Five things you need to know before the market opens on Wednesday, November 2:
1. -- Stock Futures Edge Higher As Fed Decision Looms
U.S. equity futures edged modestly higher Wednesday, while the dollar slipped lower and Treasury yields firmed, as investors braced for a key meeting from the Federal Reserve later today that could dictate market direction for the remainder of the year.
Traders are fully expecting a 75 basis point rate hike later today in Washington, a move that would lift the benchmark Fed Funds rate to between 3.75% and 4% -- the highest since 2008 -- and mark the more aggressive policy tightening from any Federal Reserve since the Paul Volcker era of the early 1980s.
Central banks around the world, in fact, have been following the Fed's lead, with at least 244 different rate hikes put into place this year, a pace of nearly one per trading day, as policymakers fight some of the fastest inflation rates on record while attempting to ensure that a fragile post-pandemic economy doesn't slip back into recession.
And with the Fed decision on tap for later today, a Bank of England rate hike expected tomorrow in London, a key October jobs report slated for Friday and next week's U.S. mid-term elections on Tuesday, market now face an important stretch of five trading days that could determine whether the solid October rally -- in the case of the Dow, the best since 1976 -- can hold into the end of an otherwise difficult year.
Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500 are priced for a 12 point opening bell advance while those linked to the Dow Jones Industrial Average are priced for a 72 point gain. The tech-focused Nasdaq is priced for a 45 point bump.
In overseas markets, the Europe-wide Stoxx 600 up 0.42% in early Frankfurt trading, while London's FTSE 100 rose 0.2%, as traders sifted through another active session of earnings release and braced for the Fed decision after the clos of trading.
Overnight in Asia, the region-wide MSCI ex-Japan index was marked 0.8% higher as China stocks continued to rebound on the back of unconfirmed reports of easing lockdown restrictions, while Japan's Nikkei 225 edged 0.05% lower as the government again hinted at potential intervention in foreign exchange markets as the yen holds at near three-decade lows against the U.S. dollar.
2. -- Fed Preview: Pivot Unlikely As Powell Stays Focused On Inflation Fight
Investors looking for a clear signal that the Fed plans to slow, or perhaps even pause, its relentless rate hike path are likely to be disappointed when Chairman Jerome Powell lays out his inflation-fighting tactics later today.
Markets are in near unanimity the Powell and his colleagues will deliver another 75 basis point rate hike today in Washington, the fourth in succession, but are largely split as to how the Fed will move when it meets again in December, thanks in part to both suggestions of slowing inflation pressures and dovish signals from central banks -- which are still hiking rates -- in major economies around the world.
The Fed's preferred measure of inflation, the core PCE price index, eased modestly last month, but is still running at a 4.9% annual clip. Headline inflation is still within touching distance of the fastest pace in four decades, personal incomes are also moving higher, and the September JOLTS report suggest some 10.7 million positions remained unfilled, a precursor to faster wage growth over the final months of the year as holiday hiring intensifies.
"Evidence of fading (inflation) pressure in the pipeline is abundant, but it is yet to hit the numbers which the Fed Chair has said clearly on multiple occasions matter most, namely, the actual core inflation data," said Ian Shepherdson of Pantheon Macroeconomics. "The most he can give doves is a clear statement that the Fed will pivot as soon as the data move, but we doubt that will be enough to prevent disappointment among some investors."
The Fed will unveil its rate decision at 2:00 pm Eastern time, with Powell speaking to the media 30 minutes later in Washington.
3. -- AMD Leaps As Gaming, Data Center Chip Sales Impress in Q3
Advanced Micro Devices (AMD) shares jumped higher in pre-market trading after the chipmaker posted modestly weaker-than-expected third quarter earnings but noted solid gains in revenues for its gaming and data center businesses.
AMD said non-GAAP earnings for the quarter came in at 67 cents per share, an 8% decline from the same period last year that missed Street forecasts by a penny. Group revenues, AMD said, rose 30% to $5.6 billion, essentially matching analysts' forecasts following the chipmaker's warning on broader market demand earlier this month, with gaming up 13.7% and data center rising 45%.
Looking into the final months of the year, however, AMD said it sees quarterly revenue in the region of $5.5 billion, plus or minus $300 million, with gross margins rising to around 51% on sequential growth for gaminga and data centers. Refinitv estimates were looking for a revenue forecast of around $5.85 billion.
AMD shares were marked 4.86% higher in pre-market trading to indicate a Wednesday opening bell price of $62.56 each.
4. -- Mondelez Higher On Q3 Earnings Beat, Snack Price Hike Place
Mondelez International (MDLZ) shares moved firmly higher in pre-market trading after the chocolate and cookie maker posted better-than-expected third quarter earnings and boosted its full-year profit forecast.
Mondelez, perhaps best-known as the maker of Oreo cookies, said adjusted earnings for the three months ending in September rose 15.7% from last year to a Street-beating 74 cents per share. Group revenues, the company said were up 8.1% to $7.76 billion, again topping analysts estimates.
Mondelez said it sees organic revenues rising 10% from last year's levels in the fourth quarter, a 2 percentage point boost from its prior guidance, with adjusted profits rising by the same pace as it passes on higher snack prices in the face of surging consumer inflation.
The group, which also makes Chips Ahoy cookies, Philadelphia cream cheese and Ritz crackers, said it plans to put further U.S. prices hikes in place next month with increases in Europe planned for next year.
Mondelez shares were marked 3.77% higher in pre-market trading to indicate an opening bell price of $64.20 each.
5. -- AirBnb Slumps As Muted Outlook Clouds, Dollar Surge Solid Q3 Earnings
Airbnb (ABNB) shares slumped lower in pre-market trading after the the home rental and experience booking group forecast muted near-term sales that offset a solid third quarter earnings report.
Airbnb posted a 28.9% increase in overall third quarter earnings, which came in at $2.88 billion, amid record overall bookings that nearly hit the 100 million nights mark for the three months ending in September.
Looking into the final months of the year, however, the group said travel would moderate -- and remain domestically focused -- and forecast revenues in the region of $1.8 billion to $1.88 billion. Airbnb said the longer term booking recovery would be "choppy", with a surging U.S. dollar hitting its overseas revenues, which comprise around half of its overall top line.
Airbnb shares were marked 5.6% lower in pre-market trading to indicate an opening bell price of $102.90 each.
