December S&P 500 E-Mini futures (ESZ24) are down -0.77%, and December Nasdaq 100 E-Mini futures (NQZ24) are down -1.09% this morning as investors digested quarterly earnings reports from Microsoft and Meta as well as robust U.S. economic data that muddied the outlook for Federal Reserve rate cuts.
Investors now look forward to the release of the Fed’s preferred inflation gauge and a new round of corporate earnings reports, with particular focus on results from “Magnificent Seven” companies Apple and Amazon.
Microsoft (MSFT) slid over -3% in pre-market trading after the tech giant provided a disappointing FQ2 cloud revenue growth forecast. Also, Meta Platforms (META) fell more than -3% in pre-market trading after CEO Mark Zuckerberg cautioned investors that the company will keep investing heavily in AI and other futuristic technologies.
In yesterday’s trading session, Wall Street’s major indices ended in the red. Super Micro Computer (SMCI) plummeted over -32% and was the top percentage loser on the S&P 500 and Nasdaq 100 after accounting firm Ernst & Young LLP resigned as the company’s auditor. Also, Advanced Micro Devices (AMD) plunged more than -10% after the semiconductor giant provided a weak Q4 revenue forecast. In addition, Eli Lilly (LLY) slumped over -6% after the drugmaker posted downbeat Q3 results and cut its full-year adjusted EPS forecast. On the bullish side, Garmin Ltd. (GRMN) soared more than +23% and was the top percentage gainer on the S&P 500 after posting upbeat Q3 results and raising its full-year guidance. Also, Alphabet (GOOGL) gained over +2% after the Google parent reported stronger-than-expected Q3 results.
The U.S. Bureau of Economic Analysis in its first estimate of Q3 GDP growth said on Wednesday that the economy grew at a +2.8% annualized rate, slightly weaker than expectations of +3.0%. Also, the U.S. October ADP employment change jumped +233K, higher than the +110K consensus and the biggest increase in 15 months. In addition, U.S. pending home sales climbed +7.4% m/m in September, stronger than expectations of +1.9% m/m and the largest increase in 4-1/4 years.
“Solid but not blistering growth fits nicely within the current economic backdrop,” said Bret Kenwell at eToro. “Too hot of a print and investors would likely question the Fed’s decision to cut rates by 50 basis points in September, while a weak print could reignite worries about a deteriorating economy.”
Meanwhile, U.S. rate futures have priced in a 96.1% chance of a 25 basis point rate cut and a 3.9% chance of no rate change at the November meeting.
Third-quarter corporate earnings season continues in full flow, with market participants awaiting new reports today from notable companies such as Apple (AAPL), Amazon (AMZN), Mastercard (MA), Intel (INTC), Merck & Co. (MRK), Altria (MO), and Uber Technologies (UBER). 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, all eyes are focused on the U.S. core personal consumption expenditures price index, the Fed’s preferred price gauge, which is set to be released in a couple of hours. Economists, on average, forecast that the core PCE price index will stand at +0.3% m/m and +2.6% y/y in September, compared to the previous figures of +0.1% m/m and +2.7% y/y.
Also, investors will focus on the U.S. Chicago PMI, which arrived at 46.6 in September. Economists foresee the October figure to be 46.9.
U.S. Personal Spending and Personal Income data will be closely monitored today. Economists forecast September Personal Spending to be +0.4% m/m and Personal Income to come in at +0.3% m/m, compared to the August numbers of +0.2% m/m and +0.2% m/m, respectively.
The U.S. Employment Cost Index will come in today. Economists expect this figure to arrive at +0.9% q/q in the third quarter, matching the second quarter’s figure.
U.S. Initial Jobless Claims data will be reported today as well. Economists estimate this figure to be 229K, compared to last week’s number of 227K.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.292%, up +0.59%.
The Euro Stoxx 50 futures are down -0.73% this morning as investors digested a mixed bag of earnings as well as key inflation data from the region. Technology stocks led the declines on Thursday. Eurostat reported on Thursday that the Eurozone’s annual inflation rate accelerated more than anticipated in October, matching the European Central Bank’s target and strengthening the case for a gradual reduction in interest rates. Meanwhile, ECB President Christine Lagarde stated that Eurozone inflation is expected to durably hit the central bank’s 2% target during the course of 2025. “Maybe we could have started to intervene a few months earlier. But we raised rates at an unprecedented rate, and we managed to bring inflation down significantly over a short period,” Lagarde told Le Monde in an interview published on Thursday. In corporate news, BNP Paribas (BNP.FP) slumped over -5% as the lender’s Q3 results failed to impress investors. At the same time, Societe Generale (GLE.FP) climbed more than +7% after reporting higher Q3 revenue and announcing several leadership changes.
France’s CPI (preliminary), Eurozone’s CPI (preliminary), Eurozone’s Core CPI (preliminary) and Eurozone’s Unemployment Rate were released today.
The French October CPI arrived at +0.2% m/m and +1.2% y/y, compared to expectations of +0.2% m/m and +1.1% y/y.
Eurozone October CPI has been reported at +2.0% y/y, stronger than expectations of +1.9% y/y.
Eurozone October Core CPI came in at +2.7% y/y, stronger than expectations of +2.6% y/y.
Eurozone September Unemployment Rate was at 6.3%, stronger than expectations of 6.4%.
Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.42%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.50%.
China’s Shanghai Composite Index closed higher today as strong manufacturing data boosted sentiment, with investors looking forward to a key leadership meeting. Property and financial stocks led the gains on Thursday. A National Bureau of Statistics report released on Thursday showed that China’s manufacturing activity expanded for the first time in six months in October, offering a tentative sign of recovery as Beijing strives to rejuvenate the economy. Although services activity also remained in expansion territory, it fell short of expectations. Meanwhile, market participants are now focusing on a meeting of the National People’s Congress Standing Committee set to take place from November 4th to 8th, where announcements regarding debt and fiscal initiatives are expected. Reuters reported that authorities were considering the approval of 10 trillion yuan ($1.4 trillion) in additional borrowing over the coming years to support the economy and address local government debt risks. In other news, China’s state-owned banks announced they will begin adjusting existing mortgage interest rates on Friday, following the loan prime rates cut last week. In corporate news, BYD fell over -4% even after surpassing Tesla in quarterly revenue for the first time, as Morgan Stanley noted that its profit per vehicle fell short of expectations. At the same time, Industrial and Commercial Bank of China rose nearly +1% in Hong Kong after reporting a 4% year-over-year increase in Q3 profit.
The Chinese October Manufacturing PMI arrived at 50.1, stronger than expectations of 49.8.
The Chinese October Non-Manufacturing PMI came in at 50.2, weaker than expectations of 50.4.
Japan’s Nikkei 225 Stock Index ended lower today as investors took profits following the Bank of Japan’s rate decision. Consumer and technology stocks led the declines on Thursday. Government data released on Thursday showed that Japan’s industrial production rebounded in September, while retail sales growth significantly slowed, providing mixed signals about the economy in the face of an increasingly uncertain demand outlook. The Bank of Japan maintained its policy interest rate at 0.25% as widely anticipated, while reiterating that it’s on track to achieve its inflation target. This outlook suggests the possibility of another rate hike in the coming months. In a research report, Capital Economics’ Marcel Thieliant stated that the BOJ kept its hawkish outlook and “we still expect a rate hike to 0.5% at its next meeting in December.” Meanwhile, the yen strengthened below 153 per dollar following the BOJ’s decision. In corporate news, Advantest surged over +6% after raising its full-year operating profit forecast, driven by robust demand for its AI-related testing tools. At the same time, Kyocera plunged more than -10% after the smartphone maker cut its annual operating profit guidance. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -0.85% to 25.75.
The Japanese September Industrial Production (preliminary) stood at +1.4% m/m, stronger than expectations of +0.9% m/m.
The Japanese September Retail Sales arrived at +0.5% y/y, weaker than expectations of +2.1% y/y.
Pre-Market U.S. Stock Movers
Microsoft (MSFT) slid over -3% in pre-market trading after the tech giant provided a disappointing FQ2 cloud revenue growth forecast.
Meta Platforms (META) fell more than -3% in pre-market trading after CEO Mark Zuckerberg cautioned investors that the company will keep investing heavily in AI and other futuristic technologies.
eBay (EBAY) plunged over -9% in pre-market trading after the e-commerce company issued below-consensus Q4 revenue guidance.
Robinhood (HOOD) slumped more than -10% in pre-market trading after reporting weaker-than-expected Q3 results.
Booking Holdings (BKNG) climbed over +6% in pre-market trading after the company posted upbeat Q3 results and boosted its annual guidance.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Thursday - October 31st
Apple (AAPL), Amazon.com (AMZN), Mastercard (MA), Merck & Co (MRK), Uber Tech (UBER), Comcast (CMCSA), Eaton (ETN), ConocoPhillips (COP), Bristol-Myers Squibb (BMY), Regeneron Pharma (REGN), Southern (SO), ICE (ICE), Intel (INTC), Cigna (CI), Altria (MO), Parker-Hannifin (PH), Canadian Natural (CNQ), WW Grainger (GWW), Quanta Services (PWR), Cheniere Energy (LNG), IQVIA Holdings (IQV), Ingersoll Rand (IR), Ametek (AME), Alnylam (ALNY), Ambev SA (ABEV), Xcel Energy (XEL), VICI Properties (VICI), Blue Owl Capital (OWL), Xylem (XYL), Estee Lauder (EL), Cenovus Energy Inc (CVE), WEC Energy (WEC), Willis Towers Watson (WTW), Entergy (ETR), Li Auto (LI), Roblox (RBLX), Kellanova (K), Erie Indemnity (ERIE), CMS Energy (CMS), Ball (BALL), Aptiv (APTV), Coterra Energy (CTRA), International Paper (IP), Kimco Realty (KIM), Hyatt (H), Sharkninja (SN), Alliant Energy (LNT), Reinsurance of America (RGA), Juniper (JNPR), Camden Property (CPT), Eastman Chemical (EMN), Lincoln Electrics (LECO), Teleflex (TFX), CubeSmart (CUBE), Norwegian Cruise Line (NCLH), Mobileye Global (MBLY), Onto Innovation (ONTO), Huntington Ingalls Industries (HII), Generac (GNRC), MasTec (MTZ), Api Group Corp (APG), Open Text (OTEX), United States Steel (X), Cullen/Frost Bankers (CFR), Fannie Mae (FNMA), HF Sinclair (DINO), BorgWarner (BWA), Gildan Activewear (GIL), Middleby Corp (MIDD), Arrow Electronics (ARW), Insight Enterprises (NSIT), Janus Henderson (JHG), Halozyme (HALO), Lincoln National (LNC), Vontier (VNT), Federal Signal (FSS), Sonoco Products (SON), Lancaster Colony (LANC), Allegro (ALGM), SM Energy (SM), Belden (BDC), Dun And Bradstreet (DNB), Madrigal Pharma (MDGL), Itron (ITRI), Bgc Group (BGC), Organon Co (OGN), Lazard (LAZ), Sabra (SBRA), Avient Corp (AVNT), Verra Mobility (VRRM), Select Medical (SEM), Kontoor Brands (KTB), The Wendy’s Co (WEN), SkyWest (SKYW), InterDigital (IDCC), CNO Financial (CNO), Eldorado Gold (EGO), Cinemark (CNK), Granite Construction (GVA), Dorman (DORM), Valaris (VAL), Cavco (CVCO), PBF Energy (PBF), ICF International (ICFI), Avis (CAR), Insperity (NSP), Kymera (KYMR), Patrick (PATK), California Water Service (CWT), Trinity Industries (TRN), Quaker Chemical (KWR), Agios Pharm (AGIO), Peloton Interactive (PTON), Laureate Education (LAUR), Driven Brands Holdings (DRVN), Utz Brands (UTZ), Baytex Energy Corp (BTE), SolarWinds Corp (SWI), Alamo (ALG), Viavi Solutions (VIAV), LeMaitre Vascular (LMAT), Distribution Solutions (DSGR), Donnelley Financial Solutions (DFIN), Cipher Mining (CIFR), Tennant (TNC), Centerra Gold (CGAU), Customers Bancorp (CUBI), Upbound (UPBD), Ardelyx Inc (ARDX), Fresh Del Monte Produce (FDP), Uniti Group (UNIT), Travere Therapeutics (TVTX).
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