December S&P 500 futures (ESZ23) are up +0.14%, and December Nasdaq 100 E-Mini futures (NQZ23) are down -0.11% this morning as investors digested weaker-than-expected business activity readings from China and the Bank of Japan’s monetary policy decision, with the focus shifting to the Federal Reserve’s monetary policy committee meeting and rate decision.
In Monday’s trading session, Wall Street’s major averages closed in the green. Western Digital Corporation (WDC) climbed over +7% after the memory chipmaker said it would separate its hard drive and flash memory businesses into two independent public companies. Also, megacap growth stocks gained ground, with Alphabet Inc (GOOGL), Microsoft Corporation (MSFT), and Meta Platforms Inc (META) rising about +2%. In addition, McDonald’s Corporation (MCD) rose over +1% after the fast food giant reported upbeat Q3 results. On the bearish side, ON Semiconductor Corporation (ON) slumped more than -21% and was the top percentage loser on the S&P 500 after issuing weaker-than-expected Q4 guidance.
Meanwhile, the U.S. Treasury lowered its federal borrowing estimate for the current quarter, citing stronger-than-expected revenue.
Third-quarter corporate earnings season is gathering pace, with notable companies like Pfizer (PFE), AMD (AMD), Amgen (AMGN), and Caterpillar (CAT) set to report their quarterly figures today. Analysts expect aggregate S&P 500 earnings to notch a 4.3% year-over-year growth for the quarter.
The Federal Reserve kicks off its two-day meeting later in the day, with investors widely expecting the U.S. central bank to keep rates on hold Wednesday. Also, investors will be closely attentive to the post-decision press conference by Fed Chair Jerome Powell.
“I think the Fed is going to hold interest steady on Wednesday, and the market would be looking for some indication that they’re done raising rates for the year. Powell and the other members are probably content to let the cumulative effect of past rate increases appear, and unless there’s data contradicting the direction of inflation, they’re probably done,” said Joseph Sroka, chief investment officer at NovaPoint.
In other news, Israel struck targets in Lebanon Tuesday and escalated its ground operations in Gaza, with Prime Minister Benjamin Netanyahu rejecting the possibility of a ceasefire.
Today, all eyes are focused on U.S. CB Consumer Confidence data in a couple of hours. Economists, on average, forecast that October CB Consumer Confidence will come in at 100.0, compared to the previous value of 103.0.
Also, investors will likely focus on the U.S. Chicago PMI, which stood at 44.1 in September. Economists foresee the October figure to be 45.0.
U.S. S&P/CS HPI Composite - 20 n.s.a. will come in today. Economists expect August’s figure to be +1.6% y/y, compared to the previous number of +0.1% y/y.
The U.S. Employment Cost Index will be reported today as well. Economists foresee this figure to stand at +1.0% q/q in the third quarter, compared to the second-quarter number of +1.0% q/q.
In the bond markets, United States 10-year rates are at 4.835%, down -0.90%.
The Euro Stoxx 50 futures are up +0.87% this morning as investors digested a slew of economic data and corporate earnings reports ahead of the Federal Reserve’s policy decision this week. Gains in real estate and chemical stocks are leading the overall market higher. A preliminary reading showed on Tuesday that Eurozone inflation reached its lowest point in more than two years in October, primarily due to declining energy prices and reduced demand resulting from the European Central Bank’s high interest rates. Separately, a flash estimate showed on Tuesday that Eurozone economic growth was weaker than anticipated in the third quarter. In corporate news, BP Plc (BP-.LN) slid over -4% after the oil major missed Q3 profit estimates. At the same time, Ab Inbev (ABI.BB) rose more than +2% after reiterating its full-year profit forecast. Also, Rolls-Royce Holdings Plc (RR-.LN) gained over +4% after Barclays upgraded the stock to Overweight from Equal Weight.
France’s GDP (preliminary), France’s CPI (preliminary), Germany’s Retail Sales, Italy’s GDP (preliminary), Italy’s CPI (preliminary), Eurozone’s CPI (preliminary), Eurozone’s Core CPI (preliminary), and Eurozone’s GDP (preliminary) data were released today.
The French GDP has been reported at +0.1% q/q in the third quarter, in line with expectations.
The French October CPI came in at +0.1% m/m and +4.0% y/y, compared to expectations of +0.2% m/m and +4.0% y/y.
The German September Retail Sales stood at -0.8% m/m and -4.3% y/y, weaker than expectations of +0.5% m/m and -4.0% y/y.
The Italian GDP came in at 0.0% q/q and 0.0% y/y in the third quarter, weaker than expectations of +0.1% q/q and +0.1% y/y.
The Italian October CPI was at -0.1% m/m and +1.8% y/y, compared to expectations of +0.2% m/m and +0.3% y/y.
Eurozone October CPI arrived at +0.1% m/m and +2.9% y/y, weaker than expectations of +0.3% m/m and +3.1% y/y.
Eurozone October Core CPI came in at 4.2% y/y, in line with expectations.
Eurozone GDP has been reported at -0.1% q/q and +0.1% y/y in the third quarter, weaker than expectations of 0.0% q/q and +0.2% y/y.
Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.09%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.53%.
China’s Shanghai Composite today closed slightly lower, snapping a five-day winning streak as weak manufacturing activity data from the country weighed on sentiment. Data from the National Bureau of Statistics showed on Tuesday that China’s manufacturing activity unexpectedly contracted in October, while non-manufacturing growth slowed substantially, casting a cloud over recent indicators suggesting a nascent recovery in the world’s second-largest economy. Meanwhile, automobile and solar power stocks led the decline on Tuesday. Tech giants and mainland developers listed in Hong Kong also slumped. On the positive side, Bank of China Ltd. rose more than +1% following its third-quarter results. In other news, foreign investors offloaded a net total of 4.7 billion yuan in Chinese shares through the Stock Connect program on Tuesday.
“The October manufacturing PMI falling into contraction territory looks to be disappointing markets and raises some doubts on the strength of the macro recovery,” said Marvin Chen, an analyst at Bloomberg Intelligence in Hong Kong.
The Chinese October Manufacturing PMI stood at 49.5, weaker than expectations of 50.2.
The Chinese October Non-Manufacturing PMI came in at 50.6, weaker than expectations of 51.8.
Japan’s Nikkei 225 Stock Index closed higher today after the Bank of Japan kept interest rates negative and made only minor changes to its yield curve control policy. The BOJ maintained its short-term interest rate target unchanged at -0.1% on Tuesday and said the target level of the 10-year Japanese government bond yield will be held at 0%. However, there was a shift in the language regarding the 1% yield cap, now referring to it as “a reference point” rather than a more rigidly set cap. Financial stocks led the gains on Tuesday following the BOJ’s keenly awaited policy decision, while the yen fell the most in two months. Meanwhile, data showed on Tuesday that Japanese industrial production and retail sales grew less than expected in September. In corporate news, Panasonic Holdings Corp tumbled over -8% after slashing the profit outlook at its EV battery unit. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -7.09% to 22.03.
The Japanese September Jobs/applications ratio stood at 1.29, weaker than expectations of 1.30.
The Japanese September Unemployment Rate was at 2.6%, in line with expectations.
The Japanese September Industrial Production came in at +0.2% m/m, weaker than expectations of +2.5% m/m.
The Japanese September Retail Sales arrived at +5.8% y/y, weaker than expectations of +5.9% y/y.
Pre-Market U.S. Stock Movers
Pinterest Inc (PINS) soared over +16% in pre-market trading after the company reported upbeat Q3 results.
NVIDIA Corporation (NVDA) fell about -0.5% in pre-market trading following a report by the Wall Street Journal, which indicated that the latest U.S. export restrictions on high-end chips could potentially lead the company to cancel orders worth billions of dollars destined for China next year.
Lattice Semiconductor Corporation (LSCC) tumbled over -17% in pre-market trading after providing weaker-than-expected Q4 revenue guidance.
Wolfspeed Inc (WOLF) climbed more than +15% in pre-market trading after the company issued stronger-than-expected Q2 guidance.
Western Digital Corporation (WDC) slid over -4% in pre-market trading after announcing a proposed offering of $1.3 billion aggregate principal amount of convertible senior notes due 2028.
Chewy Inc (CHWY) rose more than +2% in pre-market trading after Morgan Stanley upgraded the stock to Overweight from Equal Weight.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Tuesday - October 31st
Pfizer (PFE), AMD (AMD), Amgen (AMGN), Caterpillar (CAT), Eaton (ETN), Marathon Petroleum (MPC), Enterprise Products Partners LP (EPD), Stellantis NV (STLA), Ecolab (ECL), Ambev SA (ABEV), ONEOK (OKE), MSCI (MSCI), Sysco (SYY), Ametek (AME), Ares Management (ARES), Public Service Enterprise (PEG), Global Payments (GPN), WEC Energy (WEC), Yum China Holdings (YUMC), Xylem (XYL), Equity Residential (EQR), Cameco (CCJ), Sirius XM (SIRI), Hubbell (HUBB), First Solar (FSLR), Paycom Soft (PAYC), Leidos (LDOS), Incyte (INCY), Chesapeake Energy (CHK), Franklin Resources (BEN), Zebra (ZBRA), Neurocrine (NBIX), Unum (UNM), Match Group (MTCH), Axa Equitable (EQH), Bio-Techne (TECH), Caesars (CZR), AGCO (AGCO), Assurant (AIZ), Voya Financial Inc (VOYA), Topbuild Corp (BLD), Noble (NE), Repligen (RGEN), Graphic Packaging (GPK), Cognex (CGNX), Ufp Industries (UFPI), EnLink Midstream LLC (ENLC), Littelfuse (LFUS), IGT (IGT), Sensata Tech (ST), Freshworks (FRSH), Sonoco Products (SON), MGIC Investment (MTG), Zurn Water Solutions (ZWS), Phillips Edison Co (PECO), Sprouts Farmers (SFM), Huntsman (HUN), Meritage (MTH), IPG Photonics (IPGP), Equitrans Midstream (ETRN), Insperity (NSP), Blackbaud (BLKB), Skyline (SKY), Consol Energy (CEIX), Advanced Energy (AEIS), PJT Partners Inc (PJT), CommVault (CVLT), Livent (LTHM), Artisan Partners AM (APAM), Kadant (KAI), Hayward Holdings (HAYW), USA Compression Partners LP (USAC), O-I Glass (OI), Enpro Industries (NPO), LXP Industrial Trust (LXP), Dorman (DORM), Gulfport Energy Operating (GPOR), Douglas Emmett (DEI), Macerich (MAC), LGI Homes (LGIH), Banco Itau Chile (ITCL), Perficient (PRFT), Green Brick Partners Inc (GRBK), Urban Edge Properties (UE), Green Plains Energy (GPRE), Mercury General (MCY), HNI (HNI), Granite Construction (GVA), Lumen Technologies (LUMN), Equinox Gold (EQX), Claros Mortgage Trust (CMTG), Tennant (TNC), JetBlue (JBLU), Vita Coco (COCO), Xenia Hotels & Resorts Inc (XHR), Shutterstock (SSTK), Global Industrial Co (GIC), John B Sanfilippo&Son (JBSS), Harmony Bio (HRMY), Centerra Gold (CGAU), Kiniksa Pharma (KNSA).
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