Five things you need to know before the market opens on Thursday November 10:
1. -- Stock Futures Nudge Higher, Eyeing CPI Data and Crypto Fallout
U.S. equity futures edged cautiously higher Thursday as investors looked to a key inflation reading prior to the start of trading while closely-tracking developments in cryptocurrency markets over concerns of contagion from the potential multi-billion dollar collapse of the FTX exchange.
FTX is facing both the specter of near-term bankruptcy, as well as reported investigation from federal authorities -- including the Department of Justice -- that could spill-over into the mainstream financial markets over the coming weeks as investors extract leverage and exposure to the increasingly volatile sector.
That risk was evident in movements in U.S. Treasury bond yields overnight, with benchmark 10-year paper falling to 4.095% as investors moved cash into riskless assets both the isolate from any crypto fallout and in advance of the October consumer price inflation reading at 8:30 am Eastern time.
The U.S. dollar index, another indicator of a defensive tenor in the market, rose 0.08% in overnight trading to 110.646.
Investors are also tacking the slow-moving process of tabulating results from Tuesday's mid-term elections, which now look set to deliver a narrow Republican majority in the House -- where GOP lawmakers have secured at least 210 seats -- and a run-off in Georgia on December 6 between Democrat Raphael Warnock and Republican challenger Herschel Walker that will decide the fate of the Senate.
Overnight in China, news of another surge in Covid infections, despite the country's strict policies, rattled investors once again as the number of confirmed cases rose to the highest levels since April and spread more broadly across the country's industrial base in the southeast.
Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500 are set to claw back some of last night's losses with a modest 3 point opening bell gain while those linked to the Dow Jones Industrial Average, which closed 646 points lower last night, show a 15 point bump. The tech-focused Nasdaq is called 23 points higher.
In overseas markets, China stocks extended declines for a third consecutive session the back of accelerating Covid infections, while the region-side MSCI ex-Japan index was marked 1.43% lower heading into the close of trading.
In Europe, the Stoxx 600 fell 0.15% as it tracked U.S. equity futures while Britain's FTSE 100 was marked 0.17% lower in the opening hours of trading in London.
2. -- Mixed October Inflation Data Unlikely To Alter Fed Rate Path
Headline inflation is forecast to have slowed modestly last month, data from the Commerce Department is expected to indicate later this morning, but the easing of pressure buried in the CPI data likely won't provide compelling evidence for the Federal Reserve to alter its relentless rate hike projections.
Analysts expect a headline annual reading of 8%, down from the 8.2% recorded over the month of 8.2%, with a monthly increase of 0.6% tied to higher gasoline and food prices. So-called core inflation, which strips out volatile food and energy components, is expected to rise 0.5%, down from September's surprising spike of 0.6% amid a pullback in used car prices and a new measurement from the Bureau of Labor Statistics on healthcare premium costs.
The CME Group's FedWatch continues suggest traders see an easing in the Fed's rate hike stance, with bets on a 50 basis point rate hike in December pegged at 56.8%, but any upside surprise in the October readings -- and there have been many over the past few months -- will turn those projections around quickly as we head into the Thursday session.
3. -- FTX On The Brink As Reports Suggest $8 Billion Black Hole On Books
FTX, the crypto trading platform founded by billionaire Sam Bankman-Fried, is reportedly close to filing for bankruptcy protection following an about-face from rival Binance on a planned multi-billion dollar rescue.
Days after telling investors and platform depositors that FTX's assets were "fine", Bankman-Fried reportedly told investors on a conference call taht FTX is facing an $8 billion hole in its finances that is likely to be compounded by Securities and Exchange Commission and Commodity Futures Trading Commission probes into the handling of customer funds.
Bitcoin prices, which slumped to a two-year low of around $15,900 during yesterday's turmoil, were marked 1% higher on the Thursday session at $16,650 in early trading, but with FTX customers -- locked out of their accounts since last week -- facing huge losses in any bankruptcy proceedings, further declines across the crypto space are expected in the coming weeks.
"Given the size and interlinkages of both FTX and Alameda Research with other entities of the crypto ecosystem, including DeFi platforms, it looks likely that a new cascade of margin calls, deleveraging and crypto company/platform failures is starting - similar to what we saw last May/June following the collapse of Terra," JPMorgan said in a Thursday morning note.
4. -- Apple Supplier Foxconn Sees Weaker Q4 Smartphone Revenues
Apple (AAPL) supplier Foxconn said Thursday that it will adjust its production capacity in China and elsewhere to ensure that Covid-linked shutdowns have a minimal impact on its holiday quarter revenue forecasts.
Taiwan-based Foxconn, a key Apple assembler responsible for around 70% of the tech giant's iPhone shipments, posted weaker-than-expected third quarter profits of T$38.8 billion, and said December quarter smartphone revenues would likely decline on year-on-year basis amid disruptions linked to its China-based manufacturing hubs.
Earlier this week, Apple said that Foxconn's 200,000-person factory in Zhengzhou is "currently operating at significantly reduced capacity" owing to covid restrictions put in place last month by officials in Beijing and warned that it could curtail shipments of its higher-end iPhones heading into the holiday season.
"We will definitely work all out to adjust our production capacity and output, so there is no impact on demand for (the Christmas and Lunar New Year) holidays," Foxconn chairman Liu Young-way told investors on a conference call Thursday.
Apple shares were marked 0.5% higher in pre-market trading to indicate an opening bell price of $135.55 each.
5. -- Rivian Shares Jump On Smaller Q3 Loss, 2022 Production Targets
Rivian Automotive (RIVN) shares moved firmly higher in pre-market trading after the electric truckmaker posted a smaller-than-expected third quarter loss and stuck to its 2022 production forecasts.
Rivian, which is hoping to ramp-up production in the coming years to challenge established rivals such as Tesla (TSLA) in the global EV market, said its nine-month production tally came in at around 14,000 after delivering 7,363 over the three months ending in September. The Amazon (AMZN)-backed group generated revenues of $536 million and a third quarter loss of $1.72 billion.
That figure will widen to $5.45 billion by the end of the year, Rivian said, wider than its prior projection of $4.75 billion, even with 114,000 unfilled pre-orders for its pickup trucks and unsold inventory of around $950 million.
Rivian shares were marked 6.3% higher in pre-market trading to indicate an opening bell price of $29.84 each.
