Daily Markets: And Now for the Federal Reserve
Today’s Big Picture
Asia-Pacific equity indexes ended today’s session mixed. India’s Sensex declined 0.35%, Japan’s Nikkei and South Korea’s KOSPI ended the day essentially flat, losing 0.06 and gaining 0.07%, respectively. Australia’s ASX All Ordinaries gained 0.11%, Taiwan’s TAIEX rose 0.48% and China’s Shanghai Composite closed 1.15% higher. Hong Kong’s Hang Seng extended yesterday’s gains rising 2.41%, led by Consumer Services as covid restriction easing continues to play out in these markets.
By mid-day trading, Major European equity indices are up across the board and U.S. futures point to a soft open later this morning.
While the stock market sees a high probability the Federal Reserve will boost the Fed Funds rate by 75 basis points exiting its two-day monetary policy meeting later today, it is sitting on pins and needles over the central bank’s forward-looking policy view. In recent Daily Markets, we’ve discussed the growing view the Fed could start to dial back the size of its rate hikes; that view that had fueled the October stock market rally. However, recent economic data shows inflation remains persistent, and the economy is vibrant enough for the Fed to argue that it can continue to go big in its fight against inflation for a little bit longer. Should the Fed take that line of reasoning, signaling that its December monetary policy could result in another 75-basis point rate hike, we could very well see the market give back some of its recent gains. We would also point out that following the sharp move higher in recent weeks, the market is a little extended as measured by S&P 500 closing levels, coming up against stiff technical resistance at 4,000 and again at 4,100.
China has ordered a seven-day lockdown of the area around Foxconn Technology Group’s (FXCOF) main plant in Zhengzhou, a move that could severely curtail shipments in and out of the world’s largest iPhone factory.
The S&P Global Eurozone Manufacturing PMI was revised slightly down to 46.4 in October from a preliminary of 46.6. That marks the fourth straight month of falling factory activity and the biggest contraction since May 2020. Output and new orders fell at near-record rates and export demand also sank sharply as geopolitical uncertainty, high inflation and weaker economic conditions around the world weighed on foreign client spending. Price pressures subsided but remained historically elevated.
The market expects the Bank of England to raise interest rates by 75 basis points tomorrow, November 3, its largest hike since 1989, but the narrative that policymakers will strike a dovish tone is gaining popularity amid rising prospects of a recession. That line of thinking is very similar to what’s fueled the recent U.S. stock rally. It also means what the Fed says about forthcoming monetary policy moves could prime the pump for the Bank of England's comments going forward.
in addition to the usual weekly reports that includes the MBA Mortgage Applications Index and the Energy Information Administration’s Crude Oil Inventory data, at 8:15 AM ET the October ADP Employment Change Report will be published. The consensus sees 195K jobs created during the month down from 208K in September. That’s the last piece of data before the Federal Reserve announces its latest monetary policy decision at 2 PM ET today and holds the corresponding press conference around 2:30 PM ET.
Markets continued to be a little skittish ahead of today’s Fed meeting as the Dow declined 0.24%, the S&P 500 fell 0.41% and the Nasdaq Composite closed 0.89% lower. Small caps had other ideas as the Russell 2000 gained 0.25%. Sectors were mixed, led by Energy up 1.00%, and held back by Consumer Discretionary down 1.03%. Johnson & Johnson’s (JNJ) acquisition announcement catapulted Abiomed (ABMD) shares up $125.74, or 49.88% higher as JNJ looks to bolster its cardiovascular business.
Here’s how the major market indicators stack up year-to-date:
- Dow Jones Industrial Average: -10.14%
- S&P 500: -19.09%
- Nasdaq Composite: -30.39%
- Russell 2000: -17.54%
- Bitcoin (BTC-USD): -55.85%
- Ether (ETH-USD): -57.16%
Stocks to Watch
Before trading kicks off for U.S.-listed equities, the latest quarterly results from Brinker (EAT), Canada Goose (GOOS), Cedar Fair (FUN), CVS Health (CVS), Estee Lauder (EL), Ferrari (RACE), Humana (HUM), KnowBe4 (KNBE), Melco Resorts & Entertainment (MLCO), Paramount Global (PARA), Radware (RDWR), Steve Madden (SHOO), and Under Armour (UAA) will be in the batter’s box.
Danish firm A.P. Moeller-Maersk (AMKBY), one of the world's biggest shipping companies that control about one-sixth of the world's container trade, now sees global container demand contracting between 2%-4% this year vs, its previous projection of +1% to -1%.
EV company Nio (NIO) confirmed ongoing Covid restrictions in China are affecting operations at its plants, hurting production and delivery schedules.
Sprouts Farmers Market (SFM) is now available on the DoorDash marketplace in select cities, for on-demand grocery delivery.
Walmart (WMT) is offering an annual subscription for Walmart+ half-off at $49 for customers that sign up between November 1 to November 3. Those new customers will also receive extended early access to Black Friday deals starting on November 7 in addition to the full suite of normal Walmart+ benefits for the year.
As of now, it looks like a rather quiet week on the IPO front. Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.
After Today’s Market Close
Altice USA (ATUS), CF Industries (CF) eBay (EBAY), Equinix (EQIX), Etsy (ETSY), EVgo (EVGO), Faro Technology (FARO), Fortinet (FTNT), Lumen Technologies (LUMN), Omega Health (OHI), Qorvo (QRVO), Qualcomm (QCOM), Robinhood Markets (HOOD), and Zillow (ZG) will be among the rush of companies publishing their latest quarterly results. Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar.
On the Horizon
Thursday, November 3
- China: Caixin China General Services PMI – October
- S&P Global/CIPS UK Services PMI – October
- UK: Bank of England Interest Rate Decision
- US: Challenger Job Cuts Report – October
- US: Weekly Initial & Continuing Jobless Claims
- US: Productivity – 3Q 2022
- US: S&P Global Final US Services PMI – October
- US: Factory Orders – September
- US: ISM Non-Manufacturing Index – October
- US: Weekly EIA Natural Gas Inventories
Friday, November 4
- Japan: Au Jibun Bank Japan Services PMI – October
- Eurozone: S&P Global Eurozone Composite PMI
- Eurozone: Producer Price Index - September
- US: Employment Report – October
Thought for the Day
“Most of us spend too much time on what is urgent and not enough time on what is important.” ~ Stephen Covy
- Radware (RDWR), Fortinet (FTNT) are constituents of the Foxberry Tematica Research Cybersecurity & Data Privacy Index
- Sprouts Farmers Market (SFM), Nio (NIO) are constituents of the Tematica BITA Cleaner Living Index
- Sprouts Farmers Market (SFM), Nio (NIO) are constituents of the Tematica BITA Cleaner Living Sustainability Screened Index
- KnowBe4 (KNBE) is a constituent of the Tematica BITA Data Privacy and Digital Identity Index
- Qorvo (QRVO), Qualcomm (QCOM) are constituents of the Tematica BITA Digital Infrastructure & Connectivity Index
- Walmart (WMT) is a constituent 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.