Pre-Market Brief: Stocks Climb as Strong Earnings Boost Sentiment

Morning Markets

December S&P 500 futures (ESZ22) are trending up +1.13% this morning after three major US benchmark indices finished sharply higher during the regular session as strong earnings results from major Wall Street banks boosted sentiment on stocks. Three major U.S. stock indexes were fueled primarily by gains in the Technology, Consumer Services, and Industrials sectors.

"The catalysts that have triggered in the markets year-to-date are well-known. Now, investors are looking for green shoots of catalysts that can start to provide some improvement," said Joseph Sroka, a chief investment officer at NovaPoint in Atlanta. 

All three major U.S. stock indexes finished the session 1.9% to 3.4% higher after Bank of America posted upbeat quarterly results, lifting optimism about the corporate earnings season. However, analysts expect earnings for S&P 500 companies to grow 3% in the third quarter, down from 4.5% at the start of the month.

In addition, manufacturing data in the New York region was weaker than expected, boosting hopes for a Fed pivot. Meanwhile, U.S. rate futures have priced in a 96.5% chance of a 75 basis point rate increase and a 3.5% chance of a super-sized 100 basis point hike at November's monetary policy meeting. 

"Right now, the Fed owns the market Fed policy is the key driver they are implementing the most aggressive tightening in the shortest amount of time that we have seen in our generation, and it is important to remember that Fed policy, it works with a lag," said Emily Roland, a co-chief investment strategist at John Hancock Investment Management in Boston.

Today, all eyes are focused on the U.S. Industrial Production data in a couple of hours. Economists, on average, forecast that September Industrial Production will come in at +0.1% m/m compared to the previous value of -0.2% m/m.

Also, investors are likely to monitor Canada's Housing Starts data, which was at 267.4K in August. Economists expect the new figure to be 263.0K.

U.S. TIC Net Long-Term Transactions data will be reported today as well. Economists foresee this number to stand at 28.2B, compared to July's figure of 21.4B.

In the bond markets, United States 10-Year rates are at 4.031%, up +0.41%.

The Euro Stoxx 50 futures are up +0.76% this morning after Britain's new finance minister Jeremy Hunt scrapped almost all of Prime Minister Liz Truss's previously announced tax and spending measures on Monday, helping boost sentiment after weeks of turmoil. In addition, the dramatic U-turn might lead to a lower than previously anticipated interest rate hike by the Bank of England in November. Another supportive factor for European equities is the more than +3% jump in Publicis Groupe (PUB.FP) after the company raised its full-year revenue outlook.

Germany's ZEW Current Conditions, Germany's ZEW Economic Sentiment, and Eurozone's ZEW Economic Sentiment data were released today. 

Germany's October ZEW Current Conditions came in at -72.2, weaker than expectations of -68.0.

The German October ZEW Economic Sentiment stood at -59.2, stronger than expectations of -65.7.

Eurozone October ZEW Economic Sentiment was -59.7, stronger than expectations of -61.2.

Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.13%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +1.42%.

China’s Shanghai Composite today closed slightly lower as concerns over the Chinese economy continued to affect the stock market, with President Xi Jinping signaling the country has no intention of scaling back its strict zero-COVID policy. However, the government disclosed plans for more stimulus spending, and the People’s Bank of China also kept a commitment to support economic growth. 

At the same time, Japan’s Nikkei 225 Stock Index closed in the green today, recovering from sharp losses in recent sessions. The index's upward momentum was fueled by gains in the Transport, Railway & Bus, and Shipbuilding sectors. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up 1.21% to 25.02.

Pre-Market U.S. Stock Movers

RA Medical Systems (RMED) jumped more than +23% in pre-market trading after the company announced the completion of its at-the-market facility, raising gross proceeds of $7.6 million.

Fubotv Inc (FUBO) spiked about +8% in pre-market trading after the company announced preliminary third-quarter 2022 results, with revenue and subscriber growth exceeding previously issued guidance.

Antero Resources Corp. (AR) rose about +4% in pre-market trading after the company replaced Alleghany Corp. in the S&P MidCap 400.

Silk Road Medical Inc (SILK) dropped over -2% in pre-market trading after the company announced a  $100M underwritten public offering.

Canoo Inc (GOEV) rose over +15% in pre-market trading, extending yesterday's gains after the company announced binding order for 9,300 EVs from Kingbee.

Digital Turbine Inc (APPS) grew about +5% in pre-market trading, extending yesterday's gains after BofA initiated coverage of the stock with a buy rating and a $24 price target.

Today’s U.S. Earnings Spotlight: Tuesday - October 18th

J&J (JNJ), Roche Holding ADR (RHHBY), BHP Group Ltd ADR (BHP), Netflix (NFLX), Goldman Sachs (GS), Intuitive Surgical (ISRG), Truist Financial Corp (TFC), America Movil ADR A (AMOV), America Movil ADR (AMX), Interactive Brokers (IBKR), State Street (STT), JB Hunt (JBHT), Albertsons (ACI), Omnicom (OMC), First Horizon National (FHN), United Airlines Holdings (UAL), Hasbro (HAS), Commerce Bancshares (CBSH), Pinnacle (PNFP), Wintrust (WTFC), FNB (FNB), Hancock Whitney (HWC), United Community Banks (UCBI), Telekom Austria AG PK (TKAGY), Mueller Industries (MLI), Fulton (FULT), Silvergate Cap (SI), ADTRAN (ADTN), Nicolet Bankshares (NIC), Healthcare Services (HCSG), Sleep Number (SNBR), Pzena Investment Management (PZN), Cambridge Bancorp (CATC), Equity Bancshares Inc (EQBK), Mercantile (MBWM), Lict Corporation (LICT), Plumas (PLBC), Avidbank (AVBH), South Atlantic Bancshares (SABK), Steel Connect (STCN), AmeriServ (ASRV), Sense Tech (SNSGF).

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