Today’s Big Picture
Asia-Pacific equity markets finished the day lower except for Japan’s Nikkei, which gained 0.53% after the Bank of Japan (BoJ) left rates unchanged ahead of the U.S. central bank meeting. Australia’s ASX All Ordinaries eked out a 0.10% gain while China’s Shanghai Composite declined 0.09%. India’s SENSEX fell 0.37%, Taiwan’s TAIEX gave back 0.92%, and South Korea’s KOSPI slid 1.41%. Hong Kong’s Hang Seng closed 1.69% lower in a broad decline led by Electronic Technology and Producer Manufacturing names. European markets are up across the board in midday trading.
U.S. equity futures point to a positive open for the last day of trading in October as the market looks to further claw its way out of oversold territory. However, barring an exceptional rally today, the market looks to finish lower for the trailing three-month period. Pushing back on the market’s attempt to move higher today, we have soft guidance as well as some dividend cuts from some consumer-facing companies like Vanity Fair (VFC) and Denny’s (DENN), which are likely to fan the flames of worry about the consumer.
Weaker than expected October manufacturing data out of China renews questions about the pace of that economy and whether additional stimulus may be needed. That sets a potentially spooky stage for the next round of economic data that spans October figures for the manufacturing and services economy, job creation, and wage gains over the next few days. As that gets started tomorrow, the market will also face the Fed’s next policy decision and updated comments tomorrow afternoon. While stocks may get a bounce today off of oversold levels, the next few days will tell us how sustained that move could be.
China’s NBS Manufacturing PMI in China unexpectedly fell to 49.5 in October 2023 from 50.2 in September, missing market forecasts of 50.2. New orders returned to contraction (49.5 vs 50.5 in September), with foreign sales falling at a faster pace (46.8 vs 47.8). The NBS Non-Manufacturing PMI for China was down to 50.6 in October from 51.70 a month earlier. While it was the tenth straight month of expansion in the service sector, it was the softest in the sequence with steeper declines in new orders (46.7 vs 47.8 September), foreign sales (49.1 vs 49.4), and employment (46.5 vs 46.8).
As expected, the Bank of Japan kept its key short-term interest rate unchanged at -0.1% and that of 10-year bond yields at around 0% following its October policy meeting.
Retail Sales in Germany decreased 4.3% YoY in September, the most in six months and more than market forecasts of a 4% decline.
Preliminary estimates found the Euro Area economy edged up a meager 0.1% YoY in 3Q 2023, the weakest reading since the contractions in 2021. The 3Q 2023 estimate was below the 0.2% forecast and slower than 0.5% in 2Q 2023. Preliminary estimates for the Euro Area also showed its inflation rate for October fell to 2.9% YoY, the lowest level since July 2021 and lower than the market consensus of 3.1%. The initial read on October core inflation came in at 4.2% YoY, down from 4.5% in September and in line with consensus forecasts.
At 8:30 AM ET, the 3Q 2023 Employment Cost Index will be released and the market consensus expects it will come in at 1% QoQ, matching the 2Q 2023 figure.
At 9 AM ET, readers will get back to back takes on August housing prices courtesy of the latest FHFA Housing Price Index and the S&P Case-Shiller Home Price Index.
At 10 AM ET, the Consensus Bureau will publish October Consumer Confidence, which the market sees falling to 100 vs. September’s 103 reading.
The Treasury expects to borrow $776 billion during October-December, $76 billion less than it forecast in July. The lower borrowings reflect higher revenue projection, due to tax payments expected from California and other states, which had been deferred due to natural disasters. The Treasury expects to borrow $816 billion during January-March 2024, a record for that period, which implies a March-end cash balance of $750 billion, matching its forecast for the end of 2023. Exiting September, the U.S. federal government closed out its fiscal year with a ~$1.70 trillion deficit, up 23.2% YoY.
House Republicans unveiled a $14.3 billion aid package for Israel, which to pay for includes $14.3 billion in cuts to IRS funding, a detail that will likely be a non-starter for Democrats.
Equities seemed to shrug off the worries of last week as Monday saw all sectors move higher. Communications Services led the way gaining 2.06% as the entire sector (based on the Communication Services Select SPDR Fund (XLC) posted gains except for Take-Two Interactive Software (TTWO) and Electronic Arts (EA) which both fell about 1%. Financials and Consumer Staples followed, advancing 1.78% and 1.56%, respectively. Relative weakness was found in Real Estate (0.31%) and Energy (0.33%) as rate and oil supply jitters remained intact. The Russell 2000 rose 0.63%, the Nasdaq Composite rose 1.16%, the S&P 500 added 1.20% and the Dow closed 1.58% higher. Fundamentals still matter as shares of Revvity (RVTY) were taken down 16.13% after the company missed top and bottom line estimates, and also lowered 2023 guidance.
Here’s how the major market indicators stack up year-to-date:
- Dow Jones Industrial Average: -0.66%
- S&P 500: 8.53%
- Nasdaq Composite: 22.19%
- Russell 2000: -6.47%
- Bitcoin (BTC-USD): 107.81%
- Ether (ETH-USD): 50.97%
Stocks to Watch
Before U.S. equity markets begin trading today, AGCO Corp. (AGCO), Caterpillar (CAT), Eaton (ETN), JetBlue Airways (JBLU), Pfizer (PFE), Samsung (SSNLF), Sensata Tech (ST), Sprouts Farmers Market (SFM), and Sysco (SYY) will report their latest quarterly results.
Movers in early trading include Arista Networks (ANET) trading up about 10% and Catalent Inc (CTLT) down just over 17% after yesterday’s disappointing results from an MS drug trial. Advance decline figures in pre-market trading jive with S&P futures at 151/71.
At its “Scary Fast” event last night, Apple (AAPL) announced its M3 chip family, a trio of processors that power new 14- and 16-inch MacBook Pro laptops and a new iMac. Apple also introduced a redesigned entry-level model that is less expensive and has the base M3 chip inside.
VF Corp. (VFC) missed September quarter consensus EPS expectations despite revenue for the quarter modestly topping the consensus forecast. By brand, The North Face delivered another quarter of double-digit revenue growth while Vans fell 21%. Wholesale sales during the quarter fell 1%, with its Americas business down 11%, and Direct-to-Consumer was down 3%. VF withdrew its previous revenue and earnings guidance and now sees ~$600 million fiscal 2024 free cash flow vs. its prior guidance of ~$900 million. The company also cut its quarterly dividend by ~70%, declaring its next one will be $0.09 per share down from the prior $0.30 per share. Shares are trading about 7.70% lower in early trading.
Pinterest (PINS) reported top and bottom line beats for its September quarter and issued an upbeat outlook. Global Monthly Active Users increased 8% year over year to 482 million vs. the expected 473.5 million. The company sees current-quarter revenue growing 11%-13%, implying revenue of $973.5-$991.0 million vs. the $978.35 million consensus and $763.2 million in the September quarter.
Citing a tough discretionary environment, Denny’s (DENN) now sees its full-year U.S. system-wide same-restaurant sales up 2.75%-3.50% vs. its prior forecast of +3%-6%.
The shares of Lattice Semiconductor (LSCC), a company that primarily serves the communications, computing, industrial, automotive, and consumer markets, fell nearly 20% after the company delivered weaker-than-expected revenue guidance for the current quarter of $166-$186 million vs. the $195.72 consensus and $192.2 million in the September quarter.
Shares of PetMed Express (PETS) fell as much as 25% last night after missing consensus expectations and the company’s announcing it was suspending dividends to focus on organic and other expansion opportunities.
Readers who want to dig deeper into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.
After Today’s Market Close
AMD (AMD), Caesars Entertainment (CZR), First Solar (SFLR), and Yum China (YUMC) will be among the companies reporting after the equities stop trading. Those looking for more on upcoming quarterly earnings reports should head on over to Nasdaq’s Earnings Calendar.
On the Horizon
Wednesday, November 1
- Japan: Jibun Bank Final Manufacturing PMI – October
- China: Caixin Manufacturing PMI – October
- UK: S&P Global-CIPS Final Manufacturing PMI – October
- US: Weekly MBA Mortgage Applications
- US: ADP Employment Change Report – October
- US: S&P Global Final US Manufacturing PMI – October
- US: ISM Manufacturing Index – October
- US: JOLTs – Job Openings Report – October
- US: Construction Spending – September
- US: Weekly EIA Crude Oil Inventories
- US: FOMC Rate Decision
Thursday, November 2
- Eurozone: HCOB Final Manufacturing PMI – October
- UK: Bank of England Interest Rate Decision
- US: Weekly Initial & Continuing Jobless Claims
- US: Productivity and Unit Labor Cost – 3Q 2023
- US: Factory Orders – September
- US: Weekly EIA Natural Gas Inventories
Friday, November 3
- China: Caixin Services PMI – October
- UK: S&P Global-CIPS Final Services PMI – October
- Eurozone: Unemployment Rate – September
- US: Employment Report – October
- US: S&P Global Final US Services PMI – October
- US: ISM Non-Manufacturing Index – October
Thought for the Day
“Halloween was confusing. All my life my parents said, ‘Never take candy from strangers.’ And then they dressed me up and said, ‘Go beg for it.’ ” ~ Rita Rudner
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.