Daily markets: Profits season heats up with technology in the hot seat
The big picture of today
Today kicks off an avalanche of profits this week, with more than a quarter of the companies making up the S&P 500, as well as the five biggest names in tech. Of the companies that have already reported, almost 84% have exceeded estimates. After Snap’s (SNAP) the share price collapsed last week thanks to the impact of Apple (AAPL) increased protection of mobile privacy, investors will focus on Facebook (FB) results today and Alphabet (GOOG) and Twitter (TWTR) tomorrow.
While the S&P 500 and Dow hit new highs last week, the Nasdaq 100, Nasdaq Composite and Russell 2000 have yet to reach new highs. Investors will be looking for confirmation, with expectations that a breakout in small caps will be a particularly bullish signal for markets.
Stocks in Asia-Pacific were mixed today, with Hong Kong’s Hang Seng relatively unchanged while mainland China’s Shanghai Composite rose 0.8% and the Shenzhen component rose 0.7%. Japan’s Nikkei lost 0.7%, but South Korea’s Kospi rose 0.5% and Australia’s ASX 200 rose 0.3%. At noon, European markets were also mixed, but US equity futures are showing positive moves on the open. Crude strengthened in Asian trading earlier today, with WTI reaching its highest level since October 2014.
With the Delta Plus variant spreading to 11 provinces, China has reinstated some travel restrictions for people arriving from anywhere in the country who have reported locally transmitted Covid cases. All tourism-related rail services around China have also been cut off. The same Delta Plus variant is also spreading in the UK. Currently, the United States is still on the verge of opening its borders to fully vaccinated foreign travelers on November 8.
Senior U.S. health officials now expect Covid-19 vaccines for children aged 5 to 11 to be available by early November.
Yesterday, the struggling Chinese Evergrande announced that it had resumed work on more than ten projects.
Eurozone data last week showed that the economy is now growing at its slowest pace in the past six months. This morning, Germany’s Ifo Business Climate Index for October fell more than expected to 97.7 from 98.8 over expectations of a smaller drop to 97.9. This is the index’s lowest level since April, as Europe struggles with supply chain bottlenecks and declining production capacity. Expectations for the coming months and opinion on current trading conditions both deteriorated month over month.
Mexico’s unemployment rate was better than expected at 4.2% in September, down from 4.3% in August, when it was expected to hold.
Friday’s Markit flash PMIs for manufacturing and services in October were mixed, just like what we saw in Europe on Friday. Services rose more than expected to 58.2 from 54.9 in September against expectations for a minor increase to 55.1 while manufacturing fell more than expected to 59.2 from 60.7, against expectations for a minor drop to 60.3.
In other drink-worthy news, the US budget deficit for 2021 reached $ 2.772 trillion, the second highest on record, from $ 3.132 trillion in 2020.
Speaking of spending, it seems increasingly likely that a lean reconciliation spending plan and bipartisan infrastructure bill will be passed on Capitol Hill. Senators Chuck Schumer and Joe Manchin spent the weekend with President Biden at his home in Delaware to work out acceptable proposals ahead of Biden’s trip to Europe later this week.
Later today, we’ll have the Chicago Fed’s National Activity Index for September and the third of the Fed’s five regional manufacturing indexes, the Dallas Fed’s Manufacturing Index.
Major U.S. stock indexes closed in the green for the third week in a row, despite the tech sector being hit hard on Friday after hearing Snap’s disappointing figures, thanks to Apples enhanced mobile privacy features.
The Treasury curve continued to flatten, with the yield on long-term bonds falling six basis points to 2.07% as the short-term rate rose, with the 2-year yield hitting 0.46%, its highest level since early 2020.
Actions to watch
Buyers at Walmart (WMT) can now buy bitcoin for cash in select stores through Coinstar kiosks. Coinstar has partnered with Coinme, the cash-to-crypto company, to make these purchases possible.
Before the US stock markets open this morning, Kimberly Clark (KMB), Otis around the world (OTIS), and International Restaurant Brands (QSR) are expected to publish their quarterly results.
This morning the British company HSBC (HSBC) reported a 74% increase in profits and a share buyback of up to $ 2 billion. Pre-tax profits reached $ 5.4 billion from $ 3.1 billion the previous year and expectations of $ 3.8 billion.
Tesla (TSLA) rolled back its Full Self-Driving Advanced Driver Assistance Software to v10.2 after some issues with v10.3. CEO Elon Musk said the problem was to be expected with the beta software. The company is also said to have raised prices for electric vehicles over the weekend. The base Model 3 and Model Y were both increased by $ 2,000 to $ 43,990 and $ 56,990, while the base Model S and Model X vehicles were increased by $ 5,000 each to $ 94,990 and $ 104,990.
Procter & Gamble (PG), Nestlé (NSRGY), Verizon Communications (VZ), and other companies plan to continue raising prices or pushing customers to buy more expensive products until 2022 to “offset rapidly growing costs amid a global supply chain crisis.”
The Zhejiang Geely Holdings (ZGH) Swedish automaker Volvo Cars announced this morning that it is reducing the size of its stock exchange listing and will price it at $ 6.2 per share. The offer is now expected to raise around SEK 20 billion against the previously anticipated 25 billion. Geely Sweden Holdings AB will not exercise its option to increase the size. The shares are expected to start trading on Friday, a day later than expected, with the company having a market capitalization of around $ 19 billion.
All birds (BIRDS) had launched its IPO of 19.23 million shares with a target price range of $ 12 to $ 14.
To learn more, visit the Latest and Upcoming Nasdaq IPOs page.
Merger and acquisition activity
PayPal (PYPL) announced that he is not currently pursuing Pinterest (PINS) following reports from Bloomberg that the two were in talks, ending speculation about a potential $ 45 billion deal. PayPal shares are up more than 5% in pre-market trading this morning, while Pinterest shares are down about 10%.
After today’s market closes
American Campus Communities (ACC0), Celestica (CLS), Facebook (FB), Logitech International (LOGI) and Packaging Corp. (PKG) are among the companies that must publish their quarterly results. Those looking to get an overview of the revenue reports in the coming days should visit Nasdaq earnings calendar page.
On the horizon
- October 26: S & P / Case-Shiller Home Price Index, New Home Sales, CB Consumer Confidence
- October 27: durable goods orders, wholesale inventories, durable goods, goods trade balance
- October 28: Q3 GDP (advance estimate), weekly jobless claims, pending home sales
- October 29: Personal income and expenditure, PCE price index, Q3 employment cost, Chicago PMI, Michigan Consumer Sentiment
- November 1: Markit and ISM Manufacturing PMIs, Construction Spending
- November 2: Total Vehicle Sales, IBD / TIPP Economic Optimism, API Crude Oil Inventory
- November 3: evolution of ADP employment, Markit Services and composite PMI, non-manufacturing ISM and composite PMI, factory orders, Federal Reserve interest rate decision
- November 4: Trade balance, unit labor costs, non-agricultural productivity, weekly jobless claims
- November 5: Non-agricultural wage bill, unemployment rate
- November 9: PPI, change in API crude oil inventories
- November 10: Inflation, Weekly Unemployment Listings, Wholesale Stocks, EIA Crude & Gasoline Stocks, Monthly Budget Statement
- November 12: JOLTs report, Michigan Consumer Sentiment
Thought of the day
“Listen to everyone, but listen to yourself. ~ Ron Howard
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.