Pre-Market Brief: Stocks Mixed as Relief Rally Fades And Bond Yields Rise

Morning Markets

December S&P 500 futures (ESZ22) are trending down -0.66% this morning after three major US benchmark indices extended gains for the second successive trading session as weaker-than-anticipated JOLTs job openings data boosted expectations that the Federal Reserve could ease its aggressive path of monetary policy tightening. Three major U.S. stock indexes were primarily driven by gains in the Oil & Gas, Basic Materials, and Industrials sectors.

"There's hope that the Federal Reserve at some point in the fourth quarter will say the same thing. Not stop raising interest rates, but just slow the pace. That's what the market's kind of rallying on below the surface," said Anthony Saglimbene, a chief market strategist at Ameriprise Financial in Troy, Michigan.

U.S. JOLTs job openings data has been reported at 10.053M compared to economists’ expectations of 10.775M, falling by the most in nearly 2-1/2 years in August, which suggests the labor market may be beginning to cool as higher interest rates take hold.

"We don't expect a change in the Fed's likely actions at the next meeting. In our view, the labor market moved from 'extremely tight' to just 'very tight,' and the Fed will likely respond by another 0.75% increase in the Fed funds rate next month," said Jeffrey Roach, a chief economist for LPL Financial. Meanwhile, U.S. rate futures have priced in a 35.8% chance of a 50 basis point rate increase and a 64.2% chance of a 75 basis point hike at November's monetary policy meeting.

Today, all eyes are focused on the U.S. ADP Nonfarm Employment Change data in a couple of hours. Economists, on average, forecast that September ADP Nonfarm Employment Change will stand at 200K, compared to the previous figure of 132K.

In addition, market participants will be closely monitoring a crucial supply decision from OPEC+, which may cut oil output by over 1 million barrels a day.

Also, investors are likely to focus on the U.S. Trade Balance data, which was at -70.70B in July. Economists expect the August figure to be -67.70B.

U.S. September ISM Non-Manufacturing Purchasing Managers Index (PMI) will be reported today. Economists forecast this figure to be 56.0, compared to the previous value of 56.9.

U.S. Crude Oil Inventories data will come in today as well. Economists, on average, foresee this number to stand at +2.052M, compared to the last week's value of -0.215M.

In the bond markets, United States 10-Year rates are at 3.713%, up +2.65%.

The Euro Stoxx 50 is down -0.75% this morning, retreating after European stocks demonstrated the strongest trading session since mid-March on growing hopes that central banks may decelerate the pace of future interest rate increases. Today, major European sectors slid into the red, with real estate, auto parts, and telecommunications shares dropping the most as investors paused a rally driven by bets for less aggressive central banks. Also, the German latest trade balance reading weighed on sentiment in Europe as the data showed a narrowing in the country's surplus. The German Trade Balance has been reported at 1.2B in August, weaker than expectations of 4.0B.

Spain Services PMI, Italy Services PMI, France Services PMI, Germany Services PMI, Eurozone S&P Global Composite PMI, Eurozone Services PMI, U.K. Composite PMI, and U.K. Services PMI data were released today. 

The Spanish September Services PMI was 48.5, weaker than expectations of 49.8.

The Italian September Services PM came in at 48.8, weaker than expectations of 49.1.

The French September Services PMI stood at 52.9, weaker than expectations of 53.0.

The German September Services PMI was 45.0, weaker than expectations of 45.4.

Eurozone September S&P Global Composite PMI data came in at 48.1, weaker than expectations of 48.2.

Eurozone September Services PMI data stood at 48.8, weaker than expectations of 48.9.

U.K September Composite PMI has been reported at 49.1, stronger than expectations of 48.4.

U.K September Services PMI was 50.0, stronger than expectations of 49.2.

Asian stock markets today settled in the green. Japan’s Nikkei 225 Stock Index (NIK) closed up +0.48%, while the Chinese market was closed for holidays.

Japan’s Nikkei 225 Stock Index closed higher today fueled by gains in the Gas & Water, Power & Chemical, and Petroleum & Plastic sectors. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down 6.48% to 24.52.

Pre-Market U.S. Stock Movers

Vicinity Motor Corp (VEV) spiked about +60% in pre-market trading after the company officially launched and began deliveries of the first Class 3 electric truck in Canada.

Core Scientific (CORZ) gained about +4% in pre-market trading, extending yesterday's gains after Barclays initiated coverage of the stock with an overweight rating and a $3 price target.

Emerson Electric Company (EMR) gained about +3% in pre-market trading on Blackstone's interest to acquire certain Emerson Electric assets for $5-10 billion, according to Bloomberg.

Reborn Coffee (REBN) rose more than +24% in pre-market trading after the company reported higher sales but bigger losses than in Q2 last year.

Commscope Hlding (COMM) climbed over +1% in pre-market trading, extending yesterday's gains after Credit Suisse upgraded the stock to outperform from neutral with a price target of $17, up from $11.

Today’s U.S. Earnings Spotlight: Wednesday - October 5th

Tesco PLC (TSCDY), Aeon ADR (AONNY), RPM (RPM), Helen of Troy Ltd (HELE), Tilray (TLRY), Resources Connection (RGP), Q And K Intl (QK), Richardson Electronics (RELL), Byrna Technologies (BYRN), Trilogy Metals (TMQ), Educational Development (EDUC), TSR (TSRI). 

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