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Stocks Set to Open Higher as Investors Await Key U.S. Economic Data and Big Tech Earnings
December S&P 500 E-Mini futures (ESZ24) are up +0.37%, and December Nasdaq 100 E-Mini futures (NQZ24) are up +0.48% this morning as investors looked ahead to earnings reports from some of the biggest tech heavyweights as well as key economic data, including a payrolls report, the Fed’s favorite inflation gauge, and the first estimate of third-quarter GDP.
Oil prices plunged on Monday after Iran said that its oil industry was functioning normally following Israel’s retaliatory strikes on military targets across the country over the weekend. That resulted in some easing of geopolitical tension as markets geared up for a week filled with event risks.
In Friday’s trading session, Wall Street’s major averages closed mixed, with the blue-chip Dow falling to a 2-week low and the tech-heavy Nasdaq 100 rising to a 3-1/4 month high. Tapestry (TPR) surged over +13% and was the top percentage gainer on the S&P 500 after a federal judge blocked the company’s $8.5 billion acquisition of Capri Holdings. Also, Western Digital (WDC) gained more than +4% to lead chip stocks higher after reporting better-than-expected Q1 adjusted EPS. In addition, Deckers Outdoor (DECK) climbed over +10% after the company posted upbeat Q2 results and raised its full-year revenue growth forecast. On the bearish side, Mohawk Industries (MHK) plunged more than -13% and was the top percentage loser on the S&P 500 after providing below-consensus Q4 adjusted EPS guidance. Also, McDonald’s (MCD) fell about -3% and was the top percentage loser on the Dow after the CDC said that the E. coli outbreak linked to the fast-food chain’s burgers has now spread to 13 states and infected 75 people.
Economic data released on Friday showed that the University of Michigan’s U.S. consumer sentiment index was revised upward to a 6-month high of 70.5 in October, stronger than expectations of 68.9. Also, U.S. September durable goods orders fell -0.8% m/m, a smaller drop than the -1.1% m/m expected, while core durable goods orders, which exclude transportation, rose +0.4% m/m, stronger than expectations of -0.1% m/m.
“Certainly better news for Jerome Powell and Company,” said Jeff Roach at LPL Financial. “Consumers feel confident that inflation is easing. Investors are anticipating Friday’s employment release as the Fed attempts to stick the soft landing.”
Meanwhile, U.S. rate futures have priced in a 96.8% chance of a 25 basis point rate cut and a 3.2% chance of no rate change at the Fed’s monetary policy committee meeting next week.
Third-quarter earnings season continues in full force, and investors anticipate fresh reports from major companies this week, including Microsoft (MSFT), Alphabet (GOOGL), Meta Platforms (META), Amazon (AMZN), Apple (AAPL), Visa (V), AMD (AMD), McDonald’s (MCD), Pfizer (PFE), Ford Motor (F), Eli Lilly (LLY), Caterpillar (CAT), Starbucks (SBUX), Doordash (DASH), Mastercard (MA), Intel (INTC), Merck (MRK), Altria (MO), Uber Technologies (UBER), Exxon Mobil (XOM), and Chevron (CVX). 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, the September reading of the U.S. core personal consumption expenditures price index, the Fed’s preferred inflation measure, and the Nonfarm Payrolls report for October will be the main highlights. Also, market participants will be monitoring a spate of other economic data releases, including U.S. GDP (preliminary), the CB Consumer Confidence Index, JOLTS Job Openings, the S&P/CS HPI Composite - 20 n.s.a., Wholesale Inventories (preliminary), ADP Nonfarm Employment Change, Pending Home Sales, Crude Oil Inventories, the Employment Cost Index, Initial Jobless Claims, Personal Income, Personal Spending, Chicago PMI, Average Hourly Earnings, the Unemployment Rate, Construction Spending, the ISM Manufacturing PMI, and the S&P Global Manufacturing PMI.
Federal Reserve officials are in a media blackout period before the November meeting, so they are prohibited from making public comments this week.
The U.S. economic data slate is largely empty on Monday.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.281%, up +1.09%.
The Euro Stoxx 50 futures are up +0.69% this morning as risk sentiment improved, supported by easing geopolitical tensions in the Middle East. Travel and leisure stocks led the gains on Monday, while energy stocks lost ground. Meanwhile, market participants will focus on Eurozone third-quarter GDP and October inflation data this week to shape expectations regarding the European Central Bank’s future interest rate cuts. ECB Governing Council member Pierre Wunsch stated that there is no immediate need for the central bank to lower interest rates more quickly and that a slight, temporary undershoot of its inflation target would be acceptable. “Employment is high, real wages are rising and a soft landing is still the most likely outcome, so there is no urgency in further accelerating the easing of monetary policy,” Wunsch told Reuters in an interview. In corporate news, Kon.Philips N.V. (PHIA.NA) plunged over -16% after the Dutch medical devices maker cut its full-year sales forecast due to weak demand from China.
The European economic data slate is mainly empty on Monday.
Asian stock markets today settled in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.68%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +1.82%.
China’s Shanghai Composite Index closed higher today as sentiment was boosted by the launch of a new open-market monetary tool from the country’s central bank. Consumer and property stocks outperformed on Monday. Data from the National Bureau of Statistics released Sunday showed that profits at China’s industrial firms plummeted in September, posing a challenge to the economy as deflationary pressures weaken corporate finances. Industrial profits at large Chinese companies dropped -27.1% in September from a year earlier, following a -17.8% decline in August. Profits fell -3.5% in the first nine months compared to the same period in 2023. The data was “affected by factors such as high base in the same period last year,” the bureau said in a statement. Meanwhile, the People’s Bank of China introduced a new instrument to enhance its liquidity management. China’s central bank announced on Monday it would carry out monthly outright reverse repurchase operations with primary dealers for a period not exceeding one year. It also stated that it would repurchase central and local government bonds, as well as financial bonds and corporate credit debt, and publish the details on its website. In other news, Xinhua reported on Friday that China’s top legislative body is scheduled to meet from November 4th to 8th, without any mention in the agenda of the highly anticipated measures on debt and fiscal stimulus. Investor attention this week centers on earnings reports from major Chinese banks and the country’s PMI data for October.
Japan’s Nikkei 225 Stock Index closed sharply higher today, recouping most of last week’s losses as the yen weakened following the nation’s weekend election. Automobile and electronics stocks led the gains on Monday. The Japanese currency fell to a nearly 3-month low against the dollar on Monday after the Liberal Democratic Party and its coalition partner Komeito lost their majority in the lower house, fueling speculation that the political uncertainty would prompt the Bank of Japan to adopt a less hawkish stance. Ishiba’s LDP, which has governed Japan for almost all of its post-war history, along with junior coalition partner Komeito, secured 215 seats in the lower house of parliament, falling short of the 233 required for a majority. Saxo’s Charu Chanana noted that Japan’s government might undergo weeks of political negotiations, with the necessity to form a new coalition adding a layer of instability that signals risk for Japanese assets and the yen. Meanwhile, the BOJ is scheduled to decide on monetary policy on Thursday, though it is widely expected to keep its policy interest rate unchanged. In corporate news, Chugai Pharmaceutical surged over +14% after the company reported better-than-expected Q3 results. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -19.54% to 25.86.
Pre-Market U.S. Stock Movers
Boeing (BA) fell over -1% in pre-market trading following a Bloomberg report indicating that the beleaguered airplane maker plans to launch a capital raise of more than $15 billion as early as Monday.
GlobalFoundries (GFS) dropped about -1% in pre-market trading after Morgan Stanley downgraded the stock to Equal Weight from Overweight.
Nio (NIO) gained more than +3% in pre-market trading after Macquarie upgraded the stock to Outperform from Neutral with a $6.60 price target.
Serve Robotics (SERV) rose over +2% in pre-market trading after Ladenburg initiated coverage of the stock with a Buy rating and a $16 price target.
Alaska Air (ALK) advanced more than +3% in pre-market trading after Melius Research upgraded the stock to Buy from Hold with a price target of $56.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Monday - October 28th
Waste Management (WM), Welltower (WELL), Cadence Design (CDNS), Ford Motor (F), ON Semiconductor (ON), Fomento Economico Mexicano (FMX), Brown&Brown (BRO), SBA Communications (SBAC), CenterPoint Energy (CNP), Regency Centers (REG), F5 Networks (FFIV), Encompass Health (EHC), Crane (CR), Brixmor Property (BRX), Ufp Industries (UFPI), Amkor (AMKR), Trex (TREX), Flowserve (FLS), CCC Intelligent Solutions Holdings (CCCS), Element Solutions (ESI), VF (VFC), Champion Homes (SKY), Kilroy (KRC), Boot Barn Holdings (BOOT), Rambus (RMBS), TransMedics (TMDX), COPT Defense Properties (CDP), Procept Biorobotics (PRCT), NorthWestern (NWE), PotlatchDeltic (PCH), Alliance Resource (ARLP), Agilysys (AGYS), Acadia (AKR), Bank of Hawaii (BOH), Inari Med (NARI), Calix (CALX), CVR Energy (CVI), Atlas Energy Solutions (AESI), NBT Bancorp (NBTB), SJW (SJW), Camping World Holdings (CWH), Harmonic (HLIT), Safehold (SAFE), Leggett&Platt (LEG), Ultra Cleans (UCTT), LTC Properties (LTC), Hope Bancorp (HOPE), Centrus Energy (LEU), Two Harbors (TWO), Capital Southwest (CSWC), Centerspace (CSR), Transcat (TRNS), Kforce (KFRC).
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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.
