December S&P 500 futures (ESZ23) are up +0.64%, and December Nasdaq 100 E-Mini futures (NQZ23) are up +0.77% this morning as market participants looked ahead to the Federal Reserve’s interest rate decision while also gearing up for more corporate earnings results as well as Friday’s nonfarm payrolls report.
In Friday’s trading session, Wall Street’s major indexes closed mixed. Amazon.com (AMZN) soared over +6% after the e-commerce giant reported better-than-expected Q3 results and reassured investors of a strong future in cloud computing and generative artificial intelligence. Also, Intel Corporation (INTC) surged more than +9% after the semiconductor giant posted upbeat Q3 results and provided above-consensus Q4 guidance. On the bearish side, Ford Motor Company (F) tumbled over -12% after the carmaker posted downbeat Q3 results and withdrew its full-year guidance due to the pending ratification of its tentative agreement with the United Auto Workers. In addition, Chevron Corp (CVX) slumped more than -6% after the oil and gas major missed quarterly profit estimates.
Data from the U.S. Department of Commerce on Friday showed that the U.S. core PCE price index, a key inflation gauge monitored by the Federal Reserve, stood at +0.3% m/m and +3.7% y/y in September, in line with expectations. Also, the U.S. September personal spending came in at +0.7% m/m versus the consensus figure of +0.5% m/m. In addition, the University of Michigan’s reading of consumer sentiment was revised higher to 63.8 in October, stronger than expectations of 63.0.
Third-quarter earnings season continues to roll on, and investors anticipate fresh reports from notable companies this week, including Apple (AAPL), McDonald’s (MCD), Advanced Micro Devices (AMD), Caterpillar (CAT), Airbnb (ABNB), CVS Health (CVS), Qualcomm (QCOM), Starbucks (SBUX), Pfizer (PFE), and Monster Beverage (MNST). Analysts estimate aggregate S&P 500 earnings to rise 4.3% year-over-year in Q3, compared with an expected growth of 1.6% at the start of the month.
The U.S. Federal Reserve interest rate decision and Fed Chair Jerome Powell’s post-policy meeting press conference will take center stage in the coming week. U.S. rate futures have priced in a 96.2% chance of no hike on Wednesday and a 24.0% probability of a 25 basis point rate increase at the December FOMC meeting.
On the economic data front, the U.S. Nonfarm Payrolls report for October will be the main highlight. Also, investors will be monitoring a spate of economic data, including the U.S. CB Consumer Confidence, S&P/CS HPI Composite - 20 n.s.a., Chicago PMI, Employment Cost Index, ADP Nonfarm Employment Change, S&P Global Manufacturing PMI, ISM Manufacturing PMI, JOLTs Job Openings, Crude Oil Inventories, Initial Jobless Claims, Nonfarm Productivity (preliminary), Unit Labor Costs (preliminary), Factory Orders, Average Hourly Earnings, Private Nonfarm Payrolls, Unemployment Rate, S&P Global Services PMI, and ISM Non-Manufacturing PMI.
In other news, Israel has launched the second and more measured phase of its war against Hamas by deploying troops and tanks into the northern Gaza Strip.
The U.S. economic data slate is mainly empty on Monday.
In the bond markets, United States 10-year rates are at 4.866%, up +0.37%.
The Euro Stoxx 50 futures are up +0.47% this morning as investors digested Spanish inflation and German growth data while bracing for more corporate earnings reports and a sequence of central bank policy meetings. Healthcare stocks outperformed on Monday after JPMorgan strategists upgraded the sector to Overweight from Neutral. Data showed on Monday that German output shrank in the third quarter, heightening concerns that Europe’s largest economy may be on the path toward a recession. Meanwhile, the Bank of England is scheduled to announce its interest rate decision on Thursday, with investors anticipating the BoE to keep rates on hold at a 15-year high of 5.25%. ECB governing council member Peter Kazimir said on Monday that the European Central Bank cannot declare the conclusion of its tightening cycle until all inflation risks have completely dissipated, and he pointed to the December and March meetings as pivotal milestones. In corporate news, Siemens Energy Ag (ENR.D.DX) climbed over +9% after the supervisory board chairman Joe Kaeser pushed back against suggestions the company may need a taxpayer-funded bailout from the German government. Also, Dassault Systemes (DSY.FP) rose more than +2% after JPMorgan upgraded the French software maker to Overweight from Underweight.
Spain’s CPI (preliminary), Germany’s GDP (preliminary), and Eurozone’s Consumer Confidence data were released today.
The Spanish October CPI stood at +0.3% m/m and +3.5% y/y, weaker than expectations of +0.6% m/m and +3.8% y/y.
The German GDP has been reported at -0.1% q/q and -0.3% y/y in the third quarter, stronger than expectations of -0.3% q/q and -0.7% y/y.
Eurozone October Consumer Confidence came in at -17.9, in line with expectations.
Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.12%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.95%.
China’s Shanghai Composite today closed slightly higher, marking its fifth consecutive session of gains. Over 30 companies listed in China unveiled share buyback and purchase plans over the weekend, while major mutual fund house E Fund Management said it would invest in its own product. Bank stocks retreated on Monday after four of China’s biggest lenders posted shrinking margins in Q3, with Bank of Communications falling over -3% and Industrial And Commercial Bank Of China dropping more than -1%. Meanwhile, China Evergrande Group slumped more than -9% after a Hong Kong court granted the world’s most indebted developer a five-week extension to negotiate with creditors or potentially face liquidation. On the positive side, Great Wall Motor soared about +7% in Hong Kong after posting stronger-than-expected results. In other news, China’s tighter rules against short-selling activities came into effect on Monday. Investor focus is now squarely on Chinese purchasing manager indexes for October, due on Tuesday.
Japan’s Nikkei 225 Stock Index closed sharply lower today as apprehension ahead of domestic and U.S. central bank meetings dampened risk appetite. The Bank of Japan is widely anticipated to keep interest rates at negative levels. However, media reports indicated the possibility of a shift in the bank’s yield curve control policy, particularly in light of recent inflation upticks and the yen’s weakness. On the ground of this, Japanese government bond yields climbed to fresh highs on Monday. In corporate news, Hino Motors Ltd tumbled over -18% after the automaker revised its annual projection from a profit to a loss. Also, Omron Corp plunged more than -15% after the healthcare equipment maker lowered its full-year profit forecast. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +4.96% to 23.71.
“The Nikkei was dragged down by the losses in the Dow Jones over the weekend. And investors hesitated to buy stocks as they awaited policy decisions at central bank meetings in the U.S. and Japan,” said Shoichi Arisawa, general manager of the investment research department at IwaiCosmo Securities.
Pre-Market U.S. Stock Movers
Stellantis NV (STLA) gained over +1% in pre-market trading after the United Automobile Workers union announced on Saturday that it had reached a tentative agreement on a new labor contract with the company.
AbbVie Inc (ABBV) rose about +1% in pre-market trading after Barclays upgraded the stock to Overweight from Equal Weight.
Datadog Inc (DDOG) fell more than -1% in pre-market trading after Baird downgraded the stock to Neutral from Outperform.
L3Harris Technologies Inc (LHX) climbed over +1% in pre-market trading after Raymond James upgraded the stock to Outperform from Market Perform.
East West Bancorp Inc (EWBC) rose more than +1% in pre-market trading after UBS upgraded the stock to Buy from Neutral.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Monday - October 30th
McDonald’s (MCD), Arista Networks (ANET), Welltower (WELL), Public Storage (PSA), Simon Property (SPG), ON Semiconductor (ON), Arch Capital (ACGL), Monolithic (MPWR), Pinterest (PINS), Check Point Software (CHKP), Western Digital (WDC), Revvity (RVTY), CNA Financial (CNA), Lattice (LSCC), Healthpeak Properties (PEAK), Qiagen (QGEN), XPO (XPO), FMC (FMC), VF (VFC), SoFi Technologies (SOFI), ZoomInfo (ZI), Brixmor Property (BRX), Trex (TREX), Rambus (RMBS), Tenet Healthcare (THC), Credit Acceptance (CACC), Transocean (RIG), Amkor (AMKR), Workiva Inc (WK), Kite Realty (KRG), AGNC Invest (AGNC), Vornado (VNO), Black Stone Minerals (BSM), Boise Cascad Llc (BCC), Wolfspeed (WOLF), Instructure Holdings (INST), One Gas Inc (OGS), Varonis Systems (VRNS), Comstock Resources (CRK), PotlatchDeltic (PCH), Matson (MATX), CVR Energy (CVI), Leggett&Platt (LEG), Sendas Distribuidora (ASAI), Otter Tail (OTTR), Independence Realty Trust Inc (IRT), Kemper (KMPR), Axonics Modulation Technologies (AXNX), PriceSmart (PSMT), Equity Commonwealth (EQC), Atlas Energy Solutions (AESI), SJW (SJW), Forward Air (FWRD), Cushman & Wakefield (CWK), JinkoSolar (JKS), Apollo Commercial RE Finance (ARI), Acadia (AKR), Addus (ADUS), Heartland Financial (HTLF), Harmonic (HLIT), Kforce (KFRC).
On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
