December S&P 500 E-Mini futures (ESZ25) are up +0.16%, and December Nasdaq 100 E-Mini futures (NQZ25) are up +0.20% this morning, pointing to a higher open on Wall Street as Treasury yields fell amid growing expectations for a Federal Reserve rate cut in December.
Bond yields fell after data from outplacement firm Challenger, Gray & Christmas showed that U.S. companies announced the highest number of job cuts for any October in over two decades, prompting traders to increase wagers on a rate cut next month. Investors now await a slew of speeches from Federal Reserve officials for more clues on the interest rate outlook.
Still, concerns over lofty tech valuations persisted, limiting gains in U.S. equity futures. Qualcomm (QCOM) fell over -2% in pre-market trading, becoming the latest chipmaker to issue upbeat guidance that nonetheless failed to impress investors.
In yesterday’s trading session, Wall Street’s three main equity benchmarks closed in the green. Chip stocks rallied, with Micron Technology (MU) climbing over +8% and Marvell Technology (MRVL) rising more than +6%. Also, Amgen (AMGN) surged over +7% and was the top percentage gainer on the Dow after the biotech giant posted upbeat Q3 results and raised its full-year guidance. In addition, Lumentum Holdings (LITE) jumped more than +23% after the company reported better-than-expected FQ1 results and issued strong FQ2 guidance. On the bearish side, Zimmer Biomet Holdings (ZBH) plunged over -15% and was the top percentage loser on the S&P 500 after the maker of knee and hip replacements posted weaker-than-expected Q3 sales.
The ADP National Employment report released on Wednesday showed that U.S. private nonfarm payrolls rose by 42K in October, stronger than expectations of 32K. Also, the U.S. ISM services index rose to 52.4 in October, stronger than expectations of 50.7. At the same time, the U.S. October S&P Global services PMI was revised lower to 54.8 from the preliminary reading of 55.2.
Fed Governor Stephen Miran said on Wednesday that the ADP report showing an increase in employment at companies was “a welcome surprise,” though he reiterated that interest rates should be lower.
U.S. rate futures have priced in a 67.3% probability of a 25 basis point rate cut and a 32.7% chance of no rate change at December’s monetary policy meeting.
Third-quarter corporate earnings season rolls on, with notable companies like ConocoPhillips (COP), Airbnb (ABNB), Monster Beverage (MNST), Vistra Corp. (VST), Warner Bros Discovery (WBD), and Take-Two Interactive Software (TTWO) slated to release their quarterly results today. According to Bloomberg Intelligence, companies in the S&P 500 are expected to post an average +7.2% increase in quarterly earnings for Q3 compared to the previous year, marking the smallest rise in two years.
Market participants will also hear perspectives from Fed Governors Christopher Waller and Michael Barr, along with New York Fed President John Williams, Cleveland Fed President Beth Hammack, and Philadelphia Fed President Anna Paulson, throughout the day.
Meanwhile, the U.S. government shutdown has entered its 37th day. The shutdown has become the longest in U.S. history, surpassing the previous record on Tuesday night. In light of the shutdown, the publication of weekly jobless claims as well as preliminary third-quarter nonfarm productivity and unit labor costs data, originally set for today, will be delayed.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.139%, down -0.48%.
The Euro Stoxx 50 Index is down -0.09% this morning as investors digest fresh economic data from the region and mixed corporate earnings reports, while also awaiting the Bank of England’s monetary policy decision. Industrial stocks underperformed on Thursday. Data from Eurostat released on Thursday showed that the Eurozone’s monthly retail sales unexpectedly fell in September, in contrast to the more upbeat consumer sentiment seen in recent months. Separately, data showed that Germany’s monthly industrial production rebounded much less than expected in September, leading the economy ministry to warn that there are still no signs of a fundamental economic recovery. The Bundesbank also cautioned that Germany faces growing threats to financial stability stemming from unpredictable U.S. economic policy, overvalued stock markets, elevated global debt levels, and souring bank credit. Meanwhile, Norway’s central bank kept its key policy rate unchanged at 4.00% on Thursday, as widely expected, and reaffirmed its plans to ease monetary policy gradually over the next few years. Attention now shifts to the Bank of England’s monetary policy decision later in the session, with the central bank widely expected to leave the bank rate unchanged at 4.00% ahead of the government’s budget announcement later this month. In corporate news, Legrand (LR.FP) plunged over -10% after the French electrical and digital building infrastructure manufacturer posted weaker-than-expected results for the first nine months of the year. At the same time, Adecco Group AG (ADEN.Z.EB) climbed more than +7% after the staffing company posted better-than-expected quarterly results.
European Central Bank Vice President Luis de Guindos said on Thursday that policymakers are satisfied with the current level of interest rates and view any drop in inflation below 2% as temporary. “I think that convergence to 2% without any overshooting or undershooting is now the main baseline scenario for projections,” de Guindos said.
Germany’s Industrial Production and Eurozone’s Retail Sales data were released today.
The German September Industrial Production rose +1.3% m/m, weaker than expectations of +3.0% m/m.
Eurozone’s September Retail Sales fell -0.1% m/m and rose +1.0% y/y, compared to expectations of +0.2% m/m and +1.0% y/y.
Asian stock markets today settled in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.97%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +1.34%.
China’s Shanghai Composite Index closed higher today, reclaiming the key psychological 4,000 level, buoyed by renewed optimism surrounding the nation’s push for tech self-sufficiency. Technology stocks led the gains on Thursday after Reuters reported that the Chinese government had issued new guidance mandating that state-funded data center projects use only domestically produced AI chips. This could mark one of China’s most aggressive moves yet to phase out foreign technology from its critical infrastructure and advance its goal of achieving AI chip self-sufficiency. Zhongtai Securities analysts said, “China’s tech self-reliance will be an irreversible theme going forward. We think the recent pullbacks in the domestic supply chain will be buying opportunities.” In other news, China’s Commerce Ministry said on Thursday that the country is open to exploring potential trade and investment agreements with the European Union. Investors now turn their focus to China’s October trade data, scheduled for release on Friday. Barclays economists said in a note that the high base effect and the Golden Week holiday likely hurt China’s exports last month. Still, the economists anticipate that the tactical truce reached between China and the U.S. at last week’s APEC summit will help ease short-term uncertainties surrounding exports. In corporate news, Cathay Pacific Airways rose about +4% in Hong Kong after announcing it would buy back shares owned by Qatar Airways.
Japan’s Nikkei 225 Stock Index closed higher today as a rebound on Wall Street overnight revived risk appetite. Electronics and machinery stocks led the gains on Thursday. Government data released on Thursday showed that Japan’s real wages declined for the ninth straight month in September as rising inflation outpaced nominal pay, complicating the Bank of Japan’s policymaking. Inflation-adjusted wages, a key determinant of household purchasing power, declined 1.4% in September from a year earlier, following a revised 1.7% drop in August. BOJ Governor Kazuo Ueda has said he wants to see additional data, including early signs for next year’s wage negotiations, before deciding on the central bank’s next move. Meanwhile, Japan’s largest industrial union, UA Zensen, said on Thursday it would seek a 6% pay increase in next year’s wage negotiations, while the country’s biggest labor federation, Rengo, recently stated it plans to push for an increase of at least 5%. Separate data showed that Japan’s services sector continued to grow at a solid pace in October, even as new orders rose at the slowest rate in 16 months and inflationary pressures resurfaced. In corporate news, Konica Minolta surged over +15% after the company raised its full-year net profit guidance. Also, Softbank Group rose more than +2% after Bloomberg reported that the Japanese investment conglomerate had explored a potential takeover of U.S. chipmaker Marvell Technology earlier this year. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -8.14% to 33.63.
The Japanese October au Jibun Bank Services PMI stood at 53.1, stronger than expectations of 52.4.
Pre-Market U.S. Stock Movers
Qualcomm (QCOM) fell over -2% in pre-market trading, becoming the latest chipmaker to issue upbeat guidance that nonetheless failed to impress investors.
Snap (SNAP) jumped over +19% in pre-market trading after the social-media platform reported stronger-than-expected Q3 results, gave an upbeat Q4 adjusted EBITDA guidance, and announced a major partnership with Perplexity.
Applovin (APP) climbed more than +6% in pre-market trading after the advertising technology company posted upbeat Q3 results and issued above-consensus Q4 revenue guidance.
Arm Holdings (ARM) rose over +5% in pre-market trading after the chip designer reported better-than-expected FQ2 results and provided strong FQ3 guidance.
DoorDash (DASH) plunged more than -11% in pre-market trading after reporting weaker-than-expected Q3 EPS.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Thursday - November 6th
ConocoPhillips (COP), Parker-Hannifin (PH), Airbnb (ABNB), Monster Beverage (MNST), Vistra Energy (VST), Cummins (CMI), Warner Bros Discovery (WBD), Datadog (DDOG), Air Products (APD), TC Energy (TRP), Becton Dickinson (BDX), Take-Two (TTWO), Block (XYZ), Wheaton Precious Metals (WPM), Rockwell Automation (ROK), Consolidated Edison (ED), NRG (NRG), Microchip (MCHP), Mettler-Toledo (MTD), Natera Inc (NTRA), Ameren (AEE), Expedia (EXPE), Affirm Holdings (AFRM), The Trade Desk (TTD), Tapestry (TPR), Insulet (PODD), Pembina Pipeline (PBA), EchoStar (SATS), BCE Inc (BCE), Ralph Lauren (RL), IREN Ltd (IREN), RB Global (RBA), Evergy (EVRG), Alliant Energy (LNT), US Foods (USFD), Somnigroup International (SGI), DuPont De Nemours (DD), Gen Digital (GEN), Celsius (CELH), Smith&Nephew SNATS (SNN), Fidelity Financial (FNF), News Corp (NWS), DraftKings (DKNG), Hyatt (H), Wynn Resorts (WYNN), Sharkninja (SN), Viatris (VTRS), Doximity (DOCS), Lamar (LAMR), Solventum (SOLV), Karman Holdings (KRMN), Texas Roadhouse (TXRH), Camden Property (CPT), MACOM Tech (MTSI), Nuscale Power (SMR), D Wave Quantum (QBTS), ADS (WMS), Akamai (AKAM), Nova (NVMI), MP Materials (MP), Moderna (MRNA), UWM Holdings (UWMC), EPAM Systems (EPAM), Pharming Group (PHAR), Globus Medical (GMED), Dropbox (DBX), Millicom (TIGO), Planet Fitness Inc (PLNT), AAON (AAON), Stepstone (STEP), Brookfield Business (BBU), Solstice Advanced Materials (SOLS), Universal Display (OLED), Genpact (G), Stevanato Group SpA (STVN), Onto Innovation (ONTO), H&R Block (HRB), Middleby Corp (MIDD), SoundHound AI (SOUN), Nexstar (NXST), Shift4 Payments Inc (FOUR), Teleflex (TFX), Jfrog (FROG), Opendoor Tech (OPEN), StoneCo (STNE), Main Street Capital (MAIN), TransAlta Corp (TAC), ACI Worldwide (ACIW).
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.
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