As December S&P 500 E-Mini futures (ESZ24) and December Nasdaq 100 E-Mini futures (NQZ24) both experienced a decline this morning, investors are carefully analyzing the latest quarterly earnings reports from major tech companies like Microsoft and Meta, as well as robust U.S. economic data that complicates the Federal Reserve’s rate cut outlook.
Microsoft (MSFT) saw a pre-market trading drop of over -3% following the release of a disappointing cloud revenue growth forecast for the second fiscal quarter. Similarly, Meta Platforms (META) fell more than -3% in pre-market trading after CEO Mark Zuckerberg’s announcement of continued heavy investment in AI and other futuristic technologies.
The market is now eagerly awaiting the Fed’s preferred inflation gauge and the upcoming corporate earnings reports, with a particular interest in results from ‘Magnificent Seven’ companies such as Apple and Amazon.
Wall Street’s major indices closed in the red during yesterday’s trading session. Super Micro Computer (SMCI) saw a dramatic drop of over -32%, becoming the top percentage loser on both the S&P 500 and Nasdaq 100, following the resignation of Ernst & Young LLP as the company’s auditor.
Advanced Micro Devices (AMD) also experienced a significant decline, plunging more than -10%, after releasing a weak Q4 revenue forecast. Additionally, Eli Lilly (LLY) slumped over -6% post the release of disappointing Q3 results and a reduction in its full-year adjusted EPS forecast.
On a positive note, Garmin Ltd. (GRMN) surged more than +23%, leading the S&P 500’s top percentage gainers, following the announcement of strong Q3 results and an increase in full-year guidance. Alphabet (GOOGL), the parent company of Google, also reported better-than-expected Q3 results, resulting in a gain of over +2%.
The U.S. Bureau of Economic Analysis first estimate of Q3 GDP growth on Wednesday showed the economy grew at a +2.8% annualized rate, slightly weaker than the expected +3.0%. Additionally, the U.S. October ADP employment change jumped +233K, higher than the +110K consensus and the biggest increase in 15 months. Moreover, U.S. pending home sales climbed +7.4% m/m in September, stronger than the expected +1.9% m/m and the largest increase in 4-1/4 years. “Solid but not blistering growth fits nicely within the current economic backdrop,” said Bret Kenwell at eToro. “Too hot of a print and investors would likely question the Fed’s decision to cut rates by 50 basis points in September, while a weak print could reignite worries about a deteriorating economy.” Meanwhile, U.S. rate futures have priced in a 96.
As stocks plunge before the market opens, Microsoft and Meta’s performance significantly impacts investor sentiment. The upcoming U.S. inflation data and corporate earnings reports are central to market attention.
There is a 1% chance of a 25 basis point rate cut and a 3.9% chance of no rate change at the Federal Reserve’s November meeting. The third-quarter corporate earnings season is in full swing, with market participants eagerly awaiting new reports from major companies such as Apple (AAPL), Amazon (AMZN), Mastercard (MA), Intel (INTC), Merck & Co. (MRK), Altria (MO), and Uber Technologies (UBER).
Bloomberg Intelligence anticipates that S&P 500 companies are expected to report an average earnings increase of +4.3% for Q3 compared to the previous year, marking a decrease from the +7.9% growth projected in mid-July.
Economic data is also a key focus, with the U.S. core personal consumption expenditures price index, the Federal Reserve’s preferred inflation measure, set to be released shortly. Economists predict that the core PCE price index will stand at +0.
In the financial market, stocks are experiencing a plunge before the opening bell, with Microsoft and Meta contributing to the bearish sentiment. Attention is also drawn to the US inflation data and upcoming earnings reports.
In September, the US inflation rate showed a monthly increase of 3% and a yearly increase of 2.6%, contrasting with the previous rates of 0.1% monthly and 2.7% yearly.
Investors are also keenly watching the US Chicago PMI, which stood at 46.6 in September. Predictions for October are at 46.9.
Personal Spending and Personal Income data are under close scrutiny today. Economists anticipate a 0.4% monthly increase in September Personal Spending and a 0.3% monthly increase in Personal Income, contrasting with the August figures of 0.2% and 0.2%, respectively.
The US Employment Cost Index for the third quarter is expected to be +0.9% quarter-over-quarter, aligning with the second quarter’s figure.
Additionally, the US Initial Jobless Claims data is set to be reported today, with economists estimating it to be 229K, slightly above last week’s figure of 227K.
The bond market has seen the yield on the benchmark 10-year U.S. Treasury note rise to 4.292%, an increase of 0.59%.
Euro Stoxx 50 futures have declined by 0.73% this morning as investors grapple with a blend of earnings reports and pivotal inflation data from the Eurozone. Technology stocks were at the forefront of Thursday’s market downturn. Eurostat announced that the Eurozone’s annual inflation rate for October exceeded expectations, aligning with the European Central Bank’s target and bolstering the argument for a measured reduction in interest rates. ECB President Christine Lagarde projected that Eurozone inflation will sustainably reach the central bank’s 2% goal by 2025. In an interview with Le Monde published on Thursday, Lagarde reflected, “Perhaps we could have intervened a few months earlier. Nevertheless, we raised rates at an unprecedented pace, and we were successful in significantly reducing inflation over a short period.”In corporate news, BNP Paribas (BNP.FP) slumped by over -5% as its Q3 results didn’t impress investors. Meanwhile, Societe Generale (GLE.FP) climbed more than +7% after reporting higher Q3 revenue and announcing several leadership changes. France’s CPI (preliminary), Eurozone’s CPI (preliminary), Eurozone’s Core CPI (preliminary), and Eurozone’s Unemployment Rate were released today. The French October CPI was +0.2% m/m and +1.2% y/y, meeting expectations of +0.2% m/m and exceeding +1.1% y/y. Eurozone October CPI is reported at +2.0% y/y, stronger than expected +1.9% y/y. Eurozone October Core CPI is +2.7% y/y, stronger than expected +2.6% y/y. Eurozone September Unemployment Rate is 6.3%, better than expected 6.4%. Asian stock markets today closed mixed.
The Shanghai Composite Index (SHCOMP) of China closed up +0.42%. The Nikkei 225 Stock Index (NIK) of Japan closed down -0.50%. Today, China’s Shanghai Composite Index closed higher. Strong manufacturing data boosted sentiment. Investors are looking forward to a key leadership meeting. Property and financial stocks led the gains on Thursday. A National Bureau of Statistics report released on Thursday showed that China’s manufacturing activity expanded for the first time in six months in October, offering a tentative sign of recovery as Beijing strives to rejuvenate the economy. Although services activity also remained in expansion territory, it fell short of expectations. Meanwhile, market participants are now focusing on a meeting of the National People’s Congress Standing Committee set to take place from November 4th to 8th, where announcements regarding debt and fiscal initiatives are expected.
Reuters reported that authorities are considering approving 10 trillion yuan ($1.4 trillion) in additional borrowing over the coming years to support the economy and address local government debt risks.
China’s state-owned banks will begin adjusting existing mortgage interest rates on Friday following last week’s loan prime rates cut. BYD fell over -4% despite surpassing Tesla in quarterly revenue for the first time. Morgan Stanley noted its profit per vehicle fell short of expectations. Industrial and Commercial Bank of China rose nearly +1% in Hong Kong after reporting a 4% year-over-year increase in Q3 profit. The Chinese October Manufacturing PMI reached 50.1, stronger than the expected 49.8. The Chinese October Non-Manufacturing PMI came in at 50.Stocks experienced a plunge before the market opened, with Microsoft and Meta’s performance significantly affecting investor sentiment. The focus of market participants is on upcoming U.S. inflation data and corporate earnings reports.
Japan’s Nikkei 225 Stock Index closed lower today as investors locked in profits following the Bank of Japan’s rate decision. The decline was led by consumer and technology stocks.
On Thursday, government data revealed that Japan’s industrial production increased in September, but retail sales growth decelerated, sending mixed signals about the economy amidst an uncertain demand outlook.
The Bank of Japan kept its policy interest rate at 0.25%, as widely expected, while reiterating its commitment to achieving its inflation target. This stance suggests the likelihood of another rate hike in the coming months.
In a research report, Capital Economics’ Marcel Thieliant noted that the BOJ maintained its hawkish outlook, and he expects a rate hike to 0.
In the financial markets, stocks experienced a plunge before the open as Microsoft and Meta’s performance weighed on investor sentiment. The Bank of Japan’s (BOJ) decision led to the yen strengthening below 153 per dollar.
Corporate news saw Advantest’s shares surge over 6% following an increase in its full-year operating profit forecast, attributed to high demand for AI-related testing tools. Conversely, Kyocera’s stock plummeted more than 10% after the smartphone manufacturer reduced its annual operating profit guidance.
The Nikkei Volatility Index, which measures the implied volatility of Nikkei 225 options, closed 0.85% lower at 25.75. Economic data from Japan showed that September Industrial Production was higher than expected at +1.4% month-over-month, compared to the forecast of +0.9%. Meanwhile, September Retail Sales were weaker than anticipated, reporting a +0.5% year-over-year increase versus expectations of +2.1%.
Pre-market movements in the U.S. indicated that Microsoft (MSFT) shares slid over 3% after the tech giant’s disappointing Q2 cloud revenue growth forecast.
Pre-market trading witnessed significant stock movements as Microsoft and Meta influenced investor sentiment. Meta Platforms (META) dropped over 3% following CEO Mark Zuckerberg’s announcement of continued heavy investment in AI and futuristic technologies.
eBay (EBAY) saw a plunge of more than 9% after releasing Q4 revenue guidance that fell short of expectations. Robinhood (HOOD) reported weaker Q3 results, causing its stock to slump by over 10% in pre-market trading. On a positive note, Booking Holdings (BKNG) climbed over 6% after posting strong Q3 results and raising its annual guidance. For a comprehensive list of pre-market stock movers, click here. Today’s focus in the U.S. includes key earnings releases from major companies such as Apple (AAPL), Amazon.com (AMZN), Mastercard (MA), Merck & Co (MRK), Uber Tech (UBER), Comcast (CMCSA), Eaton (ETN), ConocoPhillips (COP), Bristol-Myers Squibb (BMY), Regeneron Pharma (REGN), Southern (SO), ICE (ICE), Intel (INTC), Cigna (CI), Altria (MO), Parker-Hannifin (PH), Canadian Natural (CNQ), WW Grainger (GWW), Quanta Services (PWR), Cheniere Energy (LNG), IQVIA Holdings (IQV), Ingersoll Rand (IR), Ametek (AME), Alnylam (ALNY), Ambev SA (ABEV), Xcel Energy (XEL), VICI Properties (VICI), Blue Owl Capital (OWL), Xylem (XYL), Estee Lauder (EL), Cenovus Energy Inc (CVE), WEC Energy (WEC), Willis Towers Watson (WTW), Entergy (ETR), Li Auto (LI), Roblox (RBLX), Kellanova (K), Erie Indemnity (ERIE), CMS Energy (CMS), Ball (BALL), Aptiv (APTV), Coterra Energy (CTRA), International Paper (IP), Kimco Realty (KIM), Hyatt (H), Sharkninja (SN), Alliant Energy (LNT), Reinsurance of America (RGA), Juniper (JNPR), Camden Property (CPT), Eastman Chemical (EMN), Lincoln Electrics (LECO), Teleflex (TFX), CubeSmart (CUBE), Norwegian Cruise Line (NCLH), Mobileye Global (MBLY), Onto Innovation (ONTO), Huntington Ingalls Industries (HII), Generac (GNRC), MasTec (MTZ), Api Group Corp (APG), Open Text (OTEX), United States Steel (X), Cullen/Frost Bankers (CFR), Fannie Mae (FNMA), HF Sinclair (DINO), BorgWarner (BWA), Gildan Activewear (GIL), Middleby Corp (MIDD), Arrow Electronics (ARW), Insight Enterprises (NSIT), Janus Henderson (JHG), Halozyme (HALO), Lincoln National (LNC), Vontier (VNT), Federal Signal (FSS), Sonoco Products (SON), Lancaster Colony (LANC), Allegro (ALGM), SM Energy (SM), Belden (BDC), Dun And Bradstreet (DNB), Madrigal Pharma (MDGL), Itron (ITRI), Bgc Group (BGC), Organon Co (OGN), Lazard (LAZ), Sabra (SBRA), Avient Corp (AVNT), Verra Mobility (VRRM), Select Medical (SEM), Kontoor Brands (KTB), The Wendy’s Co (WEN), SkyWest (SKYW), InterDigital (IDCC), CNO Financial (CNO), Eldorado Gold (EGO), Cinemark (CNK), Granite Construction (GVA), Dorman (DORM), Valaris (VAL), Cavco (CVCO), PBF Energy (PBF), ICF International (ICFI), Avis (CAR), Insperity (NSP), Kymera (KYMR), Patrick (PATK), California Water Service (CWT), Trinity Industries (TRN), Quaker Chemical (KWR), Agios Pharm (AGIO), Peloton Interactive (PTON), Laureate Education (LAUR), Driven Brands Holdings (DRVN), Utz Brands (UTZ), Baytex Energy Corp (BTE), SolarWinds Corp (SWI), Alamo (ALG), Viavi Solutions (VIAV), LeMaitre Vascular (LMAT), Distribution Solutions (DSGR), Donnelley Financial Solutions (DFIN), Cipher Mining (CIFR), Tennant (TNC), Centerra Gold (CGAU), Customers Bancorp (CUBI), Upbound (UPBD), Ardelyx Inc (ARDX), Fresh Del Monte Produce (FDP), Uniti Group (UNIT), Travere Therapeutics (TVTX).Stocks are experiencing a plunge before the market opens. Microsoft and Meta are weighing on sentiment. At the same time, U.S. inflation data and earnings are in the spotlight.
