Daily markets: Markets gear up for Fed meeting
The big picture today
Asia-Pacific stock indices ended today’s session up across the board, with Japan’s Nikkei gaining 0.33%, India’s Sensex 0.62%, Taiwan’s TAIEX 0.68%, Australia’s ASX All Ordinaries 1.63%, South Korea’s KOSPI 1.81% and China’s Shanghai Composite 2.62%. Hong Kong’s Hang Seng had a big day, up 5.23% on a broad rally led by consumer services on speculation about the easing of covid restrictions. Of the 50 stocks in the index that make up about 60% of Hong Kong’s total market capitalization, only one name was down today, a bank holding company.
By midday, European equity indices are up across the board and US futures are pointing to a positive start to November.
Yields on Treasuries fell, but investors await the latest set of economic data before the end of the Fed’s monetary policy meeting tomorrow afternoon. Lately, the market has been in a tug of war over whether the Fed will continue its current pace of raising interest rates or scale back its December and February hikes. It has been noted that if the 2-year and 10-year portions of the yield curve have been inverted for some time, that inversion begins to creep into the shorter end of the curve. This is starting to fuel speculation that the Fed may be about to scale back its tightening efforts, as the shorter parts of the curve that are inverting indicate a stronger signal.
What does this signal? An inverted yield curve is commonly interpreted as a signal of an impending recession, and readers should remember that Powell and other Fed officials recognized the potential for pain as part of its inflation-control efforts. . Today’s economic data could give the Fed enough cover to stay on its current path, but as we enter 2023, the chances of more modest monetary policy action are increasingly likely.
The Jibun Bank Japan manufacturing PMI was at 50.7 in October, unchanged from the flash reading and slightly lower than September’s final reading of 50.8. October’s final print was the slowest pace of factory activity since a slump in January 2021, with output and new orders falling for the fourth month in a row.
Caixin China’s general manufacturing PMI rose to 49.2 in October from September’s 4-month low of 48.1 and slightly better than the market consensus of 49.0. Even so, the October figure marketed the third straight month of declines amid COVID restrictions. Production and new orders fell at a slower pace, while buying levels rose for the first time since July. Foreign demand, however, fell for the third consecutive month.
The S&P Global/CIPS UK manufacturing PMI was revised slightly higher to 46.2 in October from a preliminary estimate of 45.8, but still points to the biggest contraction in data since May 2020. New orders have the fell the most in two and a half years. , with new export business falling for the ninth consecutive month.
At 9:45 a.m. ET, S&P Global will release the final reading of its U.S. manufacturing PMI for October. Following the recent flash reading, the market is expecting a print of 49.9, down from September’s final reading of 52. Shortly after, at 10 a.m. ET, the Institute of Supply Management will release his view on the domestic manufacturing economy in October. As this report is released, so will the September construction spending report as well as the September JOLTs job openings report.
A week before the midterm elections and with U.S. gasoline prices still up more than 10% from levels a year ago according to AAA, President Joe Biden said that he would seek to impose higher taxes on oil companies that make “windfall” profits without reinvesting in production.
Markets took a slight pause yesterday as the Russell 2000 closed essentially flat, up just 0.003% while the Dow Jones was down 0.39%, the S&P 500 was down 0.75 % and the Nasdaq Composite down 1.03%. All sectors except energy were down, led by the names of communication services and technology. Sole proprietorships that broke yesterday included Wynn Resorts (WYNN) which jumped 9.61% on a filing with the SEC that Houston Rockets and Golden Nuggets Casino owner Tilman Fertitta acquired a 6.1% stake in the company.
Here’s how the major market indicators stack up since the start of the year:
- Dow Jones Industrial Average: -9.92%
- S&P 500: -18.76%
- Nasdaq compound: -29.77%
- Russell 2000: -17.75%
- Bitcoin (USD-BTC): -55.80%
- Ether (ETH-USD): -57.28%
Stocks to Watch
Prior to the start of trading for U.S.-listed stocks, AGCO Corp. (AGCO), Commvault Systems (CVLT), Eaton (ETN), Eli Lilly (LLY), Fox Corp. (FOXA), Idexx Labs (IDXX), Leidos (LDOS), LGI Homes (LGIH), Molson Coors (TAP), SoFi Technologies (SOFI), Triton International (TRTN), (Uber) and Zebra Tech (ZBRA) are expected to feature among the companies that will publish their latest quarterly results.
For its September semester, NXP Semiconductor (NXPI) reported EPS of $2.79, beating consensus guidance of $0.04 per share. Revenue for the quarter rose 20.4% year-on-year to $3.44 billion, slightly ahead of consensus forecasts. The company shared that while it remains capacity constrained, it sees “uncertainties in the macro environment” and guided current quarter revenue to $3.2-3.4 billion versus consensus. of $3.41 billion.
Even though Herbalife (HLF) released quarterly EPS that beat revenue expectations in line with consensus guidance, the company withdrew its prior guidance for 2022 “in light of rapidly changing macroeconomic sentiment and backdrop, as well as heightened market volatility “.
Results for the quarter from September to Goodyear tire (GT) fell short of consensus expectations, moreover, he shared that he now expects “a continuation of many of the same underlying trends we saw in the third quarter.” Additionally, the company shared that it now sees cost inflation peaking in the December quarter, not the recently completed September quarter. Based on today’s spot rates, it now projects year-over-year cost increases of $300 million to $400 million in the first half of 2023, with the majority occurring in the March quarter.
Existing and potential investors in gaming companies like Las Vegas Sands (LVS) and Wynn Resorts will like to note that the Macau Gaming Inspection and Coordination Bureau announced that in October 2022, gross revenue fell 10.7% YoY and 49.6% MoM to HKD 3.899 billion .
XPeng (XPEV) announced deliveries of 5,101 smart electric vehicles in October, down about 40% per month and about 50% from a year earlier. NIO (NIO) delivered 10,059 vehicles in October, up 174.3% year-on-year but down 7.5% month-on-month. Li Auto (LI) delivered 10,052 vehicles in October, up 31.4% year-on-year, but down 13% from September.
Drivers at Delta Airlines (DAL) voted to authorize a strike if negotiators fail to reach agreement on a new contract. According to Delta, “significant progress” has been made in contract negotiations and only a few issues remain to be resolved.
Game Stop (EMG) announced the official launch of the GameStop NFT Marketplace with ImmutableX Pty Limited, which unlocks access to Web3 games and NFT gaming resources for GameStop gamers.
So far, it looks like a quiet week on the IPO front. Readers interested in learning more about the upcoming IPO schedule should visit Nasdaq’s Most Recent and Upcoming IPOs Page.
After today’s market close
Airbnb (ABNB), Caesars Entertainment (CZR), Cheesecake Factory (CAKE), Chegg (CHGG), Cirrus Logic (CRUS), Citrix Systems (CTXS), Denny’s (DENN), Electronic Arts (EA), Freshpet (FRPT), Freshworks (FRSH), Match Group (MTCH), OneSpan (OSPN) and Yum China (YUMC) are expected to be among dozens of companies reporting quarterly results after the market close today. Those who want to know more about the companies that publish reports, go to Nasdaq earnings schedule.
on the horizon
Wednesday, November 2
- Eurozone: S&P Global Final Eurozone Manufacturing PMI – October
- US: Weekly MBA Mortgage Applications
- United States: ADP report on the evolution of employment – October
- United States: EIA Weekly Crude Oil Inventories
- United States: FOMC rate decision
Thursday, November 3
- China: Caixin China General Services PMI – October
- S&P Global/CIPS UK Services PMI – October
- United Kingdom: Bank of England decision on interest rates
- United States: Challenger Job Cuts Report – October
- United States: Initial and Continuing Weekly Unemployment Claims
- United States: Productivity – 3rd quarter 2022
- US: S&P Global Final US Services PMI – October
- United States: Factory orders – September
- United States: ISM non-manufacturing index – October
- United States: EIA Weekly Natural Gas Inventories
friday november 4
- Japan: Au Jibun Bank Japan Services PMI – October
- Eurozone: S&P Global Eurozone Composite PMI
- Euro zone: Producer price index – September
- United States: Jobs report – October
Thought of the day
“The key is not to prioritize what’s on your schedule, but to plan your priorities.” ~Stephen Covy
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.