December S&P 500 E-Mini futures (ESZ26) are up +0.57%, and December Nasdaq 100 E-Mini futures (NQZ26) are up +0.86% this morning, signaling a higher open on Wall Street following last week’s tech-led selloff as a retreat in oil prices prompted investors to cautiously return to risky assets.
The price of WTI crude slumped over -4% on Monday following a report that U.S. President Donald Trump wants to allow more time for diplomacy with Iran before potentially resuming military strikes. Axios reported that Trump told Israeli Prime Minister Benjamin Netanyahu he wants to let negotiations play out. Meanwhile, Iranian Foreign Minister Abbas Araghchi said on Sunday that talks with Qatari mediators over a proposal to reopen the Strait of Hormuz were continuing but had yet to yield an agreement, according to the Iranian Parliament’s news agency ICANA.
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Treasuries advanced as lower oil prices eased inflation concerns. The 10-year T-note yield fell two basis points to 4.91%.
This week, investors will focus on the U.S. midterm elections, a slew of U.S. labor market data, remarks from Federal Reserve officials, and a new batch of corporate earnings reports.
In Friday’s trading session, Wall Street’s major equity averages closed sharply lower, weighed down by a steep selloff in chipmakers. Chip and AI infrastructure stocks tanked, led by a more than -28% plunge in Intel (INTC) after the company issued below-consensus Q4 revenue guidance. Also, the Magnificent Seven stocks slid, with Nvidia (NVDA) falling over -4% and Microsoft (MSFT) dropping more than -1%. In addition, Reddit (RDDT) cratered over -29% and was the top percentage loser in the S&P 500 after the company posted weaker-than-expected Q3 user growth and issued below-consensus Q4 revenue guidance. On the bullish side, FedEx Freight (FDXF) surged more than +14% and was the top percentage gainer in the S&P 500 after the company raised its adjusted operating profit guidance for the transition period from June 1 through Dec. 31.
The Labor Department’s report released on Friday showed that the employment cost index rose +0.8% q/q in the third quarter, in line with expectations. Separately, the U.S. October Chicago PMI fell to 55.3, weaker than expectations of 55.8.
Investors also digested hawkish comments from Fed officials. Dallas Fed President Lorie Logan said on Friday that the central bank needs to deliver at least two more quarter-point rate hikes in the near term, given the current economic outlook. “After that, it would make sense in my view to pause and examine economic and financial developments to determine what further action may be appropriate,” Logan added. Also, St. Louis Fed President Alberto Musalem said further interest-rate hikes are needed, and soon, to bring inflation back to the central bank’s target. “Incremental adjustments made earlier are usually less disruptive than larger and abrupt actions taken later,” Musalem said. In addition, Richmond Fed President Tom Barkin said that with inflation elevated, demand solid, and unemployment relatively low, the Fed’s policy direction is clear, but the question is how quickly it should move. “I think a gradual approach is a good way to go, and we’ll see what we learn over the next period of time,” Barkin added.
U.S. rate futures are currently pricing in a 74.9% chance of a 25-basis-point rate hike and a 25.1% chance of no rate change at the conclusion of the Fed’s December meeting.
The main highlight this week will be the U.S. midterm elections. American voters will elect the entire House of Representatives and roughly a third of the Senate on Tuesday. Democrats are widely expected to win control of the House, while the party also has a chance of taking the Senate. The results will be closely watched by investors, as a shift in congressional control could have implications for fiscal policy, regulation, and sectors such as AI, crypto, and financial services.
The U.S. October nonfarm payrolls report will also be in focus this week. Economists expect the key jobs report to show the unemployment rate holding steady at 4.2%, while payrolls increase by 63K. Such an outcome would keep the Fed on track for further interest-rate hikes in the coming months to curb inflation. Other labor market data to watch include JOLTS job openings, the ADP employment report, and initial jobless claims. The U.S. trade balance, factory orders, the S&P Global composite and services PMIs, the ISM non-manufacturing PMI, preliminary nonfarm productivity and unit labor costs, consumer credit, and the University of Michigan’s preliminary consumer sentiment index will also attract attention.
In addition, investors will closely monitor remarks from Fed officials. Fed Vice Chair for Supervision Michelle Bowman, New York Fed President John Williams, Chicago Fed President Austan Goolsbee, Richmond Fed President Tom Barkin, Cleveland Fed President Beth Hammack, Dallas Fed President Lorie Logan, and St. Louis Fed President Alberto Musalem are all scheduled to speak this week.
Third-quarter corporate earnings season continues in full force, with investors awaiting reports from major companies this week, including Apple (AAPL), Palantir Technologies (PLTR), Advanced Micro Devices (AMD), Arm Holdings (ARM), Qualcomm (QCOM), McDonald’s (MCD), Uber Technologies (UBER), Pfizer (PFE), CVS Health (CVS), and Moderna (MRNA). According to Bloomberg Intelligence, S&P 500 companies are expected to post an average +31% jump in third-quarter earnings from a year earlier.
Today, investors will focus on the U.S. ISM Manufacturing PMI and S&P Global Manufacturing PMI, set to be released in a couple of hours. Economists expect the October ISM manufacturing index to hold steady at 54.5, while the final S&P Global manufacturing PMI is projected to remain unrevised at 56.0.
U.S. construction spending data will also be released today. Economists project September construction spending to rise +0.4% m/m, following a +0.9% m/m gain in August.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.91%, down -0.46%.
The Euro Stoxx 50 Index is up +0.42% this morning, kicking off the new month on a positive note as the retreat in oil prices boosted sentiment. Travel and leisure stocks led the gains on Monday, buoyed by lower oil prices. Banking and technology stocks also advanced. Limiting gains, healthcare and energy stocks slid. A survey released on Monday showed that Eurozone manufacturing activity continued to expand at a solid pace in October, though growth moderated as new orders lost momentum and higher costs stemming from energy prices and supply-chain disruptions squeezed margins. Separately, data showed that Germany’s monthly retail sales unexpectedly fell in September. Meanwhile, European Central Bank Governing Council member Peter Kazimir said on Monday that the central bank will need to raise interest rates again to prevent high inflation from becoming entrenched and that markets may be underestimating what is needed to curb price pressures. “For me, the question is increasingly not whether further action will be needed but how much more will be required,” Kazimir said. Investor focus this week is on the Bank of England’s monetary policy decision. The BOE is widely expected to raise its key rate by 25 basis points to 4.00%, which would mark its first hike in more than three years, as policymakers seek to prevent persistently high energy prices from triggering second-round inflation effects. Sweden’s Riksbank and Norway’s Norges Bank will also announce their interest-rate decisions this week. The Riksbank is widely expected to raise interest rates by a quarter point to 2.00%, while Norges Bank is anticipated to keep rates unchanged at 4.50%. Beyond monetary policy, attention will center on preliminary Eurozone inflation data for October, September retail sales figures, and the ECB’s wage tracker. In corporate news, Alstom SA (ALO.FP) tanked over -25% after the company cut its full-year guidance and announced a sweeping restructuring plan.
Germany’s Retail Sales and Eurozone’s Manufacturing PMI data were released today.
The German September Retail Sales unexpectedly fell -2.0% m/m, weaker than expectations of +0.4% m/m.
Eurozone’s October Manufacturing PMI was revised higher to 52.7 from the preliminary reading of 52.4.
Asian stock markets today closed mixed. China’s Shanghai Composite Index ($CHSC) closed up +1.08%, and Japan’s Nikkei 225 Stock Index ($NKY) closed down -0.33%.
China’s Shanghai Composite Index closed sharply higher today amid expectations of renewed liquidity support following reports that regulators met with banks and brokerages to discuss measures to bolster the market. Chinese media outlet Cailian reported on Monday that the People’s Bank of China will conduct a swap operation on Tuesday, using a key tool from its 2024 market rescue plan to inject liquidity. The outlet earlier reported that financial regulators planned to meet with major banks on Monday to explore ways to improve lending programs that were also deployed in 2024. Monday’s gains were also supported by a jump in turnover in exchange-traded funds favored by the so-called National Team of state-backed investors, fueling speculation about official market intervention. The benchmark index posted its largest one-day percentage gain since Aug. 27. Meanwhile, an official survey released on Saturday showed that China’s factory activity contracted at its fastest pace in three months in October, weighed down by weak domestic demand for goods and signs of softness in exports. China’s October non-manufacturing PMI, which covers both services and construction activity, unexpectedly slipped into contraction territory. A private survey released on Monday showed that China’s factory activity expanded in October at a slower pace for the first time since July as export order growth weakened. Taken together, the surveys suggested that the world’s second-largest economy lost some momentum at the start of the fourth quarter. Investor attention now turns to a private gauge of China’s services sector due later this week.
The Chinese October Manufacturing PMI came in at 49.3, weaker than expectations of 49.9.
The Chinese October Non-Manufacturing PMI arrived at 49.7, weaker than expectations of 50.0.
The Chinese October RatingDog Manufacturing PMI stood at 52.0, in line with expectations.
Japan’s Nikkei 225 Stock Index closed lower today as investors digested domestic earnings reports while remaining cautious ahead of the U.S. midterm elections. Chip-related stocks were among the biggest losers on Monday. Memory-chip maker Kioxia Holdings plunged over -15%, becoming the biggest drag on the Nikkei after the company issued disappointing operating profit guidance for the current quarter. Kioxia’s outlook raised concerns that explosive AI-driven growth may be starting to level off. Still, Tokyo Electron climbed more than +5% after the chip equipment maker’s full-year operating profit forecast topped expectations. Losses in industrial and financial stocks also weighed on the benchmark. Meanwhile, a survey released on Monday showed that Japan’s manufacturing sector expanded at its weakest pace in seven months in October as output and new orders slowed while cost pressures intensified. Elsewhere, Japanese Finance Minister Satsuki Katayama said on Monday that Tokyo and Washington would continue to coordinate closely on currency policy objectives regardless of the outcome of the U.S. midterm elections. Investor focus this week is on Japan’s September wage data for signs that real wages rose for a ninth consecutive month. Market participants will also scrutinize the Bank of Japan’s minutes from its September meeting, when it raised interest rates by 25 basis points to 1.25%. In addition, BOJ Governor Kazuo Ueda will deliver a speech in Washington, D.C. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +5.62% at 35.72.
The Japanese October S&P Global Manufacturing PMI remained unrevised at 53.3, in line with expectations.
Pre-Market U.S. Stock Movers
Chip and AI infrastructure stocks advanced in pre-market trading, rebounding from last week’s rout. Micron Technology (MU), Arm Holdings (ARM), and Marvell Technology (MRVL) each gained more than +2%.
Most members of the Magnificent Seven edged higher in pre-market trading, with Nvidia (NVDA) and Alphabet (GOOGL) rising over +1%.
SpaceX (SPCX) rose more than +2% in pre-market trading after The Washington Post reported that the company was in talks to acquire EchoStar’s wireless service Boost Mobile or gain access to its network. Shares of AT&T (T) and T-Mobile US (TMUS) fell more than -1% following the report.
Okta (OKTA) gained over +2% in pre-market trading after S&P Dow Jones Indices announced that the stock will join the S&P 500 Index on Nov. 4.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Monday - November 2nd
Apple (AAPL), Palantir Technologies (PLTR), Vertex Pharmaceuticals (VRTX), Marriott International (MAR), The Williams Companies (WMB), Diamondback Energy (FANG), Realty Income (O), Entergy (ETR), IDEXX Laboratories (IDXX), The Estee Lauder Companies (EL), Public Service Enterprise Group (PEG), ON Semiconductor (ON), Fox Corporation (FOXA), Fox Corporation (FOX), Roku, Inc. (ROKU), Loews (L), SBA Communications (SBAC), Pershing Square (PS), Viper Energy (VNOM), Corebridge Financial (CRBG), Neurocrine Biosciences (NBIX), Equitable Holdings (EQH), Jazz Pharmaceuticals (JAZZ), Healthpeak Properties (DOC), Lattice Semiconductor (LSCC), CNA Financial (CNA), Tempus AI (TEM), UDR, Inc. (UDR), BWX Technologies (BWXT), Fabrinet (FN), BioMarin Pharmaceutical (BMRN), Grab Holdings (GRAB), The Clorox Company (CLX), Krystal Biotech (KRYS), Match Group (MTCH), Hinge Health (HNGE), Ryman Hospitality Properties (RHP), Allison Transmission Holdings (ALSN), Advanced Energy Industries (AEIS), Voya Financial (VOYA), Janus Living (JAN), Transocean (RIG), Axsome Therapeutics (AXSM), Valaris (VAL), Vornado Realty Trust (VNO), MSA Safety (MSA), BBB Foods (TBBB), Crescent Energy Company (CRGY), JBT Marel (JBTM), Archrock (AROC), Celanese (CE), Waystar Holding (WAY), Sabra Health Care REIT (SBRA), Choice Hotels International (CHH), ONE Gas (OGS), California Resources (CRC), Travere Therapeutics (TVTX), Paymentus Holdings (PAY), Cabot (CBT), Otter Tail (OTTR), Independence Realty Trust (IRT), Black Stone Minerals (BSM), Ero Copper (ERO), Cipher Digital (CIFR), Ethos Technologies (LIFE), Boise Cascade Company (BCC), Acadia Realty Trust (AKR), People (PPLI), V2X, Inc. (VVX), ReNew Energy Global (RNW), Recursion Pharmaceuticals (RXRX), Adeia (ADEA), Calix (CALX), The Chemours Company (CC), Inspire Medical Systems (INSP), Diversified Healthcare Trust (DHC), Alamo Group (ALG), Aehr Test Systems (AEHR), Kosmos Energy (KOS), Huntsman (HUN), Voyager Technologies (VOYG), Hillman Solutions (HLMN), Capital Southwest (CSWC), Ichor Holdings (ICHR), Innovative Industrial Properties (IIPR), Empire State Realty Trust (ESRT), Napco Security Technologies (NSSC), Herbalife (HLF), UMH Properties (UMH), Alexander's (ALX), Syndax Pharmaceuticals (SNDX), i-80 Gold (IAUX), Atlas Energy Solutions (AESI), Upwork (UPWK), Tennant Company (TNC), Ibotta (IBTA), Bioventus (BVS), Harmonic (HLIT), Centerspace (CSR), HealthStream (HSTM), Unitil (UTL).
On the date of publication, Oleksandr Pylypenko did not directly have a position 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.
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