Today’s Big Picture
Asia-Pacific equity indexes ended today’s session down across the board: China’s Shanghai Composite declined 0.39%, Australia’s ASX All Ordinaries 0.58%, India’s Sensex 0.69%, South Korea’s KOSPI 0.91%, Japan’s Nikkei 0.98%, and Taiwan’s TAIEX 0.99%. Hong Kong’s Hang Seng set the pace, down 1.70% on a broad selloff led by consumer durables and Retail Trade names
By mid-day trading, European equity indices are mixed, and U.S. futures point to a positive open later this morning.
At 8:30 AM ET, the October Consumer Price Index (CPI) will be published giving insight into the pace of inflation. This release will most likely shape not only how equity markets open today but also rate hike expectations for the Fed’s December monetary policy meeting. The market expectation is for headline CPI to rise 8.0% YoY vs. September’s 8.2% print while October’s core CPI is expected to rise 6.5% YoY, a tick lower compared to September’s 6.6% figure.
Despite the rollover in used car prices and other drivers of inflation earlier this year, food, energy, and continued wage pressures have the market bracing for a potentially hotter-than-expected CPI report. That could tip the CME FedWatch Tool’s forecast for the Fed’s potential rate hike from its evenly split odds between a 50 and 75-basis point rate hike. A tip toward 75-basis points runs the risk of adding to the market’s current anxiety tied to the mid-term elections. There are 34 days until the Fed concludes its December monetary policy meeting and that time will bring several more inflation data points, including next week’s October Producer Price Index (PPI) as well as the November CPI and PPI figures. As that data is released, we are likely to get a far clearer picture of what the Fed will do on the afternoon of December 14. Until that clarity has been achieved, we would expect market swings to be driven by whatever latest data point is available.
As we contend with that, we continue to wait and see which political party will gain control of the U.S. Senate. President Biden said he will not make any “fundamental concessions” during a meeting with Chinese President Xi next week. This has us anticipating another round of saber-rattling in addition to slowing economic data, retailer earnings, rising layoffs, and downward earnings expectations. Such a combination has the potential to keep the stock market volatile and more than likely rangebound.
We have a quiet day on the international economic calendar today, but tomorrow brings several data points to watch including Germany’s Consumer Price Index for October.
China’s COVID outbreak continues to increase, with new case numbers at their highest since April. In the manufacturing hub of Guangzhou, cases hit more than 2,000 for a third straight day and while officials have launched mass testing, they have resisted a city-wide lockdown for now.
In the U.S. the focal point will be the October Consumer Price Index that we discussed above. In addition, we have the usual Thursday fare which is the weekly data for Initial & Continuing Jobless Claims and Natural Gas Inventories.
Markets reacted to political uncertainty yesterday with the Dow declining 1.95%, the S&P 500 down 2.08%, the Nasdaq Composite off 2.48%, and the Russell 2000 closing 2.68% lower. All sectors finished lower, led by Energy which fell 4.89%, and Consumer Discretionary which was 3.05% lower. The least impacted sector was Utilities, down only 0.78%. One name avoiding yesterday’s drawdown was Akamai Technologies (AKAM) up 6.19% on strong earnings.
Crypto land was shaken up even further yesterday as the announced acquisition of FTX by Binance fell apart. Estimates of the potential FTX loan liability rose to above $8 billion, not to mention the specter of potential regulatory actions, prompted Binance to walk away from the deal. Bitcoin dropped 14.65% and Ether fell 17.79% despite not being directly tied to FTX’s issues.
Here’s how the major market indicators stack up year-to-date:
- Dow Jones Industrial Average: -10.52%
- S&P 500: -2135%
- Nasdaq Composite: -33.82%
- Russell 2000: -21.60%
- Bitcoin (BTC-USD): -65.86%
- Ether (ETH-USD): -70.25%
Stocks to Watch
Before trading kicks off for U.S.-listed equities, Dillard’s (DDS), Edgewell Personal Care (EPC), Honest Company (HNST), Paysafe (PSFE), Ralph Lauren (RL), and Tapestry (TPR) will be among the companies slated to report their latest quarterly results.
We Work (WE) reported a larger-than-expected bottom-line loss for its September quarter as revenue that rose 23.6% YoY to $817 million missed the $865 million consensus. The company issued downside guidance for the current quarter with revenue of $870-$890 million vs. the $923.79 million consensus.
Snacking company Utz Brands (UTZ) reported mixed September quarter results with EPS that missed the consensus forecast despite sales rising 16% YoY to $362.8 million, easily topping the $341.74 million consensus. As the benefits associated with pricing actions and productivity programs continue to build, the company expects to offset high inflation for the full year of fiscal 2022. That along with boosting its 2022 revenue guidance to +17%-19% YoY from +13%-15% led Utz to raise its EBIDTA forecast for 2022 to $166-$170 million.
Taiwan Semiconductor (TSM) announced its net revenue for October was ~NT$210.27 billion, up 1% MoM and 56.3% YoY.
Following weaker-than-expected quarterly results last week, C.H. Robinson Worldwide (CHRW) is laying off between 1,000 and 1,200 employees as it contends with slowing demand and rising costs.
Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.
After Today’s Market Close
Beazer Homes, Duolingo (DUOL), Flower Foods (FLO), indie Semiconductor (INDI), Poshmark (POSH), Sierra Wireless (SWIR), and Toast (TOST) 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
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
“If you’re going through hell, keep going.” ~ Winston Churchill
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.