December S&P 500 E-Mini futures (ESZ24) are up +0.03%, and December Nasdaq 100 E-Mini futures (NQZ24) are up +0.08% this morning, steadying after yesterday’s slump, while investors awaited the next round of corporate earnings.
In yesterday’s trading session, Wall Street’s major indexes closed lower. ASML Holding N.V. (ASML) tumbled over -16% and was the top percentage loser on the Nasdaq 100 after reporting weaker-than-expected Q3 bookings and cutting its full-year net sales guidance. Also, chip stocks slumped after Bloomberg reported that the Biden administration is discussing limiting sales of advanced AI chips to certain countries, with KLA Corp. (KLAC) plunging more than -14% to lead losers in the S&P 500 and Nvidia (NVDA) dropping over -4%. In addition, UnitedHealth Group (UNH) slid more than -8% and was the top percentage loser on the Dow after the health insurer cut its FY24 adjusted EPS forecast. On the bullish side, Walgreens Boots Alliance (WBA) surged over +15% and was the top percentage gainer on the S&P 500 after the drugstore operator posted upbeat Q4 results and issued above-consensus FY25 sales guidance.
Economic data released on Tuesday showed that the NY Empire State manufacturing index fell to a 5-month low of -11.90 in October, weaker than expectations of 3.40.
San Francisco Fed President Mary Daly stated on Tuesday that the U.S. central bank needs to remain watchful as inflation falls and the labor market cools, although she expressed confidence that officials could maintain the current economic expansion on course. Daly noted she would monitor the data to determine the pace of reducing borrowing costs but reiterated that one or two additional rate cuts are probable this year. Also, Atlanta Fed President Raphael Bostic said he anticipates the U.S. economy to slow this year but to remain robust, adding that the downward trajectory for inflation might see some bumps.
Meanwhile, U.S. rate futures have priced in a 94.2% chance of a 25 basis point rate cut and a 5.8% chance of no rate change at the next FOMC meeting in November.
Third-quarter earnings season is gathering pace, with investors awaiting fresh reports from notable companies today, including Abbott Laboratories (ABT), Morgan Stanley (MS), Prologis (PLD), U.S. Bancorp (USB), CSX (CSX), Kinder Morgan (KMI), and Alcoa (AA). 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, investors will focus on U.S. Export and Import Price Indexes for September, set to be released in a couple of hours. Economists anticipate the export price index to be -0.4% m/m and the import price index to be -0.3% m/m, compared to the previous figures of -0.7% m/m and -0.3% m/m, respectively.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.009%, down -0.65%.
The Euro Stoxx 50 futures are down -0.96% this morning, extending losses from the previous session as disappointing luxury sector earnings weighed on sentiment. Technology and luxury stocks led the declines on Wednesday. The Office for National Statistics reported Wednesday that the annual inflation rate in the U.K. dropped below the Bank of England’s 2% target in September for the first time in over three years, increasing the likelihood of an interest rate cut next month. Separately, final data from the statistical office Istat showed that Italy’s annual inflation rate was confirmed at 0.7% in September. Meanwhile, investors are awaiting the European Central Bank’s monetary policy decision on Thursday, with the central bank widely expected to deliver another 25-basis-point rate cut. In corporate news, Lvmh Moet Hennessy Louis Vuitton Se (MC.P.DX) slid over -3% after the luxury group posted an unexpected drop in Q3 sales. Also, Just Eat Takeaway.com N.V. (JET.LN) fell more than -2% after reporting weaker-than-expected Q3 gross transaction value.
U.K.’s CPI, U.K.’s Core CPI, and Italy’s CPI data were released today.
U.K. September CPI arrived at 0.0% m/m and +1.7% y/y, better than expectations of +0.1% m/m and +1.9% y/y.
U.K. September Core CPI came in at +0.1% m/m and +3.2% y/y, better than expectations of +0.3% m/m and +3.4% y/y.
The Italian September CPI stood at -0.2% m/m and +0.7% y/y, in line with expectations.
Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.05%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -1.83%.
China’s Shanghai Composite Index closed just above the flatline today as investors cautiously awaited another government briefing focused on tackling the troubled property sector. Property stocks led the gains on Wednesday as market participants braced for a joint news conference by government officials, including the housing minister and central bank. According to the State Council Information Office, Minister of Housing and Urban-Rural Development Ni Hong, along with unnamed officials from the People’s Bank of China, the Ministry of Finance, and the National Financial Regulatory Administration, will participate in a news conference on Thursday. Nomura analysts anticipate the announcement of a specific amount of liquidity support, along with measures to accelerate the use of the central bank’s refinancing program and the issuance of special bonds by local governments. Meanwhile, investors are also awaiting the release of China’s third-quarter GDP figures and additional data for September, including fixed asset investment, unemployment, industrial production, and retail sales, scheduled for Friday. In corporate news, Shaanxi Construction Engineering Group climbed over +6% after logging 22.7 billion yuan in newly signed projects during the third quarter.
Japan’s Nikkei 225 Stock Index closed lower today, tracking overnight losses on Wall Street. Technology and healthcare stocks led the declines on Wednesday. The Cabinet Office reported on Wednesday that Japan’s monthly core machinery orders, which exclude those for ships and electric power companies, fell more than expected in August, with declines observed in both the manufacturing and non-manufacturing sectors. Meanwhile, Bank of Japan policy board member Seiji Adachi stressed on Wednesday the necessity of gradually and cautiously increasing interest rates as the central bank unwinds prior easing measures, likely reinforcing market expectations that authorities will stand pat at this month’s meeting. “What we need to be careful of, in a gradual rate hike process, is that we raise it extremely gradually while keeping financial conditions accommodative” until the price trend reaches 2%, Adachi said. In other news, Japan’s Deputy Chief Cabinet Secretary Kazuhiko Aoki stated that the forthcoming stimulus package will exceed the size of last year’s measures that were funded with a 13 trillion yen ($87 billion) extra budget. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +0.59% to 27.30.
The Japanese August Core Machinery Orders came in at -1.9% m/m and -3.4% y/y, weaker than expectations of -0.1% m/m and +3.6% y/y.
Pre-Market U.S. Stock Movers
Novocure (NVCR) soared about +30% in pre-market trading after the U.S. FDA approved its portable lung cancer treatment, Optune Lua.
J.B. Hunt Transport Services (JBHT) climbed over +5% in pre-market trading after the company reported better-than-expected Q3 results.
Cisco (CSCO) gained more than +1% in pre-market trading after Citi upgraded the stock to Buy from Neutral with a price target of $62.
Interactive Brokers (IBKR) slid over -4% in pre-market trading after reporting weaker-than-expected Q3 adjusted EPS.
Estee Lauder (EL) fell about -0.8% in pre-market trading after HSBC downgraded the stock to Hold from Buy.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Wednesday - October 16th
Abbott Labs (ABT), Morgan Stanley (MS), Prologis (PLD), U.S. Bancorp (USB), CSX (CSX), Kinder Morgan (KMI), Crown Castle (CCI), Discover (DFS), Equifax (EFX), PPG Industries (PPG), Synchrony Financial (SYF), Steel Dynamics (STLD), Citizens Financial Group Inc (CFG), Rexford Inl Rty (REXR), Alcoa (AA), First Horizon National (FHN), First Industrial RT (FR), Synovus (SNV), Home BancShares (HOMB), SL Green (SLG), Cohen Steers (CNS), Liberty Oilfield (LBRT), Banner (BANR), OFG Bancorp (OFG), Triumph Bancorp (TFIN), Old Second Bancorp (OSBC), Great Southern Bancorp (GSBC), First Community (FCCO), Martin Midstream (MMLP).
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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.
