December Nasdaq 100 E-Mini futures (NQZ24) are trending down -0.23% this morning as Treasury yields continued to rise on the prospect of less aggressive Federal Reserve interest rate cuts, while investors awaited a slew of corporate earnings reports, with a particular focus on results from “Magnificent Seven” member Tesla.
In yesterday’s trading session, Wall Street’s main stock indexes ended little changed. Philip Morris International (PM) surged over +10% and was the top percentage gainer on the S&P 500 after the company posted upbeat Q3 results and lifted its full-year EPS forecast. Also, General Motors (GM) climbed more than +9% after the legacy carmaker reported stronger-than-expected Q3 results and raised the lower end of its full-year adjusted EPS guidance. In addition, Zions Bancorporation (ZION) advanced over +6% after reporting better-than-expected Q3 adjusted net interest income. On the bearish side, Genuine Parts Co. (GPC) tumbled about -21% and was the top percentage loser on the S&P 500 after cutting its full-year adjusted EPS guidance. Also, Verizon Communications (VZ) slid over -5% and was the top percentage loser on the Dow after the telecom giant reported weaker-than-expected Q3 revenue.
Economic data released on Tuesday showed that the U.S. Richmond Fed manufacturing survey rose to a 4-month high of -14 in October, stronger than expectations of -19.
Meanwhile, the International Monetary Fund noted that the U.S. election is creating “high uncertainty” for markets and policymakers due to the starkly different trade priorities of the candidates. Investors continue to worry that, no matter who wins the presidential election, there will probably be a rise in both the government’s fiscal deficit and the issuance of bonds, some analysts say.
Third-quarter corporate earnings season rolls on, with investors awaiting new reports from prominent companies today, including Tesla (TSLA), Coca-Cola (KO), T-Mobile US (TMUS), Thermo Fisher Scientific (TMO), International Business Machines (IBM), ServiceNow (NOW), AT&T (T), and Boeing (BA). According to Bloomberg Intelligence, companies in the S&P 500 are expected to post an average +4.3% increase in quarterly earnings for Q3 compared to the previous year, down from +7.9% growth projected in mid-July.
On the economic data front, investors will focus on U.S. Existing Home Sales data, which is set to be released in a couple of hours. Economists, on average, forecast that September existing home sales will stand at 3.88M, compared to 3.86M in August.
U.S. Crude Oil Inventories data will also be reported today. Economists estimate this figure to be 0.800M, compared to last week’s value of -2.191M.
In addition, market participants will be looking toward speeches from Fed Governor Michelle Bowman and Richmond Fed President Thomas Barkin.
Later today, the Federal Reserve will release its Beige Book survey of regional business contacts, which provides an update on economic conditions in each of the 12 Federal Reserve districts. The Beige Book is published two weeks before each meeting of the policy-setting Federal Open Market Committee.
U.S. rate futures have priced in an 88.9% chance of a 25 basis point rate cut and an 11.1% chance of no rate change at the next central bank meeting in November.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.239%, up +0.74%.
The Euro Stoxx 50 futures are down -0.36% this morning as investors digested a mixed bag of corporate earnings reports. Mining, bank, and chemical stocks underperformed on Wednesday. Meanwhile, European Central Bank President Christine Lagarde stated on Tuesday that the ECB will keep reducing its key interest rate in upcoming meetings while noting that the pace of the reduction has not yet been determined. “The direction of travel, clear,” Lagarde said. “Pace, to be determined.” In other news, the International Monetary Fund said Tuesday that the German economy, Europe’s largest, will stagnate this year, lowering its previous forecast of 0.2% growth. In corporate news, L’Oreal (OR.FP) slumped over -3% after the French cosmetics giant’s third-quarter sales disappointed due to weak demand in China. Also, Deutsche Bank Ag (DBK.D.DX) fell more than -2% after Germany’s largest lender warned of significant credit losses in 2024. At the same time, Heineken (HEIA.NA) gained over +2% after reporting better-than-expected Q3 organic net revenue growth and reiterating its full-year outlook. Investor attention is now on Eurozone consumer confidence data for October, which is set to be released later in the session.
Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.52%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.80%.
China’s Shanghai Composite Index closed higher today, rising for the fourth consecutive session, buoyed by optimism over corporate earnings following a raft of Beijing’s stimulus measures and a proposal from a government-backed think tank for a market stabilization fund. Insurance and automobile stocks led the gains on Wednesday. Meanwhile, a top government-linked think tank urged authorities to issue 2 trillion yuan ($281 billion) of special government bonds to establish a market stabilization fund. The fund would enhance market stability by purchasing and selling blue-chip stocks and exchange-traded funds, reported Chinese media outlet The Paper, citing a release from the Institute of Finance & Banking at the Chinese Academy of Social Sciences. That think tank is associated with the State Council, China’s cabinet. Reuters reported that People’s Bank of China Governor Pan Gongsheng told reporters that the proposal will be studied. In corporate news, China Longyuan Power gained over +4% in Hong Kong after agreeing to purchase equity stakes in eight energy companies from its controlling shareholder, China Energy Investment, for 1.69 billion yuan. Investors are awaiting Beijing’s implementation of fiscal stimulus measures to complement its monetary easing efforts. The standing committee of the National People’s Congress is set to convene in the coming weeks to discuss issues such as government spending and sovereign bond sales.
Japan’s Nikkei 225 Stock Index closed lower today, reversing earlier gains as caution prevailed ahead of the nation’s general election this weekend. Financial, industrial, and technology stocks led the declines on Wednesday. At the same time, automobile stocks outperformed as the yen weakened past the 152 per dollar level for the first time in about three months. Meanwhile, rising global bond yields also weighed on sentiment, with Japan’s longer-dated bond yields inching higher amid worries about the country’s fiscal expansion and political uncertainties ahead of the election. Polls indicated that the ruling Liberal Democratic Party and its coalition partner Komeito might lose their majority in the upcoming election. In corporate news, shares of Japanese subway operator Tokyo Metro surged +44% in their market debut on Wednesday after raising 348.6 billion yen ($2.3 billion) in Japan’s largest initial public offering in six years. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +2.13% to 27.80.
Pre-Market U.S. Stock Movers
McDonald’s (MCD) slumped over -6% in pre-market trading after the U.S. Centers for Disease Control and Prevention said that a severe E. coli outbreak linked to the company’s Quarter Pounders sickened dozens of people in the U.S.
Starbucks (SBUX) slid more than -5% in pre-market trading after the company reported weaker-than-expected preliminary Q4 results and pulled guidance for 2025.
Qualcomm (QCOM) fell over -5% in pre-market trading following a Bloomberg report that Arm is considering scrapping a key license for the chipmaker.
Texas Instruments (TXN) rose more than +3% in pre-market trading after the semiconductor company reported better-than-expected Q3 results.
Snap (SNAP) gained over +2% in pre-market trading after JMP Securities upgraded the stock to Outperform from Market Perform with a $17 price target.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Wednesday - October 23rd
Tesla (TSLA), Coca-Cola (KO), T-Mobile US (TMUS), Thermo Fisher Scientific (TMO), IBM (IBM), ServiceNow (NOW), NextEra Energy (NEE), AT&T (T), Boeing (BA), General Dynamics (GD), CME Group (CME), Amphenol (APH), Canadian Pacific Kansas City (CP), O’Reilly Automotive (ORLY), Newmont Goldcorp (NEM), Roper Technologies (ROP), Hilton Worldwide (HLT), United Rentals (URI), Ameriprise Financial (AMP), Waste Connections (WCN), Vertiv Holdings Co (VRT), Las Vegas Sands (LVS), Westinghouse Air Brake (WAB), Raymond James Financial (RJF), Veralto (VLTO), Tyler Technologies (TYL), Rollins (ROL), Lennox (LII), Teledyne Technologies (TDY), TransUnion (TRU), Teradyne (TER), Northern Trust (NTRS), Watsco (WSO), Avery Dennison (AVY), Molina Healthcare (MOH), Align (ALGN), Morningstar (MORN), Graco (GGG), Evercore (EVR), CACI (CACI), MakeMyTrip (MMYT), New Oriental Education&Tech (EDU), Annaly Capital Management (NLY), Stifel (SF), Globe Life (GL), Churchill Downs (CHDN), KBR (KBR), SEI (SEIC), EastGroup Properties (EGP), Knight-Swift Trans (KNX), Lithia Motors (LAD), South State (SSB), Popular (BPOP), Viking Therapeutics Inc (VKTX), Prosperity Bancshares (PB), Taylor Morrison Home (TMHC), MSA Safety (MSA), First American (FAF), Wyndham Hotels (WH), Impinj (PI), Mattel (MAT), Weatherford (WFRD), Pegasystems (PEGA), Essential Properties (EPRT), Mr. Cooper (COOP), Whirlpool (WHR), Moelis & Co (MC), SLM (SLM), Vista Oil Gas (VIST), ASGN (ASGN), Western Union (WU), Plexus (PLXS), Unifirst (UNF), Goosehead Insurance (GSHD), United Community Banks (UCB), First Bancorp (FBP), Blackstone Mortgage (BXMT), Travel + Leisure Co (TNL), Patterson-UTI Energy (PTEN), Century Communities (CCS), Quantumscape (QS), Oceaneering International (OII), Nextera Energy Partners LP (NEP), Constellium Nv (CSTM), Equity Commonwealth (EQC), Live Oak Bancshares Inc (LOB), WesBanco (WSBC), PROG Holdings (PRG), Stewart Info Services (STC), Getty (GTY), Pathward Financial (CASH).
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