Stock Markets Show Mixed Signals Ahead of Key Economic Reports
The S&P 500 Index ($SPX) (SPY) is down -0.10%, while the Dow Jones Industrials Index ($DOWI) (DIA) decreased by -0.20%. Conversely, the Nasdaq 100 Index ($IUXX) (QQQ) has risen by +0.10%.
Caution Prevails Amid Earnings Season and Economic Indicators
Markets are showing mixed results today as investors remain cautious ahead of critical upcoming events. Notably, (1) this week, over 40% of the S&P 500’s market cap is set to release earnings reports, (2) Thursday’s September PCE price deflator is expected to fall to +2.1% year-over-year nominal and +2.6% year-over-year core from September’s +2.2% and +2.7%, respectively, (3) Friday will reveal the U.S. October unemployment report, with payrolls anticipated to rise by +90,000 due to strike and storm disruptions and an unchanged unemployment rate of 4.1%, and (4) next Tuesday marks the U.S. election.
Key Earnings and Market Reactions
This week, five of the “Magnificent Seven” stocks are scheduled to report their earnings, starting with Alphabet today after market close, followed by Meta and Microsoft on Wednesday, and Amazon and Apple on Thursday.
Additionally, stocks are being affected by rising yields. Today, the 10-year T-note yield has reached a new 3-3/4 month high, creating downward pressure on equity prices.
Crude Oil Prices and Trade Deficit Update
In commodities, December crude oil prices have increased by +0.36% after experiencing a -6.13% decline yesterday due to Israel’s limited retaliatory actions against Iran over the weekend. While today’s recovery favored oil-related stocks, it posed challenges for airlines, cruise lines, and other fuel-intensive companies.
In trade news, the U.S. trade deficit expanded to $108.2 billion in September, surpassing the expected -$96 billion and up from August’s revised figure of -$94.2 billion. This widening deficit will likely negatively impact Q3 U.S. GDP growth.
Housing Market Shows Strength
Conversely, home price reports have exceeded expectations. The FHFA house price index rose by +0.3% month-over-month, surpassing the anticipated +0.1%. The S&P CoreLogic CS 20-City U.S. home price index also reported a +0.35% month-over-month increase and +5.20% year-over-year growth, beating expectations of +0.20% month-over-month and +5.10% year-over-year.
Corporate Earnings Performance
The third-quarter earnings season is proving robust, with 76% of S&P 500 companies that have reported thus far exceeding their earnings estimates. Bloomberg Intelligence anticipates an average +4.3% year-over-year increase in S&P 500 quarterly earnings for Q3, a decrease from the +7.9% growth forecast in July.
Market predictions are reflecting a 96% probability for a -25 basis point rate cut at the Federal Open Market Committee (FOMC) meeting on November 6-7, while the chance of a -50 basis point cut remains at 0%.
International Market Overview
Globally, stock markets are showing mixed trends. The Euro Stoxx 50 is up +0.16%, China’s Shanghai Composite index closed down -1.08%, and Japan’s Nikkei Stock 225 ended up +0.77%.
Interest Rates and Bond Market Movement
In the bond market, December 10-year T-notes (ZNZ24) have decreased by -10.5 ticks, with the yield rising to 4.324%, marking a new high over the last 3-3/4 months. Supply pressures from upcoming announcements regarding Treasury funding are contributing to downward pressure on T-notes. Additionally, discussions surrounding the persistent U.S. budget deficit are impacting market sentiment.
European bond yields are also higher, with the 10-year German bund yield climbing +4.7 basis points to 2.333% and the 10-year UK gilt yield increasing +4.4 basis points to 4.298%.
Central Bank Rate Expectations
Swaps indicate a 100% likelihood for a -25 basis point rate cut by the European Central Bank (ECB) at its policy meeting on December 12, with a 40% chance for a -50 basis point cut.
Movers in the U.S. Stock Market
In stock-specific news, Alphabet (GOOG) is up +0.9% ahead of its earnings release, and other Magnificent Seven stocks are mostly climbing: Microsoft (MSFT) is up +0.3%, Meta Platforms (META) has gained +0.3%, and Apple (AAPL) is up +0.2%. However, Tesla (TSLA) remains steady, while Nvidia (NVDA) is down -0.4%.
Conversely, oil-related stocks continue to perform weakly. Chevron (CVX) is down -0.8%, Exxon (XOM) has dropped -0.7%, Occidental Petroleum (OXY) fell by -0.5%, and Marathon Oil (MRO) is also down -0.5%.
In the transportation sector, Delta Air Lines (DAL) is up +0.7%, and American Airlines Group (AAL) is gaining +0.1%, though United Airlines Holdings (UAL) has dipped -0.2%. Royal Caribbean Cruises (RCL) is up +1.4%, while Carnival (CCL) has decreased by -0.3%.
Ford (F) has seen a significant decline of more than -9% due to concerns about high costs affecting profit margins.
DR Horton (DHI) dropped -12% after disappointing forecasts for 2025 revenue. This has affected other homebuilders, with PulteGroup (PHM), Lennar (LEN), and KB Home (KBH) down roughly -5% each.
Despite raising its revenue and earnings guidance for 2025, Pfizer (PFE) has dipped -0.8%.
Boeing (BA) has increased by +0.9% following its successful sale of $21 billion in shares to reduce debt and avert a potential credit downgrade.
Meanwhile, Coinbase (COIN) has seen gains of +3% as Bitcoin climbs an additional +3%, building on a 4.12% rise from yesterday.
Upcoming Earnings Reports
Today’s earnings reports include major companies such as Pfizer Inc (PFE), Ecolab Inc (ECL), Masco Corp (MAS), DR Horton Inc (DHI), Leidos Holdings Inc (LDOS), MSCI Inc (MSCI), American Tower Corp (AMT), Sysco Corp (SYY), Royal Caribbean Cruises Ltd (RCL), PayPal Holdings Inc (PYPL), Phillips 66 (PSX), Stanley Black & Decker Inc (SWK), Zebra Technologies Corp (ZBRA), McDonald’s Corp (MCD), Incyte Corp (INCY), Hubbell Inc (HUBB), Corning Inc (GLW), Qorvo Inc (QRVO), Stryker Corp (SYK), Mondelez International Inc (MDLZ), Chipotle Mexican Grill Inc (CMG), Republic Services Inc (RSG), FMC Corp (FMC), BXP Inc (BXP), Edison International (EIX), Electronic Arts Inc (EA), DaVita Inc (DVA), Extra Space Storage Inc (EXR), Chubb Ltd (CB), ONEOK Inc (OKE), IDEX Corp (IEX), Visa Inc (V), EQT Corp (EQT), First Solar Inc (FSLR), Caesars Entertainment Inc (CZR), Essex Property Trust Inc (ESS), FirstEnergy Corp (FE), Alphabet Inc (GOOGL), and Advanced Micro Devices Inc (AMD).
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On the date of publication,
Rich Asplund
did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more information, please view the Barchart Disclosure Policy
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
