Today’s Big Picture

Asia-Pacific equity indexes ended today’s respective trading sessions mostly lower led by the 1.6% fall in China’s Shanghai Composite and the 0.3% decline in Hong Kong’s 0.3%. India’s Sensex and Japan’s Nikkei both shed 0.1% while South Korea’s Kospi and Australia’s ASX All Ordinaries closed the day modestly higher. By mid-day trading, European equity indices are positive across the board, and U.S. futures point to a positive open later this morning as we get ready to close out the last full trading week for November. 

Setting the stage for today’s market open is the latest rash of better-than-expected earnings reports across the retail and technology landscapes. As the morning’s mini-wave of those reports is digested, with modest new economic data, the market will likely focus on comments from Boston Fed President Susan M. Collins later today. Should her comments echo those from St. Louis Federal Reserve President James Bullard yesterday that “the policy rate is not yet in a zone that may be considered sufficiently restrictive,” we could see stocks fade into today’s market close.

Author’s note: We will be off next week for Thanksgiving, and Daily Markets will return on Monday, November 28.

Data Download

International Economy

Retail Sales in the UK declined 6.1% YoY in October, better than the expected fall of 6.5% and an improvement of the 6.8% drop in September. However, the October figure is the sixth consecutive month of YoY declines in retail sales.

Domestic Economy

Following yesterday’s Housing Starts and Building Permits figures, today sees the release of October Existing Home Sales which are expected to have declined to 4.365 million from the previously reported 4.71 million figure. As with the other housing metrics, declines in these numbers are not unexpected given the current interest rate environment. Still, assuming the forecast holds it would be the lowest reading in the past decade except for the 4.01 million trough we saw in May of 2020 during the height of the pandemic.

In its winter reliability assessment, the North American Electric Reliability Corporation (NERC) reported large portions of North America are at risk of “insufficient electricity supplies during peak winter conditions,” potentially causing blackouts and other energy emergencies this winter. According to NERC, the U.S. electric grids at the highest risk of supply shortfalls are in Texas, the central system stretching from the Great Lakes to Louisiana, and New England.

Markets

Markets shifted into a neutral gear of sorts as both the Dow and Russell 2000 ended the day essentially flat and the S&P 500 and the Nasdaq Composite both traded off just over 0.30%. Underlying S&P sectors weren’t as listless given the 1.71% drop in Utilities and the 1.21% decline in Consumer Discretionary names. Technology and Energy were the only positive sectors, up .013% and 0.22%, respectively. In individual names, Estee Lauder (ELrose 2.36% following the announcement it would acquire fashion brand and long-time brand partner Tom Ford for $2.8 billion. 

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

  • Dow Jones Industrial Average: -7.68%
  • S&P 500: -17.20%
  • Nasdaq Composite: -28.76% 
  • Russell 2000: -17.47%
  • Bitcoin (BTC-USD): -64.02%
  • Ether (ETH-USD): -67.44%

Stocks to Watch

Before trading kicks off for U.S.-listed equities, Buckle (BKE), Foot Locker (FL), and Spectrum Brands (SPBwill be among the handful of companies reporting their latest quarterly results.

October quarter earnings at Applied Materials (AMATtopped consensus expectations and called for current quarter EPS to be in the range of $1.75-2.11 vs. the $1.81 consensus. The company shared that ongoing supply constraints prevented it from fully meeting customer demand and it expects to close those gaps further in the coming quarters. In terms of end markets, the company shared that consumer-driven markets are “clearly softer,” while the automotive, industrial, and power markets remain robust due to the transition to EVs, industrial automation, and renewable energy demand. 

Luxury fashion platform company Farfetch (FTCHmissed consensus expectations for its September quarter with declines in Gross Merchandise Value at both its Digital Platform and Brand segments. Management indicated it is seeing continued digital media cost inflation for luxury, especially in the U.S., as well as reports of higher inventories indicating “a very promotional environment” ahead. 

Cybersecurity company Palo Alto Networks (PANW) reported its October quarter revenue soared more than 25% YoY to $1.56 billion, edging out the $1.55 billion consensus. EPS for the quarter easily cleared the $0.69 consensus, coming in at $0.83. With billing rising 27% in the quarter, the company issued upside guidance for its fiscal 2023 with EPS of $3.37-$3.44 vs. its prior forecast of $3.13-$3.17) and the $3.17 consensus. 

Ross Stores (ROST) also issued better-than-expected results for its October quarter with both revenue and EPS topping consensus forecasts. The company continues to expect “a very promotional holiday selling season” and “ongoing inflationary headwinds to pressure” its low-to-moderate income customers. Even so, Ross issued upside guidance for FY23 with EPS of $4.21-$4.34 vs. the $4.02 consensus.

Amazon (AMZN) CEO Andy Jassy indicated headcount reductions at the tech giant will continue into next year. “Our annual planning process extends into the new year, which means there will be more role reductions as leaders continue to make adjustments. Those decisions will be shared with impacted employees and organizations early in 2023.”

Per CEO Mark Zuckerberg, WhatsApp and Message will drive the next wave of growth at Meta Platforms (METAas it looks to further monetize those platforms.

Evolent Health (EVHentered into a definitive agreement to acquire NIA, the specialty benefit management organization owned by Centene Corporation (CNCthat focuses on managing cost and quality in the areas of radiology, musculoskeletal, physical medicine, and genetics.

Adobe’s (ADBE) planned $20 billion purchase of Figma has moved to an in-depth review antitrust review by the Department of Justice.

IPOs

Defense and tactical system manufacturer KWESST Micro Systems (KWE) is expected to start trading in the week ahead. Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.

After Today’s Market Close

Once again it is Friday and that means no companies are expected to report quarterly results after equities stop trading today. Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar

On the Horizon

Monday, November 21

  • Germany: Producer Price Index – October

Tuesday, November 22

  • Eurozone: Consumer Confidence – November
  • Us: Richmond Fed Manufacturing Index – November

Wednesday, November 23

  • Eurozone: Flash S&P Global Manufacturing & Services PMIs – November
  • US: Weekly MBA Mortgage Applications
  • US: Weekly Initial & Continuing Jobless Claims
  • US: Durable Orders – October
  • US: S&P Global Flash Manufacturing & Services PMIs – November
  • US: New Home Sales – October 
  • US: University of Michigan Consumer Sentiment Index (Final)
  • US: Weekly EIA Crude Oil and Natural Gas Inventories 

Thursday, November 24

  • Germany: Business Expectations – November
  • US equity markets closed for the Thanksgiving holiday

Friday, November 25

  • Japan: Tokyo Core CPI – November
  • Germany: 3Q 2022 GDP
  • US equity markets close at 1 PM ET

Thought for the Day

“The essence of strategy is choosing what not to do.” ~ Michael Porter

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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