Today’s Big Picture
Asia-Pacific equity indexes ended today’s session up across the board except for Japan’s Nikkei, which declined 1.68%. India’s Sensex gained 0.19%, Taiwan’s TAIEX 0.31%, Australia’s ASX All Ordinaries 0.55%, South Korea’s KOSPI 0.83% and China’s Shanghai Composite 2.43%. Hong Kong’s Hang Seng set the pace, up 5.36% on a broad rally led by Retail Trade and Technology Services names.
By mid-day trading, European equity indices are up across the board except for Portugal, and U.S. futures point to a healthy open later this morning.
This week has been a bit of a ride for investors, especially after the previous week’s Fed speculation-fueled rally. As we continue through this earnings season, it doesn’t seem like the weakness we saw in Technology names is present in any meaningful way across other sectors. We have seen some individual names disappoint, but not enough to point to a general trend. Still, inflation is problematic, and continued dollar strength, while a boon to Americans traveling overseas, is providing a headwind of sorts for U.S. multinationals.
While markets were surprised at the Fed’s comments earlier this week, if today’s employment update follows expectations we would expect the markets to respond favorably. The rationale here is that a weakening employment picture might be interpreted as Fed rate hikes working to slow the economy which would be interpreted as a reason for the Fed to dial down the pace and scope of these hikes. If that were to happen, then maybe, just maybe, we could manage our way through this part of the cycle with minimal bruising and not nearly as much pain as advertised by Powell.
Data Download
International Economy
The Au Jibun Bank Japan Services PMI figure for October was released last night and came in at 53.2 which surprised against consensus estimates of 51.7 and also came in higher than the previously reported 52.2.
Final S&P Global Eurozone Composite PMI for October was released at 47.3 which nudged the initial reading up slightly from 47.1. A reminder that a PMI reading below 50 points to a slowdown of activity. Eurozone Composite PMI has been pushing lower since its latest high water mark in April 2022 and crossed 50 in July as economic pressures show little sign of reversing in the region.
The Eurozone Producer Price Index for September came in slightly lower, at 41.9% than the previously reported 43.4%. Energy prices still dominate this metric and the trickle-down effect is still present as non-durable consumer goods prices rose 1.0% and capital goods and durable consumer goods rose 0.40% each.
Domestic Economy
8:30 AM ET will provide an update on the employment picture in the U.S. as the unemployment rate will be announced along with payroll figures, the average workweek metric, and hourly earnings. Unemployment is expected to tick up to 3.6% from the previously reported 3.5%, payroll figures are expected to fall for all three types (Manufacturing, Nonfarm, Private Nonfarm), YoY hourly earnings growth is expected to decline slightly to 4.7% from the previously reported 5.0% and the average workweek is expected to be steady at 34.5 hours.
Markets
Markets continued to react to Fed Chairman Powell’s comments from Wednesday as the Dow fell 0.16%, the Russell 2000 declined 0.53%, the S&P 500 shed 1.06% and the Nasdaq Composite closed 1.73% lower. Sectors were mixed with Technology and Communication Services closing roughly 3% and 2.5% lower, offset somewhat by Energy rising 1.87% and Industrials gaining 1.05%. Names ignoring market sentiment yesterday include Etsy, which was up 14.27% on a strong quarter that exceeded analyst expectations.
Here’s how the major market indicators stack up year-to-date:
- Dow Jones Industrial Average: -11.94%
- S&P 500: -21.95%
- Nasdaq Composite: -33.89%
- Russell 2000: -20.74%
- Bitcoin (BTC-USD): -56.44%
- Ether (ETH-USD): -58.51%
Stocks to Watch
Before trading kicks off for U.S.-listed equities, quarterly results from AMC Networks (AMCX), Cboe Global Markets (CBOE), fuboTV (FUBO), Lamar Advertising (LAMR), Malibu Boats (MBUU), and Tenneco (TEN) are on deck.
DraftKings (DKNG) announced third-quarter earnings with revenue of $520 million which was a 135.7% gain YoY and beat estimates by $64.98 million. Monthly Unique Payers increased to 1.6 million, a 22% increase on a YoY basis. The company is raising its fiscal year 2022 revenue guidance to a range of $2.16B to $2.19B from the range of $2.08B to $2.18B vs. consensus of $2.14B. The company now expects the fiscal year 2022 Adjusted EBITDA loss of between $800M and $780M compared to its prior guidance of a loss of between $835M and $765M.
Hershey (HSY) released earnings announcing EPS of $2.17, beating estimates by $0.07 on revenues of $2.73 billion, up 15.7% YoY and beating consensus by $110 million. Organic sales growth came in at 11.8%, acquisitions were additive to net sales while the strong US dollar provided a slight headwind as foreign sales were repatriated back to the US. Overall, the company had a strong Q3 and now anticipates $8.20 to $8.27 in earnings per share for the year, up from a previous forecast of $8.05 to $8.20 as compared to the consensus of $8.19.
Cardinal Health (CAH) posted a strong third quarter with EPS of $1.20, surprising by $0.23 on revenues of $49.6 billion which were up 13% YoY and also beat consensus by $1.44 billion. The company reaffirmed its fiscal year 2023 EPS guidance range of $5.05 to $5.40 versus the $5.25 consensus estimate.
IPOs
Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.
After Today’s Market Close
As we fade into the weekend, no companies are expected to report their quarterly results after equities finish trading for the week. Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar.
On the Horizon
Monday, November 7
- China: Imports/Exports – October
- Germany: Industrial Production – October
- Eurozone: Sentix Investor Confidence – November
- US: Consumer Credit – September
Tuesday, November 8
- Japan: Household Spending, Leading Index – September
- Eurozone: Retail Sales – September
- US: NFIB Small Business Optimism Index – October
Wednesday, November 9
- China: Consumer Price Index, Producer Price Index – October
- Japan: Economy Watchers Index – October
- US: Weekly MBA Mortgage Applications
- US: Wholesale Inventory – September
- US: Weekly EIA Crude Oil Inventories
Thursday, November 10
- US: Weekly Initial & Continuing Jobless Claims
- US: Consumer Price Index – September
- US: Weekly EIA Natural Gas Inventories
Friday, November 11
- Japan: Producer Price Index – October
- UK: 3Q 2022 GDP
- UK: Industrial and Manufacturing Production – September
- Germany: Consumer Price Index – October
- US: University of Michigan Consumer Sentiment Index (Preliminary) – November
Thought for the Day
“Perhaps our greatest distinction as a species is our capacity, unique among animals, to make counter-evolutionary choices.” ~ Jared Diamond.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
