Following Donald Trump’s victory in the 2024 presidential election, stocks are set for a significant rally on Wednesday. Bitcoin surged to an all-time high of $75,000, likely to benefit from expectations of relaxed regulations. The dollar index reached its highest level since July, and the 10-year Treasury yield rose to approximately 4.43%. Bank shares experienced a notable boost, with JPMorgan, Bank of America, and Wells Fargo, each jumping by at least 6%. Additionally, futures for the small-cap benchmark Russell 2000 increased by 6%.

European stocks continued their upward trajectory, with the pan-European Stoxx 600 rising by 1.2%. This broad-based increase saw most regional bourses and sectors gaining, with media stocks leading the charge by adding 2.6%. However, the automotive sector faced challenges, declining by 2%. Among individual companies, Commerzbank reported a 6.2% drop in net profit to 642 million euros for the third quarter, attributed to a broader decline in net interest income and increased risk provisions.

Asia-Pacific markets presented a mixed performance. Japan’s Nikkei 225 led the gains, surging by 2.61%, buoyed by the Bank of Japan’s September monetary policy meeting minutes, which revealed a consensus among members to raise rates. Conversely, South Korea’s Kospi fell by 0.52%, and Hong Kong’s Hang Seng index dropped significantly by 2.5%. Australia’s S&P/ASX 200 also saw a decline, closing 0.83%. Meanwhile, investors are closely monitoring the ongoing five-day meeting of China’s National People’s Congress for potential announcements on additional economic stimulus measures.

Economic Calendar

Earnings Calendar

Notable reports for Friday before the bell include AEP, FOLD, ASC, ASTE, ATHM, AVDX, AAVA, BCO, BIP, CLBT, CELH, COR, CTRI, GIB, CRL, CLVT, CNDT, CURB, CVS, DK, DIN, ENLT, ENVO, HLNE, HWM, IONS, IRM, JCI, JLL, KMT, KRNT, LNTH, LINE, LXP, MAC, MKTX, MCFT, EYE, ODP, OC, PFGC, PERI, PRGO, PNW, SNDR, SMG, SRE, SFL, SHOP, SMRT, SWX, STWD, SUN, SGHC, TEVA, TRMB, VERX, & VSH.

After the bell reports include ARM, ACAD, ADTN, ALB, AMC, AWR, ANSS, APA, RUCS, ASH, ASPN, ATO, BTG, BALY, BBDC, BBSI, BYND, BKH, BMBL, CDRE, CDLX, CERT, CHRD, CLNE, CWAN, CDE, COHR, CXW, CRSR, CTVA, COTY, CXT, CCRN, LAW, CSGS, CYTK, CLX, APPS, DV, DUOL, BROX, ELF, ECPG, ET, ENS, ENLC, EQX, EVTC, EOLS, FICO, FSLY, FNF, FBIN, GNK, GFL, GILD, LOPE, GH, HCAT, HL, HST, HUBS, IIPR, IONQ, JXN, JAZZ, HOBY, KNTK, KVYO, KGS, KD, LB, LZ, RAMP, LYFT, MRO, VAC, MTCH, MCK, MELI, HEOH, MKSI, MODV, MWA, NFG, NMIH, NTR, OSUR, ORA, PCRX, PYCR, PR, PLYA, POWA, POWI, PRI, PTC, QTWO, QGEN, QCOM, RDN, DPD, RYN, PLSY, RNR, RVMD, RLJ, RGLD, SRPT, SBGI, SITM, STR, SEDG, STE, SUI, TTWO, TNDM, SKT, TS, TKO, COOK, TRIP, TPC, UPWK, VECO, VCYT, VSTO, VTLE, WAY, WES, WMB, WOLF, WK, XHR, ZG, & ZIP.

News & Technicals’

CVS Health reported mixed results for the third quarter, with higher medical costs impacting its profitability. The company anticipates that these elevated costs will continue to pressure its performance throughout the year, leading them to withhold a formal outlook at this time. This earnings report marks the first under the leadership of CEO David Joyner. Additionally, CVS announced the appointment of Steve Nelson, former CEO of UnitedHealth Group, as the new president of its health insurer, Aetna, effective immediately.

Super Micro, the embattled server maker, reported a sharp 17% decline in its preliminary first-quarter results on Tuesday. The company is grappling with several corporate governance challenges, including the recent resignation of its auditor. Despite these issues, the board of directors stated that there was no evidence of fraud or misconduct by management. This statement comes as the company seeks to reassure stakeholders amid ongoing scrutiny.

Solar stocks are experiencing a sell-off as clean energy investors react to the news of Donald Trump’s upcoming second term as President. Concerns are mounting among traders that Trump might repeal the Inflation Reduction Act if Republicans gain unified control of the government. This uncertainty has led to a significant drop in the Invesco Solar ETF, which was down by 7% in premarket trading.

The world’s largest automaker by sales volume reported a 20% year-on-year decline in operating profit. Despite this drop, the company upheld its full-year operating profit forecast of 4.3 trillion yen. In a positive move for shareholders, Toyota increased its full-year dividend forecast to 90 yen, up from 75 yen the previous year.

Although the stocks are set for a significant rally, I would be very cautious about rushing in chasing the exuberant moves.  The T2122 indictor will likely show a very overbought condition first thing this morning so watch for the possibility of some profit taking or a substantial whipsaw.  Soon markets will remember we have and pending FOMC decision Thursday afternoon and choppy price action could resume. The dollar and bond yields are zooming higher in speculation of policy changes so be very careful with commodities.

Trade Wisely,

Doug