Pre-Market Brief: Stocks Mixed Ahead of Key U.S. Jobs Data
Morning Markets
December S&P 500 futures (ESZ22) are trending down -0.38% this morning after three major US benchmark indices fizzled a two-day relief rally on robust economic data and Federal Reserve officials' remarks that pushed back against bets of a pivot. Three major U.S. stock indexes were weighted down primarily by losses in the Utilities, Consumer Goods, and Basic Materials sectors.
U.S. private employers increased hiring in September, as shown in the stronger-than-expected ADP National Employment report on Wednesday, pointing to underlying economic strength. In addition, U.S. services activity rebounded more than expected in September, suggesting the Fed will keep interest rates higher for longer.
San Francisco Federal Reserve President Mary Daly said that the "path has been very clear: we are going to raise the rate until we get into restrictive territory, and then we are going to hold it there until inflation comes down closer to 2%," easing investor bets on a Fed pivot. Atlanta Fed President Raphael Bostic supported those statements, saying the Fed should "remain purposeful and resolute" in the battle against inflation.
Meanwhile, U.S. rate futures have priced in a 32.6% chance of a 50 basis point rate increase and a 67.4% chance of a 75 basis point hike at November's monetary policy meeting.
Today, all eyes are focused on the U.S. Initial Jobless Claims data in a couple of hours. Economists, on average, forecast that Initial Jobless Claims will come in at 203K, compared to the last week's figure of 193K.
Also, investors are likely to focus on a batch of speeches from Federal Reserve members, including Waller and Mester.
In the bond markets, United States 10-Year rates are at 3.757%, down -0.05%.
The Euro Stoxx 50 is up +0.32% this morning, regaining momentum after European markets closed lower on Wednesday as bullish sentiment observed in global equities in recent days faded, especially after Eurozone PMI data fell to a 20-month low, fueling fears of a recession in the region. An additional supportive factorfor European equities is the more than +3% jump in shares of Imperial Brands PLC (IMB.LN) after the tobacco company said FY22 trading was in line with expectations.
Also, market participants are awaiting the report of the European Central Bank's September meeting for hints on the pace and path of future rate increases.
Germany Factory Orders, U.K Construction Purchasing Managers Index (PMI), and Eurozone Retail Sales data were released today.
The German August Factory Orders data has been reported at -2.4% m/m, weaker than expectations of -0.7% m/m, leading to additional concerns about the health of Europe's largest economy.
U.K September Construction PMI stood at 52.3, stronger than expectations of 48.0.
Eurozone August Retail Sales came in at -0.3% m/m and -2.0% y/y compared to expectations of -0.4% m/m and -1.7% y/y.
Asian stock markets today mainly settled in the green, supported by hopes of the Chinese economic recovery. Regional markets extended gains after reports from local Chinese media suggested that consumers' holiday spending remained strong despite COVID-related concerns, boosting hopes for a recovery. In addition, Chinese demand for commodity imports is expected to rise in the fourth quarter, according to a Reuters report.
Japan’s Nikkei 225 Stock Index (NIK) closed up +0.70%, while the Chinese market was closed for holidays.
Japan’s Nikkei 225 Stock Index surged today to its highest level since late September, driven by energy and chip-related stocks. The index's upward momentum was primarily driven by gains in the Precision Instruments, Transportation Equipment, and Electrical/Machinery sectors. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down 4.32% to 23.46.
Pre-Market U.S. Stock Movers
Surgepays Inc (SURG) jumped more than +8% in pre-market trading after the company announced it had exceeded 200,000 subscribers in its mobile broadband subscriber business SurgePhone Wireless LLC.
Pinterest Inc (PINS) gained over +4% in pre-market trading after Goldman Sachs upgraded the stock to buy from neutral with a price target of $31, up from $24.
Lumen Technologies Inc (LUMN) dropped over -1% in pre-market trading after Wells Fargo downgraded the stock to equal weight from overweight with a price target of $8, down from $12.50.
Steel Dynamics Inc (STLD) rose more than +1% in pre-market trading after Goldman Sachs upgraded the stock to buy from neutral with a price target of $88, down from $89.
Reliance Steel & Aluminum Co (RS) slid over -1% in pre-market trading after Goldman Sachs downgraded the stock to neutral from buy with a price target of $201, down from $218.
Today’s U.S. Earnings Spotlight: Thursday - October 6th
Constellation Brands A (STZ), Constellation Brands B (STZb), Seven i ADR (SVNDY), McCormick&Co (MKC), McCormick & Comp (MKCv), ConAgra Foods (CAG), ASX ADR (ASXFY), Levi Strauss A (LEVI), Tilray (TLRY), Ferrexpo (FEEXF), AngioDynamics (ANGO), IDT (IDT), Aehr Test Systems (AEHR), Landec (LNDC), Park Electrochemical (PKE), Trilogy Metals (TMQ), TSR (TSRI), Peoples Educational (PEDH).
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