U.S. stocks are attempting to recover after a significant downturn, with the Dow experiencing its largest one-day loss since early December. Strong earnings from Tesla have provided a boost of confidence, encouraging bullish sentiment as SPY and QQQ aim for a premarket rebound. Meanwhile, the 10-year Treasury yield has been on an upward trajectory this week, surpassing the 4.25% mark during Wednesday’s session high. This increase in yields has exerted pressure on stocks recently, contributing to the market’s volatility.

Thursday, European stocks saw a modest rise, with most major bourses and sectors trading in positive territory. Renault’s shares surged over 7% following an unexpected increase in third-quarter revenue, showcasing the French carmaker’s resilience. Similarly, Barclays experienced a 4% boost in its share price after reporting better-than-expected third-quarter results, reflecting strong performance in the British banking sector.

Asia-Pacific markets experienced a general downturn. South Korea narrowly avoided a technical recession, with its third-quarter GDP growing by a modest 0.1% quarter-on-quarter. Despite this, South Korea’s benchmark Kospi fell by 0.72%. Australia’s S&P/ASX 200 also saw a slight decline of 0.12%. Hong Kong’s Hang Seng index dropped significantly by 1.35%, and mainland China’s CSI 300 experienced a larger loss of 1.12%. In contrast, Japan’s Nikkei 225 was the notable outlier, managing to reverse earlier losses and gain 0.1%.

Economic Calendar

Earnings Calendar

Notable reports for Thursday before the bell include ADT, ALKS, ALLE, AB, AAL, AIT, BHLB, BFH, BC, CRS, CARR, CBRE, COLB, DOV, DOW, DTE, EEFT, XPRO, FRME, FSV, FCN, HOG, HAS, HON, ITGR, KDP, KKR, LH, LEA, LTH, LNN, LKQ, MSM, NDAQ, NOC, OSIS, PPBI, POOL, RDUS, RS, RCI, RES, R, SPGI, SMPL, SAH, SBSI, LUV, FTI, TECK, TXT, TSCO, TPH, UNP, UPS, VLO, VLY, VIRT, VC, WNC, WST, & WEX. After the bell reports include ABCB, APPF, ART, AJG, ASB, BYON, SAM, BYD, COF, CSL, CINF, COUR, CUZ, DECK, DXCM, DLR, EW, EXPO, FHI, FFBC, FIBK, GLPI, GBCI, HIG, DOC, KNSL, KN, LHX, MGRC, MTX, NOV, OLN, PECO, PDM, PFG, RMD, SBCF, SKX, SPSC, SSNC, TXRH, TROX, UHS, VRSN, WDC, WY, & WSFS.

News & Technicals’

On September 13, Boeing machinists initiated a strike after decisively rejecting a labor proposal, with 64% voting against it. The proposal included substantial benefits such as 35% raises, a $7,000 ratification bonus, and increased 401(k) contributions. Resolving this strike has become a top priority for Boeing’s new CEO, Kelly Ortberg, as the company faces ongoing financial strain and is projected to continue burning cash through 2025. Ending the strike is crucial for stabilizing Boeing’s operations and financial outlook.

United Parcel Service (UPS) reported an increase in third-quarter profit on Thursday, driven by a rebound in volume ahead of the holiday season, which boosted revenue. Cost-cutting measures also helped mitigate the impact on margins from consumers opting for cheaper delivery options. Notably, the growth has been largely fueled by new e-commerce players, specifically China-linked bargain retailers Shein and Temu. This shift has intensified the move from premium air services to more affordable ground services, and further to the even lower-profit SurePost services, reflecting changing consumer preferences in the delivery market.

IBM’s software division saw strong performance, driven by accelerated growth in its Red Hat business. However, the company’s consulting and infrastructure units fell short of revenue expectations. Looking ahead, IBM anticipates that fourth-quarter revenue growth, at constant currency, will match the 2% growth seen in the third quarter. This outlook reflects a balanced perspective on the company’s varied business segments and their contributions to overall growth.

Hyundai Motor issued a warning on Thursday about slowing demand and increasing competition yet maintained its 2024 earnings target despite a 7% decline in third-quarter operating profit. This announcement led to a more than 5% drop in its share price. During a conference call, CFO Lee Seung-jo highlighted the deteriorating business environment for the automotive industry, pointing to rising policy uncertainties and global geopolitical risks as significant challenges.

SPY and QQQ are attempting to recover on the back of the TSLA earnings, however, the disappointing results from IBM are keeping the DIA rather subdued in the premarket.  That said, with a huge number of earnings reports today and some potential market moving economic reports anything is possible.  Bond yields continue to apply significant pressure to the market as gold continues to surge will keep investors on edge despite the hype the earnings season creates.

Trade Wisely,

Doug