Stock futures remained flat as investors wait for directional signals of follow-through up or down. This week’s earnings reports have been a mixed bag, with strong performances from major banks being counterbalanced by weaker outlooks from companies like UnitedHealth Group and Dutch chipmaker ASML. Investors are particularly focused on upcoming reports from Morgan Stanley and Abbott Laboratories, due before the market opens. Bryn Talkington, managing partner of Requisite Capital Management, mentioned on CNBC’s “Closing Bell” that the stock market is expected to be volatile in the coming weeks as investors navigate through earnings season and the presidential election.

European markets saw a decline as global market sentiment deteriorated. However, the FTSE 100 stood out among major regional indices, rising by 0.6% following the release of U.K. data indicating a significant drop in the inflation rate to 1.7% in September. Among individual stocks, LVMH experienced a notable drop of 6.3% at the opening, while British hotel group Whitbread emerged as the best performer, with its shares increasing by 3.7%.

Asia-Pacific markets experienced a downturn as investors remained cautious, anticipating potential stimulus measures aimed at bolstering China’s real estate sector. The upcoming press briefing by China’s housing minister on Thursday is expected to shed light on these measures. Meanwhile, New Zealand reported a 2.2% increase in its consumer prices index for the third quarter, indicating rising inflationary pressures. In South Korea, the seasonally adjusted unemployment rate slightly increased to 2.5% in September from 2.4% in August, reflecting minor fluctuations in the labor market.

Economic Calendar

Earnings Calendar

Notable reports for Wednesday before the bell include ABT, ASML, DFG, FHN, MS, OFG, PLD, SYF, USB, & WAFD. After the bell reports include AA, CNS, CCI, CSX, DFS, EFX, FR, HOMB, KMI, PPG, REXR, SLG, STLD, & SNV.

News & Technicals’

United Airlines reported third-quarter revenue and earnings that exceeded Wall Street expectations, signaling a strong performance. The airline also announced a $1.5 billion share buyback, marking its first repurchase since the onset of the Covid-19 pandemic. Additionally, United’s fourth-quarter earnings estimate surpassed analysts’ forecasts, further highlighting the company’s positive financial outlook.

On Wednesday, Asian and European chip stocks declined following disappointing sales forecasts from Dutch semiconductor equipment maker ASML, which negatively impacted global stocks in the sector. In Asia, Japan’s Tokyo Electron experienced the most significant losses, with its stock plummeting nearly 10%. Meanwhile, in Europe, ASML’s stock fell for the second consecutive day, losing 4% of its value. ASML’s CEO, Christophe Fouquet, highlighted customer caution in the company’s early released results, noting that the recovery is progressing more gradually than previously anticipated.

Boeing announced plans to raise up to $25 billion to strengthen its balance sheet, a move aimed at enhancing its financial stability. In a separate filing, the company disclosed that it has secured a $10 billion credit agreement with banks. Despite these efforts, Boeing is under scrutiny from credit ratings agencies, which have issued warnings that the company could lose its investment-grade rating. This highlights the ongoing financial challenges Boeing faces as it navigates a complex economic landscape.

Venture funding for cloud startups in the U.S., Europe, and Israel is expected to increase by 27% year-over-year, marking the first rise in three years, according to a report from VC firm Accel. Of the $79.2 billion raised by cloud firms, 40% was allocated to generative AI startups. Philippe Botteri, a partner at Accel, highlighted the dominance of AI in the sector, stating that “AI is sucking the air out of the room” in an interview with CNBC. This trend underscores the growing focus and investment in AI technologies within the cloud industry.

Mortgage Apps number came with a substantial disappointment this morning as investors wait for directional signals of what the follow-though will look like today. The ASML early report had bearish effects not only here in the U.S. but also translated into selling around the world last night.  Of course, earnings results or the economic numbers are likely to provide the inspiration for the bulls or bears to make that decision.  Remember that Thursday is a very big day of economic reports so plan your risk accordingly.

Trade Wisely,

Doug

Stock futures remained relatively stable on Tuesday following record highs for both the Dow Jones Industrial Average (DIA) and the S&P 500 (SPY). Information technology stocks were the standout performers, driving the S&P 500 up by nearly 1.4%, with Nvidia’s 2.4% rally to a record close providing significant upward momentum. The focus now shifts to corporate earnings, with major financial institutions like Goldman Sachs, Citigroup, and Bank of America set to report. Additionally, earnings from United Airlines, Walgreens Boots Alliance, and Johnson & Johnson are anticipated. Investors are also keeping a close watch on manufacturing data and comments from several Federal Reserve speakers, which could influence market sentiment.

European stocks showed a mixed performance on Tuesday as third-quarter earnings reports began to emerge. The market saw a divergence across sectors, with travel stocks rising by 1.3%, while oil and gas stocks fell by 3.15%, mirroring declines in the oil market. Telecom stocks gained 1.39%, largely driven by a significant 8.5% jump in Sweden’s Ericsson, which exceeded earnings expectations despite a 4% drop in year-on-year sales. Meanwhile, the U.K.’s statistics agency reported that average wages excluding bonuses increased by 4.9% year-on-year, though earnings including bonuses fell to a two-year low of 3.8%.

China’s stock markets experienced a significant downturn on Tuesday following the release of disappointing September trade data. Both exports and imports fell short of expectations, with exports rising only 2.4% and imports increasing a mere 0.3% compared to the previous year. This led to a 2.66% drop in the CSI 300 index and a 3.67% decline in Hong Kong’s Hang Seng index. In contrast, South Korea’s Kospi index saw a modest gain of 0.39%, buoyed by revised trade data showing a substantial surplus of $6.7 billion for September. Japan’s Nikkei 225 and Australia’s S&P/ASX 200 also posted gains, rising 0.77% and 0.79%, respectively.

Economic Calendar

Earnings Calendar

Notable reports for Tuesday before the bell include ACI, BAC, C, SCHW, GS, JNJ, PNC, PGR, STT, UNH, & WBA. After the bell reports include FULT, HWC, IBKR, JBHT, OMC, PNFP, SGH, & UAL.

News & Technicals’

Nvidia shares have reached an all-time high, driven by soaring demand for it’s artificial intelligence chips. Major tech companies like Microsoft, Meta, Google, and Amazon are purchasing Nvidia’s graphics processing units (GPUs) in large quantities to build extensive AI computing clusters. This surge in demand has propelled Nvidia’s market valuation to over $3.4 trillion, underscoring its pivotal role in the AI revolution and solidifying its position as a leading player in the tech industry.

A federal appeals court has expedited the Commodity Futures Trading Commission’s (CFTC) case against the Kalshi exchange, which is offering contracts that function as bets on U.S. political elections. These contracts, facilitated by Kalshi and Interactive Brokers, allow bets on outcomes such as the presidential election, U.S. Senate races, and which party will control Congress. Notably, Kalshi has already booked over $7 million in contracts on the presidential race between former President Donald Trump and Vice President Kamala Harris. The court’s decision to fast-track this case underscores the regulatory scrutiny surrounding the legality of such political betting markets.

Ericsson reported adjusted third-quarter earnings of 7.327 billion Swedish crowns ($0.7 billion) on Tuesday, significantly exceeding the analysts’ forecast of 5.75 billion crowns. This impressive performance was largely driven by robust sales growth in North America, which saw a year-on-year increase of over 50%. The company’s strengthened position in the U.S. market, bolstered by securing a major contract with AT&T last year, where it outperformed Finnish competitor Nokia, has been a key factor in this success.

Federal Reserve Governor Christopher Waller indicated on Monday that upcoming interest rate cuts will be more measured compared to the significant reduction in September. He emphasized a gradual approach to lowering the policy rate over the next year, despite short-term uncertainties. Waller’s comments come amid mixed economic data, which the Fed is closely monitoring to guide its policy decisions. This cautious stance reflects the Fed’s aim to balance economic growth with inflation control.

With the DIA and SPY sporting fresh record highs we now face the ramp up of earnings reports likely to inspire significant price volatility.  The rising dollar and bond yields continue to be a contradiction to the market’s bullish enthusiasm and the T2122 indicator continues to flag a short-term overbought condition.  Stay with the trend but tighten stops as it would only take a minor stumble to trigger a profit taking wave.

Trade Wisely,

Doug

U.S. stock futures dipped on Thursday as investors await the release of September’s CPI report, scheduled for 8:30 a.m. ET. The report is expected to provide further indications of whether inflation is continuing to cool. Economists surveyed by Dow Jones predict a modest 0.1% increase in the CPI monthly and a 2.3% rise over the past year. Additionally, Thursday morning will see the release of weekly initial jobless claims, adding to the day’s economic data that investors will be closely monitoring.

European markets opened slightly lower on Thursday morning as investors awaited the latest U.S. inflation data. The insurance sector saw a boost, with stocks rising by 0.72%, driven by stronger prospects following Hurricane Milton’s severe impact on Florida. Conversely, mining stocks experienced a decline, falling by 0.8%. This mixed performance reflects the varied investor sentiment across different sectors in anticipation of the upcoming economic indicators.

Asia-Pacific markets experienced a positive close on Thursday, with several key indices showing gains. In China, the central bank announced it is accepting applications from financial institutions to participate in a new liquidity tool, initially valued at 500 billion yuan ($70.7 billion), aimed at providing easier access to capital for the stock market.

Economic Calendar

Earnings Calendar

Notable reports for Wednesday before the bell include DAL, DPZ, NEOG, & TLRY. After the bell there are no notable reports.

News & Technicals’

Japanese convenience retailer Seven & i Holdings, the parent company of 7-Eleven, has revised its earnings forecast for the fiscal year ending February 2025, lowering its expectations. This decision comes as the company faces increasing pressure from investors to streamline its extensive business portfolio. In response, Seven & i Holdings announced plans to establish an intermediate holding company to manage its supermarket food business, specialty stores, and other ventures. This strategic move aims to enhance operational efficiency and address investor concerns about the company’s diverse range of businesses.

Amazon is experimenting with integrating automated mini warehouses into Whole Foods supermarkets, creating a new store format that enhances the shopping experience. This innovative approach allows customers to purchase items from Amazon’s online store and its mass-market supermarket chain while browsing Whole Foods, with the convenience of picking up their orders at checkout. By streamlining the shopping process, Amazon aims to attract more grocery shoppers and gain a competitive edge over its rivals, offering a one-stop solution for all their shopping needs.

Two former Pfizer executives, Ian Read and Frank D’Amelio, who were previously associated with activist investor Starboard Value’s campaign at the struggling pharmaceutical company, announced late Wednesday that they would step back from the effort. Both Read, the former CEO, and D’Amelio, the ex-CFO, expressed their full support for current CEO Albert Bourla and his management team. Meanwhile, Starboard Value has acquired a significant stake in Pfizer, amounting to approximately $1 billion, as it seeks to drive a turnaround at the company.

At their September meeting, Federal Reserve officials agreed to cut interest rates but faced uncertainty about the extent of the reduction. Minutes released on Wednesday revealed that a substantial majority of participants supported a half-percentage-point cut, though some expressed reservations about such a significant move. Since the meeting, economic indicators have suggested that the labor market is stronger than anticipated by those advocating for the 50-basis point cut, adding complexity to the decision-making process.

As we wait for September’s CPI report one must wonder if yesterday’s big push that set new record highs in the DIA and SPY if investors will be rewarded for their anticipation or disappointed should prices reverse.  We will soon find out.  The sharp rally in bond yields pushing rates higher seems to be a substantial contradiction to the bullishness.  That said, it would be wise to be prepared for anything including the possibility we will still have to wait for earnings to really get prices moving.

Trade Wisely,

Doug

U.S. stock futures dipped Wednesday as prices struggle to follow-through after a strong session Tuesday, driven by tech stocks and a decline in oil prices from their recent highs. Despite this positive momentum, the market could face further volatility, as October is historically the most turbulent month, especially with the U.S. presidential election just weeks away. Investors are also keenly awaiting the release of the latest Federal Reserve meeting minutes at 2 p.m. ET, which could provide further insights into the economic outlook and monetary policy direction.

On Wednesday, European markets experienced slight gains despite fluctuating positive sentiment, largely influenced by the volatility in Chinese markets. The mixed performance in Asia, especially the significant sell-off in Chinese stocks, led to a cautious mood among European investors. Nevertheless, certain sectors managed to post gains, with banks rising by 1.7% and oil and gas stocks adding 1.6%. Key events to watch in Europe today include the German government’s latest economic forecasts and the NATO defense ministers’ meeting in Belgium.

On Wednesday, Chinese stocks experienced a significant sell-off amid a volatile trading day across Asia-Pacific markets. The mainland CSI 300 index plummeted by 7.05%, ending a 10-day winning streak and closing at 3,955.98. Similarly, Hong Kong’s Hang Seng index dropped 1.7% in its final hour of trading. In contrast, Japan’s Nikkei 225 rose by 0.87% to 39,277.96, and the Topix index increased by 0.3%, closing at 2,707.24. Australia’s S&P/ASX 200 saw a modest gain of 0.13%, finishing at 8,187.4. Meanwhile, New Zealand’s central bank cut its policy rate by 50 basis points to 4.75%, whereas the Reserve Bank of India maintained its rate at 6.5%.

Economic Calendar

Earnings Calendar

Notable reports for Wednesday before the bell include HELE. After the bell reports include AZZ.

News & Technicals’

Boeing announced it has withdrawn its contract offer following a breakdown in negotiations with the machinist union. Over 32,000 Boeing machinists went on strike on September 13 after decisively rejecting a new contract proposal. The union stated that Boeing failed to offer wage increases and other improvements during the latest round of discussions, leading to the current impasse. This development marks a significant escalation in the labor dispute between Boeing and its machinists.

Starting Wednesday, Disneyland will increase the prices of its most popular tickets. While the base entry price will stay at $104, other ticket prices will rise by $7 to $12. Additionally, the cost of the Magic Key annual passes will see a hike of 6% to 20%, translating to an increase of $100 to $125 depending on the pass type. These adjustments reflect Disneyland’s ongoing efforts to manage demand and enhance the guest experience.

Late Tuesday, the Department of Justice announced it is contemplating a potential breakup of Google as an antitrust measure. The DOJ is evaluating both behavioral and structural remedies to prevent Google from leveraging products like Chrome, Play, and Android to favor its search engine. The judge has not yet ruled on these remedies, and Google is expected to appeal, which could prolong the legal process for years. This development marks a significant step in the ongoing scrutiny of Google’s market practices.

On Monday, a U.S. judge issued a permanent injunction requiring Google to provide alternatives to its Google Play store for downloading apps on Android phones. This ruling, delivered by Judge James Donato in a California court, represents the most significant outcome of Epic Games’ antitrust lawsuit against Google, which began in 2020. Additionally, Epic and Google will establish a three-person committee to review technical issues related to Google’s compliance with the injunction, according to the court filing.

Although very select stocks gave us an impression of a very bullish shift this morning, futures prove that the market remained locked in the consolidation range and struggle to follow through continues. The rising bond yields pushed mortgage rates higher triggering a sharp decline in applications this morning raising some uncertainty as we wait for the FOMC minutes. However, we are likely getting closer to big move in the market perhaps inspired by the Thursday CPI report or the big bank reports beginning Friday morning.  Buckle up for a possible explosion of volatility in the days ahead.

Trade Wisely,

Doug

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