Daily Markets: Investors Gear for Election, Inflation Data This Week

Today’s Big Picture

Asia-Pacific equity indexes ended today’s session up across the board: China’s Shanghai Composite gained 0.23%, India’s Sensex 0.39%, Australia’s ASX All Ordinaries 0.56%, South Korea’s KOSPI 0.99% Japan’s Nikkei 1.21%, and Taiwan’s TAIEX 1.51%. Hong Kong’s Hang Seng continued to lead these markets up 2.69% on another broad rally led by Non-Energy Materials and Electronic Technology.

By mid-day trading, European equity indices are up across the board and U.S. futures point to a positive open later this morning as the U.S. stock market looks to rebound from last week’s sell-off. 

We have another busy week for investors albeit a slightly different one than last week. While the pace of quarterly earnings reports will be about the same, there is a sharp drop in the number of S&P 500 constituents. That likely translates into fewer market-moving earnings reports, but we will also start to collect retailer earnings reports. In focus will be what they say about efforts to move bloated inventories from earlier in the year, the impact on profits, and what they see for the holiday shopping season. 

We also have a step down in the pace of economic data, following last week’s market hope-dashing Fed monetary policy meeting. The upcoming September Consumer Price Index report could not only get chins wagging, but it has the potential to reset expectations for the Fed’s December monetary policy as well. We also have another wave of Fed speakers in the coming days, and odds are they will reinforce the presser comments made by Fed Chair Powell about what’s ahead for monetary policy. 

Tomorrow is Election Day in the U.S., and the outcome will determine control of Congress, likely shaping the second half of the Biden administration. Advisory firm Strategas sees a 70% chance of a Republican win for both the House and Senate but we would also note the stock market has tended to perform well following mid-term election results no matter which party was viewed as winning the day. 

Data Download

International Economy

Exports from China unexpectedly dropped 0.3% YoY to $298.37 billion in October, missing the market consensus of 4.3% growth and September’s 5.7% YoY increase. Imports to China also unexpectedly fell in October, dropping 0.7% YoY to $213.17 billion vs. the expected 0.1% increase and the 0.3% rise booked in September. 

Industrial production in Germany rose 0.6% MoM in September, rebounding from an upwardly revised 1.2% fall in August and the expected 0.2% increase. Production went up for consumer (1.4%) and capital goods (1.1%) but fell for intermediate goods (-0.1%).

The November Sentix Investor Confidence reading for November rebounded to -30.9 from -38.3 the prior month and topped the expected -35.0 figure.

Sunday, COP27, the UN's flagship climate conference with delegates from nearly 200 countries gathering in Egypt, kicked off. Expected topics include the 1.5 degree Celsius limit, climate finance, and decarbonization.

Domestic Economy

At 10 AM ET, September Consumer Credit data will be released and it is expected to show a $30 billion increase following the $32.24 billion jump posted in August. 

Federal Reserve officials are once again making the rounds and today readers should expect to hear from Cleveland Federal Reserve Bank CEO Loretta Mester, Boston Federal Reserve Bank CEO Susan Collins, and Richmond Federal Reserve Bank President Thomas Barkin. 

And as we prepare for tomorrow’s midterm elections and how they may change the landscape in Washington, we’ll also want to keep tabs on developing weather systems in the Atlantic that could become tropical storms or hurricanes. That system could hit Florida’s east coast later this week. 

According to survey findings from Alignable, U.S. small businesses' rent delinquencies jumped in October due to higher rents and persistent inflation pressures that “absorbed most sales gains.” Per the survey’s findings, 37% of small businesses couldn't pay their full rent in October, up from 30% in September. The report also found that 59% of small business owners taking this October poll reported consumers are spending less this month than last.

Markets

Markets read into Friday’s employment figures and deduced that the uptick in the overall unemployment rate was a sign that rate hikes are working, and that the Fed might not have to continue its aggressive rate hikes. The Russell 2000 gained 1.13%, the Dow rose 1.26, the Nasdaq Composite advanced 1.28% and the S&P 500 closed 1.36% higher. All sectors were up led by Materials posting a roughly 3.50% gain followed by Technology and Financials which were both up 1.83%. Lagging sectors included Communications Services (0.68%) and Utilities (0.61%). The trend of investors severely punishing poorly performing companies continued as Warner Brothers Discovery (WBD) fell 12.87% on posting a loss in Q3 despite an increase in sales.

Here’s how the major market indicators stack up year-to-date:

• Dow Jones Industrial Average: -10.83%
• S&P 500: -20.89%
• Nasdaq Composite: -33.04% 
• Russell 2000: -19.84%
• Bitcoin (BTC-USD): -54.40%
• Ether (ETH-USD): -55.42%

Stocks to Watch

Before trading kicks off for U.S.-listed equities, Ballard Power (BLDP), Beam Therapeutics (BEAM), Palantir Technologies (PLTR), Ritchie Bros. (RBA), and Treehouse Foods (THS) will be among the companies slated to report their latest quarterly results. 

Apple (AAPL) now expects lower iPhone 14 Pro and iPhone 14 Pro Max shipments than previously anticipated: "COVID-19 restrictions have temporarily impacted the primary iPhone 14 Pro and iPhone 14 Pro Max assembly facility located in Zhengzhou, China. The facility is currently operating at a significantly reduced capacity. We continue to see strong demand for iPhone 14 Pro and iPhone 14 Pro Max models. However, we now expect lower iPhone 14 Pro and iPhone 14 Pro Max shipments than we previously anticipated and customers will experience longer wait times to receive their new products.” This follows recent lockdowns in Zhengzhou, a region that is home to ~50% of iPhone production, as well as reports Apple is looking to move 5% of its iPhone production to India this year and 25% by 2025.

With Microsoft’s (MSFT) $69 billion Activision (ATVI) buyout facing heightened scrutiny from regulators, the New York Post reports insiders are concerned the level of regulator interest could blow up the deal. Helping fuel that thought, Microsoft has declined to offer EU regulators any legal remedies ahead of an expected full-scale probe that could kick off on November 8.

In a regulatory filing, LiveRamp Holdings (RAMP) shared a reduction in force involving approximately 10% of its full-time employees and a second planned downsizing of the company’s real estate footprint.

Reports indicate the Consumer Financial Protection Bureau is seeking more than $1B to settle a string of investigations into Wells Fargo’s (WFC) alleged mistreatment of customers at its consumer deposit, mortgage lending, and automobile lending practices.

Nike (NKE) announced it suspended its relationship with Brooklyn Nets player Kyrie Irving and canceled the next line of shoes branded around the basketball all-star due to his promotion of an anti-Semitic documentary.

IPOs

Online game developer Snail (SNAL) and oncology drug developer Acrivon Therapeutics (ACRV) are expected to start trading in the week ahead. Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.

After Today’s Market Close

22andMe (ME), Activision Blizzard (ATVI), Digital Ocean (DCON), Diodes (DIOD), Groupon (GRPN), Hims & Hers Health (HIMS), Mosaic (MOS), Take-Two (TTWO), TripAdvisor (TRIP), and Veeco Instruments (VECO) are expected to report quarterly results after equities stop trading today. Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar. 

On the Horizon

Tuesday, November 8

• Japan: Household Spending, Leading Index – September
• Eurozone: Retail Sales - September
• US: NFIB Small Business Optimism Index – October 

Wednesday, November 9

• China: Consumer Price Index, Producer Price Index – October
• Japan: Economy Watchers Index - October
• US: Weekly MBA Mortgage Applications 
• US: Wholesale Inventory – September
• US: Weekly EIA Crude Oil Inventories

Thursday, November 10

• US: Weekly Initial & Continuing Jobless Claims
• US: Consumer Price Index – September 
• US: Weekly EIA Natural Gas Inventories 

Friday, November 11

• Japan: Producer Price Index – October
• UK: 3Q 2022 GDP 
• UK: Industrial and Manufacturing Production – September
• Germany: Consumer Price Index - October
• US: University of Michigan Consumer Sentiment Index (Preliminary) – November 

Thought for the Day

“The illusion that times that were are better than those that are, has probably pervaded all ages.” ~ Horace Greeley

Disclosures

• Apple (AAPL), Microsoft (MSFT), Nike (NKE) are constituents of the Tematica Research Thematic Dividend All-Stars Index

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics

Stocks Economy Politics Earnings Central Banks Smart Investing