Today’s Big Picture

Asia-Pacific equity indexes ended today’s session down across the board as overseas markets took their cue from yesterday’s U.S. market reaction to Fed comments and Hong Kong’s Hang Seng continued to slide on covid related measures, down 3.08% today. India’s Sensex was off 0.11%, China’s Shanghai Composite declined 0.19%, South Korea’s KOSPI fell 0.33%, Taiwan’s TAIEX dropped 0.87%, and Australia’s ASX All Ordinaries closed 1.77% lower. Japan’s markets are closed today marking Culture Day, a holiday that promotes Japanese culture, the arts, and academic endeavors.

By mid-day trading, European equity indices are down across the board except for the Czech Republic, Hungary, and Turkey. U.S. futures point to a lower open later this morning. Yesterday’s late-day sell-off was sparked by hawkish comments from Fed Chair Powell that the Fed may need to raise interest rates more than expected. This seems to put some final nails in the coffin of the hopium-inspired thought that the central bank could dial back the size of near-term future rate hikes. According to Powell, “We still have some ways to go, and incoming data since our last meeting suggests that the ultimate level of interest rates will be higher than previously expected.”

To say those comments caught the market off guard would be something of an understatement and we are now seeing expectations once again recalibrated. An updated CME FedWatch Tool now has the Fed Funds rate likely between 500-550 basis points exiting the Fed’s May 2023 policy meeting vs. 450-475 last week. Veteran investors are all too familiar with the adage “don’t fight the Fed,” and it looks like a new generation of investors is in the process of learning this lesson. 

Data Download

International Economy

The Caixin China General Services PMI deteriorated further to 48.4 in October from 49.3 in September, contracting for the 2nd straight month due to a slowdown in activity amid efforts to stop the spread of COVID-19. The October data pointed to a slightly faster rise in average fees charged by services companies in China. 

The S&P Global/CIPS UK Services PMI was revised higher to 48.8 in October from the preliminary. However, the data still pointed to the first overall decline in services output since February 2021. A number of firms noted that political uncertainty since the mini-budget adversely impacted business investment and encouraged a wait-and-see approach to new projects.

AT 8 AM ET, the Bank of England is expected to follow the Fed’s footsteps and raise interest rates by 75 basis points. This would be the BoE’s biggest rate rise since 1989 as it battles the highest inflation in 40 years and place. Consumer price inflation returned to a 40-year high of 10.1% in September and is likely to have risen further in October when regulated energy prices jumped, even after factoring in subsidies. 

Domestic Economy

We have a flurry of economic data being published today that comes in addition to the usual Thursday lineup of weekly data for initial and continuing jobless claims and natural gas inventory data from the Energy Information Administration. Ahead of Friday’s October Employment Report and following Fed Chair Powell’s post-monetary policy statement press conference yesterday, twin reads of the services economy will be had from the Institute for Supply Management and S&P Global. Per Powell’s presser remarks, comments on input and output pricing in both reports will be of prime interest. Today also brings the latest Challenger Job Cuts report for October and that figure will no doubt be sized up against September’s. 

Markets

Comments from Fed Chair Powell sent markets tumbling yesterday as he stated plainly that any talk of a potential Fed pivot was unfounded and that there was a good chance that the terminal rate in this cycle would be beyond, as the street likes to say, “a four handle.” Despite rallying earlier in the day, the Dow declined 1.55%, the S&P 500 fell 2.50%, and both the Russell 2000 and the Nasdaq Composite closed 3.36% lower. All sectors were lower, with Consumer Discretionary and Technology taking the biggest hits. Individual names bucking yesterday’s selloff included Dupont De Nemours (DDwhich gained 3.13% on news from Rogers Corporation (ROG) that they would be unwinding the planned acquisition of DD.

Here’s how the major market indicators stack up year-to-date:

  • Dow Jones Industrial Average: -11.53%
  • S&P 500: -21.12%
  • Nasdaq Composite: -32.73% 
  • Russell 2000: -20.32%
  • Bitcoin (BTC-USD): -56.53%
  • Ether (ETH-USD): -58.73%

Stocks to Watch

Before trading kicks off for U.S.-listed equities, ADT (ADT), Atlas Worldwide (AAWW), Autohome (ATHM), Cardiovascular Systems (CSII), Crocs (CROX), Cummins (CMI), CyberArk (CYBR), Datadog (DDOG), Gogo (GOGO), Ingredion (INGR), InterDigital (IDCC), Kellogg (K), Lending Tree (TREE), Nikola Corp. (NKLA), Peloton (PTON), Shake Shack (SHAK), Strategic Education (STRA), and Zoetis (ZTS) will be among those delivering their latest quarterly results and guidance. 

Shares of Qualcomm (QCOM) fell in after-hours trading last night after the semiconductor company reported in-line fiscal fourth-quarter earnings but offered poor first-quarter guidance. The company sees EPS of $2.25-$2.45 on $9.2-$10 billion in revenue for the current quarter vs. the $3.42 and $12.02 billion consensus. Qualcomm also said it implemented a hiring freeze in October.

September quarter results at Nu Skin (NUS) missed top and bottom-line consensus figures with revenue falling 16.1% YoY to $537.8 million. Per the company, its results were, “impacted more than anticipated by worsening macro headwinds, including prolonged COVID-related disruptions in Mainland China, the slowdown in South Korea, persistent global inflation and excessive foreign currency pressure.” For the current quarter, Nu Skin now sees EPS of $0.40-0.60 vs. the $1.09 consensus with revenue of $500-$550 million vs. the $645.47 million consensus.

Shares of Lumen Technologies (LUMN) fell in after-market trading last night following quarterly results that widely missed expectations and the company eliminated its dividend while authorizing a $1.5 million share buyback.

September quarter results from Roku (ROKU) topped expectations with revenue for the quarter rising 12.0% YoY to $761.37 million, outpacing the $693.72 million consensus. However, the company issued downside guidance for the current quarter with revenue of “roughly” $800 million vs. the $894.63 million consensus. The company also announced CFO Steve Louden plans to leave Roku sometime in 2023 after helping recruit and transition his role to a successor.

Shares of Nutrien (NTR) slipped post-market yesterday after the company missed expectations for 3Q earnings and revenues, and cut full-year earnings guidance to reflect lower near-term potash sales volumes and prices.

Recreational vehicles maker Thor Industries (THO) formed a strategic partnership with commercial EV company Harbinger Motors to enhance the electrified RV experience for its consumers.

In a regulatory filing, Coinbase Global (COIN) disclosed Surojit Chatterjee, the company’s chief product officer, has decided to step down from the role, effective November 30, 2022.

Politico reports Adobe’s (ADBE) planned $20 billion acquisition of Figma is expected to see an in-depth antitrust review by the Department of Justice, including contacting customers and competitors of Adobe and Figma. 

Reuters reports Morgan Stanley (MS) is expected to start a fresh round of layoffs in the coming weeks as its dealmaking business remains challenged amid inflation and an economic downturn.

IPOs

As of now, it looks like a rather quiet week on the IPO front. Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.

After Today’s Market Close

Air Lease (AL), Allscripts Healthcare (MDRX), Amgen (AMGN), Bill.com (BILL), Carvana (CVNA), Chuy’s (CHUY), Coinbase Global (COIN), Corsair Gaming (CRSR), DoorDash (DASH), Expedia Group (EXPE), Funko (FNKO), Monster Beverage (MNST), News Corp. (NWSA), PayPal (PYPL), Skyworks (SWKS), Starbucks (SBUX), Synaptics (SYNA), TPI Composites (TPIC), Twilio (TWLO), Universal Display (OLED), and Yelp (YELP) will be among the sea of earnings report after today’s market close. Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar

On the Horizon

Friday, November 4

  • Japan: Au Jibun Bank Japan Services PMI – October
  • Eurozone: S&P Global Eurozone Composite PMI
  • Eurozone: Producer Price Index – September
  • US: Employment Report – October

Thought for the Day

“I am not a product of my circumstances. I am a product of my decisions.” ~ Stephen Covy

Disclosures

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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