U.S stock futures remained relatively unchanged as investors prepared for significant corporate earnings releases, particularly from prominent tech companies. The market seemed to react positively to a decline in oil prices, which followed weekend airstrikes by Israel on Iran that did not impact energy facilities. As the busiest week of the earnings season progresses, traders are closely monitoring reports from major firms. Pfizer and McDonald’s are set to release their results before the market opens, while Alphabet, Snap, Reddit, Chipotle, and Advanced Micro Devices will report after the closing bell.

European markets saw modest gains as investors processed the latest earnings reports. HSBC’s London-listed shares surged by 4.5% following a third-quarter earnings report that exceeded analyst expectations and the announcement of a $3 billion share repurchase plan. Conversely, shares of Novartis dropped by 3.5%, despite the pharmaceutical giant raising its full-year guidance after reporting increased third-quarter sales. This mixed performance highlights the varied investor reactions to corporate earnings and strategic announcements.

On Tuesday, Asia-Pacific markets experienced mixed movements, with most indices showing gains. Japan’s Nikkei 225 rose by 0.77%, despite the ruling Liberal Democratic Party losing its parliamentary majority, indicating investor confidence in the market’s resilience. South Korea’s Kospi managed to reverse earlier losses, ending the day up by 0.21%. Hong Kong’s Hang Seng Index also saw a modest increase of 0.35%. In contrast, China’s CSI 300 fell by 1%, reflecting some market challenges. Additionally, Japan’s jobless rate for September improved slightly to 2.4%, down from 2.5% in the previous month.

Economic Calendar

Earnings Calendar

Notable reports for Tuesday before the bell include AMT, AWI, ABG, ATI, CBZ, CECO, CHKP, CMCSA, CVLT, GLW, CTS, DHI, DTM, EXP, ECL, EPD, ESAB, FELE, ULCC, GPK, HEES, HRMY, HNI, HUBB, INCY, IPGP, ITT, JBI, JBLU, KNSA, LDOS, MAS, MCD, MSCI, NWBI, PYPL, PFE, PSX, PJT, RCL, STNG, SSTK, SOFI, SWK, SYY, THC, XRX, & ZBRA. After the bell reports include TXG, ATGE, AMD, ALHC, ALSN, GOOGL, AMH, APAM, BRMN, BXP, CZR, CAKE, CHE, CMG, CB, DVA, EIX, EA, ENVX, EQT, ESS, EXEL, EXE, EXR, FCF, FSLR, FE, FMC, HURN, IEX, NGVT, LSTR, LFUS, MTH, MIR, MOD, MDLZ, NRDS, OI, OKE, PK, PRQ, PFS, QRVO, RDDT, RSG, SAGE, SKWD, SNAP, STAG, SKY, UDMY, UMBF, UIS, UNM, VRNS, V, WPC, WERN, & ZWS.

News & Technicals’

Ford has adjusted its 2024 earnings forecast to the lower end of its previously announced range, now expecting an adjusted EBIT of approximately $10 billion, down from the initial range of $10 billion to $12 billion. Despite this adjustment, the automaker slightly exceeded Wall Street’s third-quarter expectations. The company’s third-quarter performance was driven by strong results from its “Pro” commercial and fleet business, along with solid contributions from its traditional operations, known as “Ford Blue.”

BP reported an underlying replacement cost profit of $2.3 billion for the July-September period, surpassing analyst expectations of $2.1 billion according to an LSEG-compiled consensus. Despite this, the British oil major’s third-quarter net profit of $2.3 billion was a decline from the $2.8 billion reported in the second quarter and the $3.3 billion in the third quarter of 2023. This marks BP’s weakest quarterly performance since the fourth quarter of 2020, a period when industry profits were severely impacted by the coronavirus pandemic.

Delta Airlines is seeking over $500 million in damages, along with litigation costs and punitive damages, following an IT outage linked to CrowdStrike’s security software. The outage caused Delta to cancel thousands of flights and struggle with recovery, lagging its competitors. Delta claims that flaws in CrowdStrike’s software affected its computers despite having disabled automatic updates. In response, CrowdStrike has filed its own suit, arguing that the issues were due to “Delta’s own negligence.”

Microsoft has accused Google of orchestrating “shadow campaigns” to undermine its reputation with European regulators. According to a blog post by a Microsoft lawyer, Google is allegedly leading a coalition of cloud companies to sway policymakers and mislead the public. This accusation comes in the wake of Google’s announcement that it plans to file an antitrust complaint against Microsoft with the European Union’s executive body, criticizing Microsoft’s software licensing practices. The escalating tensions highlight the ongoing rivalry between the two tech giants in the competitive cloud services market.

Anticipation is high as we wait for significant corporate earnings that will include reports from the tech giants over the next three trading days.  Expect significant price volatility that could create meaningful morning gaps in the index charts so plan your risk carefully. New record highs in the QQQ and SPY are very possible but if some earnings disappoint big declines are also possible as traders run for the door.  Be prepared as all this pent-up emotion spills out over the market.

Trade Wisely,

Doug