Stock futures saw a slight rebound following a challenging day on Wall Street, where rising oil prices and bond yields exerted downward pressure on the markets. On Tuesday morning, these factors eased somewhat, improving investor sentiment. The 10-year Treasury yield notably climbed above 4%, reaching its highest level since early August, while West Texas Intermediate oil futures rose above $77 per barrel, impacting the broader market negatively. However, the energy sector benefited from the rise in oil prices, making it the only one of the 11 sectors in the S&P 500 to close Monday in positive territory. Investors are now turning their attention to upcoming economic data on small businesses and the trade deficit.

European markets continued to decline as regional sentiment worsened amid ongoing concerns about the Middle East conflict. Mining stocks led the losses, dropping 4.54%, while household goods fell by 2.37%. European luxury stocks, including major brands like LVMH and Kering, also opened lower as hopes for a demand boost from Chinese stimulus measures faded. This downturn follows a shaky start to the week, reflecting broader investor apprehension.

Chinese markets experienced a volatile session following a briefing from the National Development and Reform Commission that lacked specifics on additional stimulus measures. The CSI 300 index in mainland China surged over 10% at the opening but eventually trimmed its gains to close 5.93% higher at 4,256.1. Meanwhile, Hong Kong’s Hang Seng index saw a dramatic drop of over 10% before recovering slightly to end with a 9% loss. Other Asia-Pacific markets also faced declines, influenced by Japan’s economic data showing a 1.9% year-on-year decrease in household spending for August, marking the steepest decline since January.

Economic Calendar

Earnings Calendar

Notable reports for Monday before the bell notable reports include PEP, & ACCD. After the bell there are no notable reports.

News & Technicals’

Uber is enhancing its platform with new sustainability-focused features. One notable addition is the “EV preference” option, allowing customers to choose fully electric vehicles by default when hailing a ride. On the delivery side, Uber Eats is expanding its offerings to include farmers’ market produce in New York City and Los Angeles. For drivers, Uber is introducing an “EV Mentor” program and an AI chatbot powered by OpenAI’s ChatGPT, designed to assist drivers with questions about purchasing and using battery electric vehicles instead of traditional gas-powered ones. These updates reflect Uber’s commitment to promoting environmentally friendly practices across its services.

A Delaware bankruptcy judge has approved FTX’s reorganization plan nearly two years after the cryptocurrency exchange filed for bankruptcy. The company has amassed between $14.7 billion and $16.5 billion in assets, which it intends to distribute to its creditors. Under the court-approved plan, 98% of FTX’s creditors are expected to receive 119% of their allowed claims, marking a significant recovery for those affected by the exchange’s collapse.

On Tuesday, South Korean tech giant Samsung Electronics announced that it anticipates lower-than-expected profits for the third quarter. The company, a leading memory chip manufacturer, projected an operating profit of approximately 9.10 trillion won, a significant increase from last year’s 2.43 trillion won. However, this figure falls short of the 11.456 trillion won ($7.7 billion) forecasted by analysts polled by LSEG for the quarter ending September 30.

Super Micro shares surged by 15% after the computer server company announced it is shipping over 100,000 graphics processing units (GPUs) per quarter, driven by the growing demand for artificial intelligence. As a major player in the AI boom, Super Micro provides computers that serve as servers for data storage, websites, AI training models, and more. Despite this positive momentum, the company is currently about nine weeks behind in releasing its annual report, which was initially expected in August.

Although the easing bond yields are providing a slight rebound this morning, we should remember the indexes remain within their choppy range and market breadth remains very low.  Of course, big moves are possible if something changes in the Middle East.  Other than that, the market will likely continue to chop until waiting on FOMC minutes, CP, PPI and beginning of earnings season on Friday.  Trade wisely and try not anticipate ahead of these big data points.

Trade Wisely,

Doug

Stock futures declined on Monday as Wall Street faced struggle to maintain momentum. Contributing to the pressure was a rise in U.S. Treasury yields, with the benchmark 10-year Treasury yield increasing nearly 3 basis points to 4.008%, marking its first time above 4% since August. Keith Lerner, co-chief investment officer at Truist Wealth, warned that the upcoming U.S. presidential election and the potential for an “October surprise” could sustain market volatility in the coming weeks. Investors are also closely monitoring international developments, particularly the ongoing tensions in the Middle East.

European stocks began the new trading week on a positive note, initially buoyed by gains in Asia overnight, but quickly pared back those gains. Currently, banks and household goods are the only sectors in positive territory, with increases of 0.2% and 0.4%, respectively. Shares of Rio Tinto fell by 0.26% after the mining company confirmed it was in discussions to acquire lithium producer Arcadium Lithium. On the data front, the U.K.’s Halifax House Price Index revealed that British house prices rose in September at the fastest annual pace since November 2022. Additionally, euro zone retail sales in August edged up by 0.2% from the previous month, aligning with expectations from a Reuters poll.

This week, the financial spotlight is on the Asia-Pacific region as three central banks—the Bank of Korea (BOK), Reserve Bank of New Zealand (RBNZ), and Reserve Bank of India (RBI)—prepare to announce their interest rate decisions. According to a Reuters poll, economists anticipate rate cuts from both the BOK and RBNZ, while the RBI is expected to maintain its current rate. The Nikkei index saw a significant rise, climbing 1.8% to close at 39,332.74, driven by gains in financial and consumer cyclical stocks, with Mizuho Financial Group and Nikon among the top performers.

Economic Calendar

Earnings Calendar

Notable reports for Monday before the bell we have no notable reports. After the bell reports include NAPA.

News & Technicals’

Early Monday, Hurricane Milton intensified to a Category 2 storm, prompting Florida to prepare for its largest evacuation in seven years. The hurricane is projected to impact major population centers such as Tampa and Orlando. Although forecast models show varying paths, the most likely scenario indicates that Milton could make landfall in the Tampa Bay area on Wednesday and maintain its hurricane status as it traverses central Florida before moving into the Atlantic Ocean.

Beginning October 7, banks in the U.K. will be mandated to compensate victims of online fraud up to £85,000. This new regulation comes amid ongoing tensions between financial institutions and tech companies over the responsibility for combating online scams. On Thursday, London-based digital bank Revolut criticized Meta, claiming it has fallen “woefully short” in its global efforts to address fraud. For years, banks have felt they are shouldering the majority of the financial burden from virtual scam attacks, exacerbating the friction between these sectors.

Starboard Value has acquired approximately $1 billion stake in Pfizer, as reported by sources familiar with the situation. The activist fund, led by Jeff Smith, is considering involving former Pfizer CEO Ian Read and ex-finance chief Frank D’Amelio, though their potential roles remain unspecified. This investment comes at a challenging time for Pfizer, which is aggressively cutting costs due to declining demand for its Covid-19 treatments.

The 10-year Treasury yield, a key benchmark for mortgages and car loans, surged back above 4% amid stronger labor market data. This marks its highest level since early August and a significant rebound from its 2024 low of approximately 3.58% just over a month ago. Investors are closely watching speeches from Federal Reserve officials Neel Kashkari, Raphael Bostic, Michelle Bowman, and Alberto Musalem, scheduled for Monday. Additionally, the 10-year Treasury auction is set for Wednesday, which could further influence market dynamics.

I would not be surprised if the struggle to maintain momentum continued this week despite the bullish rally in the market on Friday squeaking out new record high close in the DIA.  Market is highly anticipating the kick-off on earnings on Friday hoping the results will finally push us out of this choppy consolidation. However, between now and then we have an FOMC minutes release, a CPI report and a PPI report along with rising bond yields and oil prices providing uncertainty. Of course, all the geopolitical tensions and pending election just piles on the uncertainty facing the market.

Trade Wisely,

Doug

October trading has begun on a challenging note, with escalating tensions in the Middle East dampening market enthusiasm. These growing concerns have also pushed oil prices higher, with U.S. crude futures rising by over 1.5%, contributing to a week-to-date gain of 4.6%. On Wall Street, investors are anticipating new labor market data, including the release of weekly initial jobless claims on Thursday and September’s payrolls report, which is due on Friday morning.

European stocks declined on Thursday, influenced by the ongoing conflict in the Middle East, which dampened regional investor sentiment. Auto stocks were particularly affected, falling by 1.87% amid reports that the European Union might impose tariffs of up to 45% on Chinese electric vehicle (EV) manufacturers as early as Friday. Investors also evaluated new unemployment data from the euro zone, which revealed that the unemployment rate remained steady at a record low 6.4% in August.

On Thursday, Hong Kong stocks experienced a significant drop, ending a six-day winning streak as the momentum from China’s stimulus measures began to wane. Concurrently, the Japanese yen weakened against the U.S. dollar, marking its largest single-day decline since June 2022. Meanwhile, markets in mainland China will remain closed until October 8th due to a week-long holiday, and South Korea’s markets are also closed for National Foundation Day. Additionally, Taiwan’s markets were shut for a second consecutive day as Typhoon Krathon brought heavy rainfall to the island.

Economic Calendar

Earnings Calendar

Notable reports for Thursday before the bell include ANGO & STZ. After the bell reports include TLRY.

News & Technicals’

Levi Strauss reported mixed quarterly results, announcing plans to sell its Dockers business. While the company experienced robust growth in its namesake brand and Beyond Yoga, sales at Dockers fell by 15% during the quarter. Despite this, Levi’s focus on direct selling and lower cotton costs contributed to a 4.4 percentage point increase in its gross margin.

Europe’s leading car manufacturers are growing increasingly anxious about the potential for substantial fines, especially as demand for electric vehicles (EVs) weakens ahead of stricter carbon regulations. Starting next year, European carmakers will face more stringent emission targets, with the EU cap on average emissions from new vehicle sales dropping to 93.6 grams of CO2 per kilometer. Renault CEO Luca de Meo recently indicated that if EV sales do not improve, the European auto industry could face financial penalties amounting to 15 billion euros ($16.5 billion).

Atlanta is expected to experience haze and a chlorine odor on Thursday as authorities work to manage the aftermath of a chemical lab fire that started on Sunday. Air quality monitoring around the BioLab facility in Conyers detected elevated chlorine levels overnight, according to a news release from the Georgia Emergency Management and Homeland Security Agency on Wednesday. The presence of chemical gas has led to a shelter-in-place recommendation for the entire county, which has a population of 93,570, and mandatory evacuation orders for residents in the vicinity of the plant.

The British pound dropped by over 1% against the U.S. dollar on Thursday following comments from Bank of England Governor Andrew Bailey. In an interview with the Guardian, Bailey suggested that further positive news on inflation could enable the central bank to adopt a more proactive stance on rate cuts. The Bank of England maintained interest rates at 5% in September after a 25-basis point cut in August, citing concerns about high services inflation. Bailey also expressed optimism that cost of living pressures had not been as persistent as previously anticipated.

Israel’s response early Thursday put geopolitics front and center in the minds of investors as the escalating tensions weigh on sentiment. The DIA, SPY and QQQ remain in choppy yet bullish patterns while market breadth continues to wane. I would expect more of the same today unless we can find some substantial inspiration in the weekly claims data.  However, the pending employment situation report Friday could also inspire a break of this 2 week long consolidation.

Trade Wisely,

Doug

The major averages emerging from a losing session, with rising Middle East tensions dampening risk appetite and investor enthusiasm for the new trading period. Stock futures declined on Wednesday morning as traders prepared for potential further losses at the start of October. Technology stocks were the worst performers on Tuesday. Investors are looking forward to gaining insights into private payrolls through ADP’s Employment Survey. Additionally, Friday’s nonfarm payrolls report is anticipated to significantly influence market direction and the Federal Reserve’s upcoming rate decisions as it begins its rate-cutting cycle.

European stocks edged slightly higher as investors tried to overlook the escalating tensions in the Middle East. The oil and gas sector saw a notable increase of 2.42%, while travel and leisure stocks dipped by 0.25% due to airlines diverting flights away from the conflict zone. Defense companies experienced gains amid rising conflict risks. Despite reporting revenues and profits that exceeded expectations for the first half, shares of British sports retailer JD Sports fell by 3.5%.

Hong Kong’s Hang Seng index surged over 6%, reaching a 22-month high and marking its sixth consecutive day of gains, driven by recent stimulus policies. Meanwhile, markets in mainland China were closed for the Golden Week holiday and will remain so for the rest of the week. In contrast, Australia’s S&P/ASX 200 dipped slightly by 0.13% to close at 8,198.2. South Korea’s Kospi experienced a more significant decline of 1.22%, ending at 2,561.69, while the small-cap Kosdaq slipped 0.23% to 762.13. Japan’s Nikkei 225 also saw a notable drop of 2.18%.

Economic Calendar

Earnings Calendar

Notable reports for Thursday before the bell include CAG & RPM. After the bell reports include LEVI.

News & Technicals’

Stephen Roach, a senior fellow at Yale Law School’s Paul Tsai China Center, warns that markets are at risk of being “whipsawed” due to the combination of regional conflict in the Middle East and rising unemployment in the United States. The situation in the Middle East intensified on Tuesday when Iran launched a ballistic missile attack on Israel following the killing of Hezbollah leader Hassan Nasrallah and an Iranian commander in Lebanon. Roach noted that the markets are likely to be uncertain about their direction, as the conflicts in the Middle East contribute to inflationary pressures just as global central banks are beginning to ease monetary policy.

The strike affecting ports along the East and Gulf coast could drive up prices for food, automobiles, and various other consumer goods, though the overall economic impact is expected to be modest. Key industries are likely to face significant challenges including coal, energy, and agricultural products. However, there are potential mitigations to the strike’s impact. West Coast ports are expected to absorb some of the freight that would typically be handled by the eastern ports. Additionally, some companies had foreseen the disruption and stockpiled goods in advance.

Nike has withdrawn its full-year guidance and announced the postponement of its investor day, originally scheduled for November. Despite beating earnings expectations by 18 cents, the company fell short on revenue as it focuses on refining its product assortment and revamping its innovation strategy. Additionally, Nike is preparing for a leadership transition with a new CEO set to take the helm.

In a Tuesday interview with CNBC’s Jim Cramer, Chipotle CSO Jack Hartung discussed the company’s business in California following a price increase in April. Hartung noted that there is “macro resistance” from consumers to inflation across the industry. He emphasized that the situation in California is more about broader economic impacts rather than specific resistance to Chipotle’s price hike. Hartung pointed out that restaurant transactions are down across the board, indicating a wider trend affecting the entire restaurant industry.

Clearly the rising Middle East tensions have added a dose of uncertainty and volatility to the price action but so far, the bullish patterns in the DIA, SPY and QQQ remain intact. In truth, yesterday pullback relieved a lot of overbought pressure and may well prove to have been a healthy relief.  Remember, it’s the follow-though that matters and with the sharply declining market breadth that could be tough to achieve.  Stick with the trend but be ready with a plan to protect your capital if or when Israel retaliates.

Trade Wisely,

Doug

On the first trading day of October aa the fourth quarter begins, stock futures showed mixed results following a surprisingly strong performance in September. The S&P 500 and the Dow both reached closing records in the previous session, buoyed by Federal Reserve Chair Jerome Powell’s statement that the central bank is “not on any preset course” regarding future rate policy decisions. Investors are also keeping an eye on upcoming economic data, with the U.S. Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey for August set to be released on Tuesday morning, along with the S&P Global U.S. Manufacturing Purchasing Managers’ Index and the ISM Manufacturing PMI readings.

European stocks began October on a positive note, buoyed by the news that euro zone inflation has fallen below 2% for the first time since mid-2021, according to preliminary data released on Tuesday. Despite this overall positive trend, Renault shares dropped by 3.6%, placing them at the bottom of France’s CAC 40 index. This decline extends the losses seen in the auto sector from the previous session, reflecting ongoing industry pressures. Additionally, German inflation data released on Monday indicated a decrease in the consumer price index to 1.8% in September.

The financial markets in South Korea, Hong Kong, and mainland China are closed due to a public holiday. Mainland China will remain closed for the rest of the week in observance of the Golden Week holiday. Meanwhile, in Japan, business optimism among large manufacturers has remained steady, showing no change. However, sentiment among large non-manufacturers has seen a slight improvement, rising to +34 from +33 in the third quarter.

Economic Calendar

Earnings Calendar

Notable reports for Thursday before the bell include AYI, MKC, PAYX, & UNFI. After the bell reports include CLAM, LW, NKE, & RGP.

News & Technicals’

Federal Reserve Chair Jerome Powell stated on Monday that the recent half percentage point interest rate cut should not be seen as an indication that future rate adjustments will be equally aggressive. Speaking to the National Association for Business Economics, Powell emphasized that the Fed is “not on any preset course” regarding monetary policy. He expressed confidence in the strength of the economy and anticipated that inflation would continue to decrease.

Between 2014 and 2015, the Chinese stock market experienced a dramatic surge, doubling in value over six months as leverage increased significantly, noted Aaron Costello, regional head for Asia at Cambridge Associates. However, he pointed out on Monday that the current market conditions are different, with less dramatic gains and lower leverage levels. Costello reassured that “we’re not in the danger zone yet,” but he also highlighted the uncertainty surrounding whether economic growth will be robust enough to sustain a long-term market rally.

CVS Health’s board has enlisted advisors to conduct a strategic review of its business amidst potential activist pressure and a significantly depressed stock price, according to sources familiar with the situation. This review has been in progress for some time, though it remains uncertain what actions, if any, will be taken. Following the news, CVS shares saw a rise of approximately 2.5% in after-hours trading on Monday.

Starting at 12:01 a.m. ET on October 1, approximately 50,000 longshoremen from the International Longshoremen’s Association (ILA) began a strike at East Coast and Gulf Coast ports, stretching from New England to Texas. This marks the union’s first strike since 1977, following unsuccessful contract negotiations with port ownership. The strike affects a significant portion of U.S. trade, as 43%-49% of all U.S. imports and billions of dollars in monthly trade pass through these ports. The ILA, the largest maritime union in North America, rejected a proposal from the port management group USMX on Monday, which included a nearly 50% wage increase over six years.

As the fourth quarter begins traders will be hoping for a follow-through to the sharp afternoon rally that occurred yesterday that squeaked out new records in Dow and SP-500.  Market breadth, however, continued to decline with the indexes remaining in a choppy consolidating condition. Keep in mind that the big bank reports don’t begin until Oct. 11^th so as we wait, don’t be surprised to see choppy light volume conditions persist.  Middle eastern tensions continue to grow the longshoreman strike adds another layer of uncertainty for the traders to digest.

Trade Wisely,

Doug

U.S. stock futures remained flat as the last day of September began, following three consecutive weeks of gains for the major averages. Despite a challenging start to September, historically the weakest month for the stock market, markets rebounded as the month progressed, buoyed by the Federal Reserve’s interest rate cuts. Investors are now looking ahead to a significant test later in the week with the release of September’s jobs report on Friday. Additionally, Carnival is set to announce its quarterly earnings on Monday morning, adding to the week’s financial highlights.

European markets began the week and the final trading session of September on a negative note, with auto stocks leading the decline, down 3.8%. Stellantis, listed in Milan, saw its shares plummet by 13.5% after the automaker revised its 2024 annual guidance downward due to worsening global industry conditions. Similarly, France’s Renault experienced a drop of over 6% on Monday, while German automakers Porsche and Volkswagen both fell by around 3%.

China’s CSI 300 index experienced a significant surge, rallying by 8.48% to close at 4,017.85. This impressive performance was driven by strong gains in healthcare and tech stocks, marking a nine-day winning streak. It was the index’s best day since September 2008 and its highest level since August 2023. In contrast, Japan’s Nikkei 225 index faced a sharp decline, tumbling nearly 5% on Monday. This drop, coupled with a weakening yen against the dollar.

Economic Calendar

Earnings Calendar

Notable reports for Monday before the bell include CCL. After the bell there are no notable reports.

News & Technicals’

U.S. East and Gulf Coast port workers are poised to go on strike at midnight on Monday, with no negotiations currently scheduled to prevent the stoppage. This strike threatens to halt container traffic from Maine to Texas, potentially costing the economy up to $5 billion a day. The disruption could affect the flow of essential goods, from food to automobiles, at major ports, risking job losses and increasing inflation just weeks before the U.S. presidential election. With no talks planned before the Monday deadline, the situation remains critical.

Oil markets have not priced in an ‘all-out war’ despite the recent escalation in tensions following the killing of a Hezbollah leader by an Israeli airstrike in Beirut. The confirmation of the leader’s death by Hezbollah did not lead to a sharp reaction in oil prices. Instead, the global benchmark Brent crude saw a modest increase of 1.56%, reaching $73.10 per barrel, while U.S. West Texas Intermediate futures rose by 1.09%, trading at $68.19 per barrel.

The French-Italian conglomerate Stellantis, which owns brands like Chrysler, Dodge, Jeep, and Maserati, has issued a warning about lower-than-expected sales across most regions for the second half of the year. As a result, Stellantis has revised its adjusted operating income (AOI) margin for the full-year 2024 to a range of 5.5% to 7.0%, down from its previous “double digit” outlook. Similarly, Aston Martin, famous for its iconic models featured in James Bond films, has also announced reductions in its profit margin and production targets for the year. 

With the corporate buyback blackout in full effect the indexes could easily experience choppy market conditions as we wait for the official kickoff to 4^th quarter earnings on OCT. 11.  I continue to suggest raising your stoploss levels to protect your positions with the T2122 staying very elevated in the short-term.  That said, I would not rule out the possibility of a little volatility today due to end of quarter window dressing.

Trade Wisely,

Doug

Wall Street is working to stabilize after a mixed session on Wednesday, with Nasdaq 100 futures rising by 1.3%. This boost was largely driven by Micron Technology, whose shares surged 14% in extended trading following the release of strong guidance for the current quarter. Traders are now looking ahead to the weekly jobless claims report, expected on Thursday, with economists surveyed by Dow Jones predicting 223,000 initial unemployment claims for the week ending September 21.

European stocks saw an uptick on Thursday morning, driven primarily by a strong performance in the mining sector, which surged over 3.6%. Technology and household goods stocks also contributed to the positive momentum, each rising around 3%. Conversely, oil and gas stocks declined by more than 2.8% following a Financial Times report indicating that Saudi Arabia is considering abandoning its unofficial oil price target of $100 per barrel. Among the notable gainers, shares of the French luxury group Kering climbed significantly.

Chinese stocks continued their upward trajectory as state media reported that the nation’s top leaders had endorsed the government’s recent economic support measures. The CSI 300 index in Mainland China extended its winning streak to seven consecutive days, reaching its highest point in approximately four months following a pivotal meeting that reaffirmed the government’s commitment to stimulus efforts. Meanwhile, South Korea’s Kospi surged by 1.9%, driven by significant gains in SK Hynix. The chip maker announced the commencement of mass production of the world’s first 12-layer HBM3E chip, designed for AI memory applications.

Economic Calendar

Earnings Calendar

Notable reports for Thursday before the bell include CAN, KMX, JBL, & SNX. After the bell reports include COST, BB, & MTN.

News & Technicals’

Global chip stocks experienced a significant rally on Thursday following U.S. memory semiconductor maker Micron’s announcement of revenue guidance that exceeded expectations, propelling its share price upward. This positive sentiment extended to South Korea, where shares of Samsung Electronics and SK Hynix also saw gains. In Europe, Dutch semiconductor equipment maker ASML surged over 4% in early trading. Other semiconductor companies, including ASMI, BE Semiconductor, and STMicroelectronics, also posted sharp increases.

Russian President Vladimir Putin announced that Russia is making several clarifications to its nuclear doctrine, specifically defining the conditions under which nuclear weapons may be used. He mentioned that the draft amendments to the doctrine will broaden the scope of states and military alliances subject to nuclear deterrence. In a stern warning to Western nations, Putin declared that any attack on Russia by a non-nuclear state, if supported by a nuclear-armed nation, would be treated as a “joint attack,” signaling a significant shift in Russia’s strategic defense policy.

The Federal Trade Commission (FTC) is intensifying its efforts against “automation” companies that promise to launch and manage online businesses for customers in return for an upfront investment. The latest target of this crackdown is Ascend Ecom, which operated an e-commerce scheme primarily on Amazon. The FTC has accused Ascend and similar companies of misrepresentation and making deceptive earnings claims, highlighting the need for greater scrutiny and regulation in this sector to protect consumers from fraudulent business practices.

OpenAI’s board is currently deliberating plans to restructure the organization into a for-profit business. This news follows the announcement by Chief Technology Officer Mira Murati that she will be leaving the company after six and a half years. Later the same day, CEO Sam Altman revealed that Chief Research Officer Bob McGrew and Vice President of Research Barret Zoph are also set to depart. These significant leadership changes come at a pivotal moment for OpenAI as it considers a major shift in its business model.

With the earnings results out of MU the market is once again all excited about AI as the institutions work to stabilize the sector pushing new record highs in the SPY at the open.  However, it would be wise to be careful chasing at the open and watch for potential whipsaws as the market reacts to huge day of economic data and Fed speakers including the Chairman himself. 

Trade Wisely,

Doug

Stock futures dipped on Wednesday, following record-high closes for the S&P 500 and Dow, which rose by 0.25% and 0.20%, respectively. The Nasdaq Composite also saw gains, increasing by 0.56% and nearing its record high, now less than 4% away. Despite these positive movements, concerns about a slowing economy persist, especially after the Federal Reserve’s rate cut last week. Investors are now looking ahead to upcoming economic data, including new home sales for August, set to be released on Wednesday morning, and weekly jobless claims on Thursday.

European stocks edged lower on Wednesday, trimming gains from the previous session that were driven by Chinese stimulus measures. The banking sector was notably affected, with the banking index falling by approximately 0.4% as investors closely watched UniCredit’s potential acquisition of Commerzbank, Germany’s second-largest lender. Additionally, German software giant SAP saw a significant drop, landing at the bottom of the Stoxx 600, following reports from Bloomberg that the company is under investigation in the U.S. for alleged price-fixing.

China’s stock market led the Asia-Pacific region on Wednesday, driven by new stimulus measures announced by Beijing the previous day. This positive sentiment also saw the offshore yuan briefly strengthen to 6.995 against the U.S. dollar, marking the first time it broke the 7.00 level since May 2023. Hong Kong’s Hang Seng index reflected this optimism, rising by 0.63% in its final trading hour. Meanwhile, investors turned their attention to Australia’s inflation data, which showed a 2.7% year-on-year increase in the consumer price index for August.

Economic Calendar

Earnings Calendar

Notable reports for Wednesday before the bell notable report includes CTAS. After the bell includes MU, CNXC, FUL, JEF, & WS.

News & Technicals’

Caroline Ellison, the key witness in the case against FTX founder Sam Bankman-Fried, was sentenced to two years in prison by a New York federal court in Manhattan. She was also ordered to forfeit $11 billion. Ellison, who managed the Alameda Research hedge fund linked to FTX, had agreed to a plea deal in December 2022, shortly after the cryptocurrency exchange declared bankruptcy. During sentencing, Judge Lewis Kaplan acknowledged her significant cooperation but stated he could not grant her a “literal get-out-of-jail-free card.”

The Biden administration has endorsed the latest government funding proposal, reducing the likelihood of a shutdown before the November 5 presidential election. House Speaker Mike Johnson, R-La., introduced a new three-month funding bill on Sunday after his initial proposal failed in the GOP-controlled House. This appropriations bill aims to fund the government through December 20, instead of March 2025, and notably excludes the SAVE Act, a contentious voter ID bill.

Italy’s UniCredit has surprised German authorities with a potential multibillion-euro merger involving Frankfurt-based Commerzbank. Market observers indicated to CNBC on Tuesday that this move might have caused a sense of national embarrassment for Germany’s government. Some argue that the outcome of this takeover attempt could challenge the essence of the European project. On Monday, Milan-based UniCredit announced it had increased its stake in Commerzbank to approximately 21% and has requested to raise this holding to up to 29.9%.

Japan has been facing a rice shortage in recent months, driven by a combination of adverse weather conditions and a surge in tourism. This situation has been exacerbated by Japan’s restrictive rice policies. In August, many supermarkets frequently ran out of white rice, prompting stores to limit purchases to one bag per person.

After another round of record-high closes futures suggest a bit softer open for Wednesday.  Uncertainty of 4^th quarter earnings and the pending GDP and core PCE numbers are a natural reason for choppy price action and weaker than average volume.  With the T2122 indicator continuing to register a short-term overbought condition avoid overtrading and have a plan to protect positions if a profit-taking wave begins.

Trade Wisely,

Doug

U.S. stock futures saw a slight uptick on Tuesday in response to recent policy changes in China hoping to buoy economic declining confidence. The modest gains were primarily driven by increases in the utilities and financial sectors. Traders are also anticipating new economic data, including the Conference Board’s consumer confidence reading for September and the Richmond Fed manufacturing index, both set to be released later in the morning.

By mid-morning, the pan-European Stoxx 600 index had risen by 0.8%, driven by strong performances in the mining, technology, and household goods sectors. In contrast, telecoms, health care, and utilities were the only sectors in negative territory. Auto stocks also showed significant gains, with BMW up 3%, and both Mercedes Benz Group and Volkswagen increasing by 2%.

The People’s Bank of China announced a reduction in the reserve requirement ratio by 50 basis points, aiming to stimulate economic activity. Meanwhile, Australia’s central bank maintained its benchmark policy rate at 4.35%, aligning with economists’ expectations. Following these announcements, Hong Kong’s Hang Seng index surged nearly 4%, marking its best day in over seven months. In Japan, the Nikkei 225 closed 0.57% higher at 37,940.59, and the Topix rose by 0.54% to 2,656.73, as Japanese markets resumed trading after a holiday.

Economic Calendar

Earnings Calendar

Notable reports for Tuesday before the bell include AZO & THO. After the bell reports include KBH, PRGS, SFIX, & WOR.

News & Technicals’

A year after identifying geopolitics as the world’s biggest risk, JPMorgan Chase CEO Jamie Dimon reiterated his concerns, stating that “geopolitics is getting worse, they are not getting better” in an interview with CNBC-TV18. Dimon emphasized the escalating geopolitical tensions and urged the U.S. to brace for a prolonged conflict between Ukraine and Russia.

Boeing announced it has extended its “best and final” offer, which includes higher pay and other benefits, but the union rejected it, stating it was not a negotiated proposal. Over 30,000 Boeing machinists initiated a strike on September 13 after decisively rejecting a tentative agreement. The financial repercussions of the strike will hinge on its duration, with Bank of America estimating that it is costing Boeing $50 million per day.

President Joe Biden is preparing to deliver his final annual address to the United Nations General Assembly in New York. In his speech, Biden will aim to reconcile his diplomatic achievements and objectives with the ongoing conflicts in the Middle East, Ukraine, and Sudan. Additionally, foreign leaders are taking the opportunity this week to meet with Biden’s potential successors, Vice President Kamala Harris and former President Donald Trump.

Southwest Airlines’ COO informed staff that the company will need to make “difficult decisions” to enhance profitability. The airline has already announced plans to implement assigned seating, introduce red-eye flights, and offer seats with extra legroom. Southwest is facing pressure from activist investor Elliott Investment Management, which is advocating for a change in leadership.

Big policy changes in China are helping markets around the world continue the recent bullishness but keep in mind that it also signals the major problems with the Chinese economy. With the corporate buyback blackout, a pending GDP and core PCE reading along with uncertainty of coming 4^th quarter earnings I would not be surprised to see continued choppy market conditions. Also keep and eye on the growing geopolitical tensions with the potential of pushing energy prices substantial higher. 

Trade Wisely,

Doug

Stock futures edged higher on Monday, trying to build on the rate cut momentum that pushed the Dow Jones Industrial Average to a record closing level. Investors are keenly awaiting economic data on the service and manufacturing sectors, which could provide further insights into the health of the economy. Additionally, market participants will be closely monitoring speeches from key Federal Reserve officials, including Atlanta Fed President Raphael Bostic, Chicago Fed President Austan Goolsbee, and Minneapolis Fed President Neel Kashkari, for clues on the central bank’s future monetary policy direction.

European stocks remained flat in early trading on Monday, reflecting concerns over declining business activity in Germany and France, the region’s two largest economies. In France, the Purchasing Managers’ Index (PMI) for manufacturing and services fell sharply to 47.4, an eight-month low, significantly missing the Reuters forecast of 50.6 and dropping from 53.1 in August. Similarly, Germany’s business activity contracted, with the PMI decreasing from 48.4 in August to 47.2 in September, marking a seven-month low.

Recent economic data highlights several key trends across Asia-Pacific. China’s youth unemployment rate has surged for the second consecutive month, reaching its highest level this year, as reported by the National Bureau of Statistics. This rise reflects a cooling labor market amid broader economic weakening. Meanwhile, the Reserve Bank of Australia is commencing a two-day policy meeting to determine the country’s future monetary direction. In Singapore, both headline and core inflation rates exceeded expectations in August, with year-on-year increases of 2.2% and 2.7%, respectively.

Economic Calendar

Earnings Calendar

Notable reports for Monday before the bell there are no notable reports. After the bell includes AIR.

News & Technicals’

Global semiconductor leaders Taiwan Semiconductor Manufacturing Co. (TSMC) and Samsung Electronics are reportedly in discussions with the United Arab Emirates (UAE) to explore the possibility of establishing Mega factories in the Middle East. According to a report by the Wall Street Journal, these facilities would be primarily funded by the UAE, with Abu Dhabi’s sovereign wealth fund, Mubadala, playing a crucial role in financing the expansion of the country’s domestic semiconductor manufacturing capabilities.

Europe appears to be on the brink of an economic downturn as its largest economies, Germany and France, grapple with political and economic challenges. Recent data released on Monday indicates that business activity in both countries continued to decline in September. In Germany, the HCOB flash composite Purchasing Managers’ Index (PMI) dropped to a seven-month low, while in France, the composite PMI fell to an eight-month low.

Republican House Speaker Mike Johnson has introduced a revised temporary government funding proposal, incorporating significant amendments from the original bill presented earlier this month. The new proposal aims to fund the government through December 20 and notably excludes any provisions of the SAVE Act, a Trump-backed election security measure that would mandate proof of citizenship for voter registration. This adjustment reflects ongoing negotiations and compromises within the legislative process to ensure continued government operations.

RH CEO Gary Friedman explained to CNBC’s Jim Cramer why the upscale home furnishing retailer avoids official social media accounts, emphasizing the importance of authenticity. Friedman criticized paid promotions by online influencers, stating that such tactics lack genuineness. He highlighted that enduring brands earn their reputation by being truthful, rather than relying on “fake fans” or paid endorsements on platforms like Instagram or TikTok. According to Friedman, true brand value comes from honesty and integrity, not from artificial online popularity.

The premarket futures continue push higher hoping to continue the bullish rate cut momentum however, with most stocks in their black out period we should we watchful for a pullback or a resting consolidation as we wait for the next round of earnings.  Slowing economic conditions in Asian and European markets will add some weight to today’s economic reports and could effect today’s sentament.

Trade Wisely,

Doug