Today’s Big Picture
Asia-Pacific equity indexes ended today’s session mixed: India’s Sensex declined 0.25%, China’s Shanghai Composite and Japan’s Nikkei were down 0.53% and 0.56%, respectively, and Hong Kong’s Hang Seng closed 1.20% lower. Australia’s ASX All Ordinaries gained 0.52% and South Korea’s KOSPI advanced 1.06% while Taiwan’s TAIEX set the pace, up 2.18% in a broad rally led by Electronic Technology names. The only declining TAIEX sector was Energy Minerals.
By mid-day trading, European equity indices are mixed, and U.S. futures point to a weak market open later this morning.
The stock market is facing its latest bout of uncertainty as control of Congress has yet to be determined. While the Republican party appears to be closing in on a House win, several races have yet to be called and the expected red wave failed to materialize. While we wait for the final results, PredictIt sees Republicans taking the House and Democrats keeping control of the Senate. From a stock market perspective, a divided government is likely to be a positive on several fronts, particularly traditional energy companies and the banking and defense sectors. The potential for further tax increases is also questionable, a potential feel-good positive for consumers and related spending.
While we continue to watch that outcome, we have a fresh lockdown in China which is raising concerns over supply chains and the impact on the holiday shopping season. We also have the release of the September Consumer Price Index report tomorrow, and what it says will influence near-term expectations for the Fed Funds rate. Results discussed below in Stocks to Watch for Affirm (AFRM) and Upstart Holdings (UPST) showcase the impact of higher interest rates. As the number of companies announcing layoffs continues to grow, we are likely to see concern over the holiday shopping season grow as well.
Data Download
International Economy
China’s annual inflation dropped to 2.1% YoY in October from 2.8% in the prior month, below the market consensus of 2.4%. This was the lowest figure since May as food inflation eased to 7.0% from September’s 25-month peak of 8.8%, while non-food inflation slowed to 1.1% from 1.5% in September. Following the 0.9% drop in September, China’s producer prices fell 1.3% YoY in October, missing the forecasted 1.5% drop. Declines reflect weak domestic demand and disruptions to output amid strict COVID curbs as well as falling commodity prices. CNN also reports China’s manufacturing hub Guangzhou locked down a third district, as authorities rush to stamp out a widening Covid outbreak and avoid activating the kind of citywide lockdown that devastated Shanghai earlier this year.
The Economy Watchers Survey Outlook in Japan decreased to 46.4 points in October from 49.2 points in September amid growing concerns over intense cost pressures.
Domestic Economy
While we wait for the outcome of the mid-term elections and tomorrow’s September Consumer Price Index, today brings the usual weekly Wednesday data – the MBA Mortgage Application Index and EIA Crude Oil Inventories. In between the two, September Wholesale Inventory data will also be published and a gain of 0.8% is expected following the 1.3% move higher in August.
Markets
Equity Markets held up fairly well on election day with only the Russell 2000 essentially flat, down a mere 0.05%. The Nasdaq Composite gained 0.49%, the S&P 500 rose 0.56% and the Dow advanced 1.02%. All sectors were positive except for Consumer Discretionary which fell 0.25%. Solaredge Technologies (SEDG) soared 19.13% yesterday on a strong quarter boosted by European sales as the region has been under energy duress due to the Russian invasion of and subsequent war in Ukraine. Analysts raised both price targets and ratings yesterday.
The meltdown of the world’s third-largest crypto trading venue FTX culminated in its sale to the world’s largest venue Binance yesterday. Although not directly tied to FTX’s woes, Bitcoin fell 9.48%, and Ether dropped 14.98% yesterday.
Here’s how the major market indicators stack up year-to-date:
- Dow Jones Industrial Average: -8.74%
- S&P 500: -19.68%
- Nasdaq Composite: -32.14%
- Russell 2000: -19.44%
- Bitcoin (BTC-USD): -60.00%
- Ether (ETH-USD): -63.81%
Stocks to Watch
Before trading kicks off for U.S.-listed equities, Canopy Growth (CGC), Capri Holdings (CPRI), Ceva (CEVA), DR Horton (DHI), Nomad Foods (MOMD), Roblox (RBLX), The Trade Desk (TTD) and Wendy’s (WEN) will be among the companies slated to report their latest quarterly results.
September quarter results at Disney (DIS) missed top and bottom-line expectations despite revenue for the quarter rising 8.7% YoY which included Disney+ subscriptions rising 39% YoY to 164.2 million. Disney continues to see its streaming business becoming profitable in 2024 and shared advertiser interest for the Disney+ ad tier has been strong with more than 100 advertisers lined up. Disney Parks, Experiences, and Products revenues for the quarter increased to $7.4 billion vs. $5.5 billion in the year-ago quarter with operating income growth at domestic parks and experiences benefitting from higher volumes and increased guest spending, where demand remains strong. Outside the U.S., Disneyland Paris is experiencing a great resurgence, but Shanghai Disney continues to be challenging and the company doesn’t have visibility for a reopening date for that park.
Quarterly results from Lucid Group (LCID) missed expectations even though it achieved record quarterly production of 2,282 vehicles, more than triple the prior quarter. Still Lucid shared it has over 34,000 reservations, representing potential sales of over $3.2 billion and it is on track to meet its annual production guidance of 6,000 to 7,000 vehicles. The company also plans to open Project Gravity SUV reservations in early 2023.
Shares of Buy Now, Pay Later company Affirm (AFRM) were under pressure after it cut its fiscal year guidance on the expectation for reduced revenue from Peloton (PTON) and the impact of higher interest rates on its funding costs despite continued growth in the number of active users.
AI-driven lending platform company Upstart Holdings (UPST) reported weaker-than-expected quarterly results and issued guidance for the current quarter that was softer than expectations. The rising interest rate environment is taking a toll on the demand for loans. Previously, Upstart announced it would lay off about 7% of its workforce due to falling loan demand.
On the heels of its ending its Yeezy label partnership with musician and designer Ye, formerly known as Kanye West, Adidas AG (ADDYY) now expects 2022 revenue to increase by a low-single-digit percentage at constant currency, from previous guidance in the mid-single digits. This marks the fourth time this year that the company has lowered its full-year outlook.
Reports indicate Barclays PLC (BCS) has begun eliminating jobs across its investment-banking group, as has Citigroup (C). Meanwhile, other indications are Salesforce (CRM) began layoffs earlier this week. Joining the fray, Zendesk (ZEN) approved a plan to shed ~4.9% of its total global workforce.
Taiwan Semiconductor (TSM) is planning another multibillion-dollar factory investment in Arizona, one that will reportedly be an investment similar in size to the $12 billion it committed two years ago.
IPOs
Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.
After Today’s Market Close
Beyond Meat (BYND), Digital Turbine (APPS), Dutch Bros. (BROS), ForgeRock (FORG), Inter Perfumes(IPAR), Navitas Semiconductor (NVTS), Rackspace Technology (RXT), Redfin (RDFN), Rivian Automotive (RIVN), Wynn Resorts (WYNN), and Zip Recruiter (ZIP) 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
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
“Politics has become so expensive that it takes a lot of money even to be defeated.” ~ Will Rogers
Disclosures
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
