on Thursday. European Central Bank President Christine Lagarde, Bank of Japan Governor Kazuo Ueda, and Bank of England Governor Andrew Bailey will also deliver speeches this week.
In the coming week, investors will be monitoring a spate of economic data, including the U.S. Exports, Imports, Trade Balance, Wholesale Inventories, Crude Oil Inventories, Initial Jobless Claims, and Michigan Consumer Sentiment (preliminary).
In addition, several Fed officials will be making appearances this week, including Cook, Waller, Williams, Logan, and Jefferson.
In other news, oil rose over +1% after Saudi Arabia and Russia reaffirmed their commitment to maintaining production cuts until the end of the year.
The U.S. economic data slate is mainly empty on Monday. However, investors will likely focus on the release of the Federal Reserve Senior Loan Officer Opinion Survey.
In the bond markets, United States 10-year rates are at 4.591%, up +0.75%.
The Euro Stoxx 50 futures are down -0.29% this morning as investors digested important data on regional business activity while awaiting more earnings reports and a host of ECB speakers. Losses in real estate stocks are leading the overall market lower. At the same time, travel stocks outperformed on Monday, with Ryanair Holdings Plc (RYA.I.DX) climbing over +6% after Europe’s largest airline by passenger numbers projected a record full-year profit and promised a regular dividend pay. According to a survey released on Monday, the decline in Eurozone business activity intensified in the previous month, with demand in the dominant services industry continuing to weaken, raising the likelihood of an impending recession. In other corporate news, Melrose Industries Plc (MRO.LN) rose more than +4% after the aerospace supplier said its unit GKN Aerospace Engines expanded its long-term partnership with GE Aerospace.
Germany’s Factory Orders, Spain’s Services PMI, Italy’s Services PMI, France’s Services PMI, Germany’s Services PMI, Eurozone’s Composite PMI, and Eurozone’s Services PMI data were released today.
The German September Factory Orders stood at +0.2% m/m, stronger than expectations of -1.0% m/m.
The Spanish October Services PMI arrived at 51.1, stronger than expectations of 49.3.
The Italian October Services PMI was at 47.7, weaker than expectations of 48.5.
The French October Services PMI stood at 45.2, weaker than expectations of 46.1.
The German October Services PMI was at 48.2, stronger than expectations of 48.0.
Eurozone October Composite PMI has been reported at 46.5, in line with expectations.
Eurozone October Services PMI stood at 47.8, in line with expectations.
Asian stock markets today settled in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.91%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +2.37%.
China’s Shanghai Composite today closed higher, driven by optimism that major central banks are done with interest rate hikes, while investors also geared up for upcoming economic readings from the country. China’s top leaders have pledged to restore confidence in the stock market, and the Ministry of State Security emphasized on Friday that maintaining financial stability is an integral aspect of national security. Adding to the positive sentiment, Chinese Premier Li Qiang announced on Sunday that China intends to further expand market access and increase imports. Meanwhile, IT and healthcare stocks outperformed on Monday. Chinese technology giants and property developers listed in Hong Kong also surged. In other news, China’s most recent balance of payments data revealed that the country recorded its first-ever quarterly deficit in foreign direct investment. Investor focus this week is squarely on crucial trade and inflation readings from Asia’s largest economy.
Japan’s Nikkei 225 Stock Index closed sharply higher and hit a more than 1-month high today, tracking Friday’s Wall Street rally after weaker-than-expected U.S. payrolls data boosted hopes that the Federal Reserve was done with its rate-hike campaign. Chip stocks led the gains on Monday, with Advantest surging over +8% and Tokyo Electron rising more than +2%. A business survey showed on Monday that Japan’s services activity expanded at the slowest pace this year in October, raising concerns about the ongoing softening of the key sector driving economic growth. Meanwhile, Bank of Japan Governor Kazuo Ueda said Monday that the central bank is steadily advancing towards its inflation goal. In corporate news, Sanrio soared over +7% after the owner of the Hello Kitty character boosted its annual profit guidance. At the same time, Kawasaki Kisen Kaisha Ltd tumbled more than -11% after the shipping firm slashed its full-year profit forecast. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +0.75% to 20.16.
The Japanese October Services PMI came in at 51.6, stronger than expectations of 51.1.
Pre-Market U.S. Stock Movers
Tesla Inc (TSLA) climbed more than +2% in pre-market trading following a Reuters report indicating the company’s plans to produce a new, more affordable electric car model in Germany.
Gamida Cell Ltd (GMDA) surged over +4% in pre-market trading after presenting new data on the impact of the company’s proprietary nicotinamide technology on its allogeneic stem cell therapy omidubicel and investigational natural killer cell therapy candidate GDA-201.
Lucid Group Inc (LCID) rose more than +1% in pre-market trading after the company reduced the price of its Air luxury sedans for a limited time ahead of the upcoming holiday season.
Bank of America Corp (BAC) gained about +0.8% in pre-market trading after Keefe Bruyette upgraded the stock to Market Perform from Underperform.
Nutrien Ltd (NTR) fell nearly -1% in pre-market trading after JPMorgan downgraded the stock to Neutral from Overweight.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Monday - November 6th
Vertex (VRTX), Itau Unibanco (ITUB), NXP (NXPI), Constellation Energy (CEG), Realty Income (O), Diamondback (FANG), Coterra Energy (CTRA), IFF (IFF), Celanese (CE), Aspen (AZPN), Essential Utilities (WTRG), Shockwave Medical (SWAV), TIM Participacoes (TIMB), CCC Intelligent Solutions Holdings (CCCS), Coherent (COHR), Fabrinet (FN), FS KKR Capital (FSK), Ryman Hospitality Properties (RHP), AAON (AAON), Halozyme (HALO), Viper Energy Ut (VNOM), Affiliated Managers (AMG), Teradata (TDC), Hilton Grand Vacations (HGV), Air Lease (AL), Cabot Corp (CBT), Tidewater (TDW), Goodyear Tire & Rubber Co (GT), Kosmos Energy (KOS), Guardant Health (GH), Stepstone (STEP), Sabra (SBRA), Knife River (KNF), Crane NXT (CXT), American States Water (AWR), Sanmina (SANM), DISH Network (DISH), Freshpet Inc (FRPT), CNO Financial (CNO), Albany (AIN), Ringcentral Inc (RNG), Tanger Factory Outlet Centers (SKT), Enovis (ENOV), ICU Medical (ICUI), Revolution Med (RVMD), Treehouse Foods (THS), ACV Auctions (ACVA), Sterling Construction (STRL), Alteryx (AYX), Highpeak Energy Acquisition (HPK), Crescent Energy (CRGY), Tripadvisor (TRIP), Mueller Water Products (MWA), Par Pacific Holdings (PARR), NeoGenomics (NEO), Talos Energy (TALO), Paymentus (PAY), EverCommerce (EVCM), AssetMark (AMK), Tecnoglass (TGLS), V2X Inc (VVX), Ameresco (AMRC), CoreCivic (CXW), Janus International Group (JBI), Air Transport Services (ATSG), Veeco (VECO), TransMedics (TMDX), Alphatecs (ATEC), Hims Hers Health (HIMS), Diamond Offshore Drilling (DO), EchoStar (SATS), Service Properties (SVC), Phinia (PHIN), Rover (ROVR), Jeld-Wen Holding (JELD), Skyward Specialty Insurance (SKWD), Opko Health (OPK), Bain Capital Specialty Finance (BCSF), Apartment Invest (AIV).
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