Five things to know before the market opens on Wednesday, November 2:
1. — Stock futures rise as Fed decision looms
U.S. stock futures edged higher on Wednesday as the dollar fell and Treasury yields firmed as investors braced for a key meeting of the Federal Reserve later in the day, this could dictate the direction of the market for the rest of the year.
Traders are fully expecting a 75 basis point rate hike later today in Washington, a move that would lift the benchmark Federal funds rate between 3.75% and 4% – the highest since 2008 – and marks the most aggressive policy tightening by any Federal Reserve since the Paul Volcker era of the early 1980s.
In fact, central banks around the world have followed the Fed’s lead, with at least 244 different rate hikes put in place this year, a pace of nearly one per trading day, as policymakers battle some of the fastest rate increases. inflation recorded rates while trying to ensure that a fragile post-pandemic economy does not fall back into recession.
And with the Fed decision on tap for later today, a Bank of England rate hike due tomorrow in London, a key October jobs report due Friday and the US election in Next week’s midterm on Tuesday, the market now faces a major five-day trade streak that could determine whether October’s strong rally – in the case of the Dow, the best since 1976 – can hold until the end of an otherwise difficult year.
As the start of the trading day approaches on Wall Street, futures contracts linked to the S&P500 are valued for a 12-point opening bell lead while those tied to the Dow Jones Industrial Average are valued for a 72-point gain. The technology-focused Nasdaq has a price of 45 points.
In overseas markets, the Europe-wide Stoxx 600 rose 0.42% at the start of the Frankfurt session, while London’s FTSE 100 rose 0.2% as traders scrutinized another active earnings session and braced for the Fed’s decision after the market close.
Overnight in Asia, the MSCI regional index excluding Japan rose 0.8% as Chinese stocks continued to rebound following unconfirmed reports of the easing of lockdown restrictions, while the Japanese Nikkei 225 edged down 0.05% as the government again hinted at potential. intervention in the currency markets as the yen remains at its lowest level in nearly three decades against the US dollar.
2. — Fed Snapshot: Pivot Unlikely as Powell Stays Focused on Fighting Inflation
Investors looking for a clear signal that the Fed is considering slowing, or even pausing, its relentless rate hike path will likely be disappointed when Chairman Jerome Powell outlines his inflation-fighting tactics later in the week. daytime.
Markets are almost unanimous Powell and his colleagues will deliver another 75 basis point rate hike in Washington today, the fourth in a row, but are widely divided on how the Fed will act when it meets in again in December, thanks in part to both suggestions of slowing inflationary pressures and dovish signals from central banks – which continue to hike rates – in the world’s major economies.
The Fed’s favorite inflation indicator, the core PCE the price index, fell slightly last month, but is still running at an annual level of 4.9%. Headline inflation is still near the fastest pace in four decades, personal incomes are also rising and the September JOLTS report suggests some 10.7 million jobs remained unfilled, a precursor to faster wage growth during the last months of the year. hiring is intensifying.
“The evidence of diminishing (inflationary) pressure in the pipeline is abundant, but it has yet to reach the numbers that the Fed Chairman has clearly stated repeatedly as important, namely the actual data on the core inflation,” said Ian Shepherdson of Pantheon Macroeconomics. . “The most he can give the doves is a clear statement that the Fed will pivot as soon as the data moves, but we doubt that will be enough to stave off some investors’ disappointment.”
The Fed will release its rate decision at 2:00 p.m. Eastern Time, and Powell will address the media 30 minutes later in Washington.
3. — AMD Surges in Game, Data Center Chip Sales Impress in Q3
Advanced micro-systems (AMD) – Get a free report Shares soared in premarket trading after the chipmaker posted slightly weaker-than-expected third-quarter earnings but noted strong revenue gains for its gaming and data center businesses.
AMD said non-GAAP earnings for the quarter were 67 cents per share, down 8% from the same period last year that missed Street’s forecast by a dime. Group revenue, AMD said, rose 30% to $5.6 billion, essentially in line with analysts’ forecasts following the chipmaker’s warning of broader market demand early in the month. month, with games up 13.7% and data centers up 45%.
As for the last months of the year, AMD said it expects quarterly results revenue in the region of $5.5 billion, plus or minus $300 million, with gross margins hitting around 51% on sequential growth for gaming and data centers. Refinitv estimates were looking for a revenue forecast of around $5.85 billion.
AMD shares rose 4.86% in premarket trading to point to a Wednesday opening price of $62.56 apiece.
4. — Mondelez up on Q3 earnings pace, instead of higher snack prices
Mondelez International (MDLZ) – Get a free report Shares rose sharply in premarket trading after the chocolate and cookie maker posted better-than-expected third-quarter earnings and raised its full-year profit forecast.
Mondelez, perhaps better known as the maker of Oreo cookies, said adjusted earnings for the three months ending September rose 15.7% from a year ago to 74 cents per share. The group’s revenue, the company said, rose 8.1% to $7.76 billion, again beating analysts’ estimates.
Mondelez said it expects organic revenue to increase 10% over last year’s levels in the fourth quarter, an increase of 2 percentage points from its previous guidance, with adjusted earnings growing at the same rate as ‘It passes on higher snack prices in the face of soaring consumer inflation. .
The group, which also makes Chips Ahoy cookies, Philadelphia cream cheese and Ritz crackers, said it plans to roll out further price increases in the United States next month along with increases in Europe. planned for next year.
Mondelez shares rose 3.77% in premarket trading to show an opening price of $64.20 each.
5. — AirBnb slumps as outlook darkens, solid Q3 earnings rise in dollars
Airbnb (ABNB) – Get a free report The shares fell in premarket trading after the Home Rental and Experience Booking Group’s forecast reduced short-term sales that offset a strong third-quarter earnings report.
Airbnb posted a 28.9% increase in overall third-quarter profit to $2.88 billion amid record-breaking overall bookings that nearly hit the 100 million night mark for guests. three months ending in September.
Looking to the final months of the year, however, the group said travel would moderate – and remain focused on the domestic market – and forecast revenue in the region of $1.8 billion at $1.88 billion. Airbnb said the recovery in longer-term bookings would be “unstable”, with the soaring US dollar hitting its overseas revenue, which accounts for about half of its overall revenue.
Airbnb shares were down 5.6% in premarket trading to show an opening price of $102.90 each.
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