Morning Markets
December E-Mini S&P 500 futures (ESZ23) are up +0.37%, and Dec Nasdaq 100 E-Mini futures (NQZ23) are up +0.23%.
Stock index futures this morning are mildly higher after Treasury yields plunged on this morning’s weaker-than-expected U.S. unemployment report. The 10-year T-note yield is down by another -12 bp at 4.54% this morning, adding to the combined -28 bp plunge seen on Wednesday and Thursday. The 2-year T-note yield this morning is down -13 bp at a 2-month low of 4.86%.
Today’s U.S. unemployment report showed a weaker-than-expected labor market and supported this week’s theme that the Fed is likely done raising interest rates. Oct U.S. payrolls rose by +150,000, weaker than expectations of +180,000. Also, Sep payrolls were revised lower to +297,000 from +336,000.
Meanwhile, the Oct U.S. unemployment rate rose by +0.1 points to a 1-3/4 year high of 3.9%, which showed a slightly weaker labor market than expectations for an unchanged rate of 3.8%. On the positive side for inflation, Oct average hourly earnings rose +0.2% m/m, which was slightly weaker than expectations of +0.3%, although the Oct year-on-year figure of +4.1% m/m was slightly stronger than expectations of +4.0%.
The markets are looking ahead to this morning’s Oct ISM services index (10 am ET), which is expected to show a -0.6 point decline to 53.0 from 53.6 in September.
The markets are discounting a 10% chance for a +25 bp rate hike at the next FOMC meeting on Dec 12-13 FOMC and a 6% chance for that +25 bp rate hike at the following FOMC meeting on Jan 30-31, 2024. The markets are then expecting the FOMC to begin cutting rates later in 2024 in response to an expected slowdown in the U.S. economy.
Stocks have underlying support from the generally favorable Q3 earnings season. Of the S&P 500 companies reporting thus far, 82% have beaten the consensus, better than the year-earlier figure of 72%.
The Sep Eurozone unemployment rate rose by +0.1 point to 6.5%, which showed a slightly weaker labor market than expectations for an unchanged unemployment rate of 6.4%.
The German trade report showed economic weakness, with Sep exports falling -2.4% m/m and imports falling -1.7% m/m, weaker than expectations of -2.0% and -0.1%, respectively. The Sep trade surplus of 16.5 billion euros was slightly larger than expectations of 16.3 billion euros, but was down from Aug’s revised 17.7 billion euros.
French Sep industrial production fell -0.5% m/m and -0.1% y/y, weaker than expectations of unchanged for both figures. Sep manufacturing production fell -0.4% m/m and -0.9% y/y, which was weaker than expectations of +0.1% m/m.
Overseas stock markets are higher. The Euro Stoxx 50 is up +0.33%. China’s Shanghai Composite Index today closed up +0.71%. Japan’s stock market today was closed for the Culture Day national holiday.
Pre-Market U.S. Stock Movers
Apple (AAPL) is down -1.5% in pre-market trading after the company, in its earnings report late Thursday, reported weaker than expected revenue from China and management downplayed expectations for holiday sales.
Bill Holdings (BILL) plunged -29% in pre-market trading on disappointing management guidance on revenue and full-year earnings projections.
Block (SQ) is sharply higher by +17% in pre-market trading on a Q3 earnings beat and a hike in its full-year guidance.
Coinbase (COIN) is down -3.5% as disappointment about reduced Q3 trading volume outweighed a revenue beat.
Expedia (EXPE) is up +9% in pre-market trading after a Q3 earnings beat and the announcement of a $5 billion stock buyback program.
Nio (NIO) is up +3.9% in pre-market trading after saying it plans to cut jobs and might spin off non-core divisions to cut costs and boost margins.
Earnings Reports (11/3/2023)
AES Corp/The (AES), Cardinal Health Inc (CAH), Cboe Global Markets Inc (CBOE), Church & Dwight Co Inc (CHD), Dominion Energy Inc (D), EOG Resources Inc (EOG), Eversource Energy (ES), Gartner Inc (IT), Johnson Controls International (JCI), Sempra (SRE).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
