Daily Markets: Markets Set to Take a Breather

Men looking at stock quotes at Nasdaq MarketSite
Credit: Reuters / Gary Hershorn -

Today’s Big Picture

Equity markets today look to be taking a bit of a breather after setting new record highs for bitcoin and the Dow, despite a slowing U.S. economy, rising inflation in Europe, and as China looks to be experiencing its most profound economic slowdown in a generation.

The major equity indices in Asia-Pacific closed mixed today, with Japan’s Nikkei 225 leading losses, falling 1.9%. Hong Kong’s Hang Seng dropped 0.5%, South Korea’s Kospi fell 0.2%, and Australia’s ASX 200 was relatively unchanged. Mainland China was mixed, with the Shanghai Composite rising 0.2% while the Shenzhen Component fell fractionally. By midday trading, the major European equity indices were mostly lower, and U.S. equity futures point to minor declines at the open.

Having a trading halt that lasted more than two weeks, China’s Evergrande (EGRNY) is back in the headlines, falling nearly 13% in Hong Kong on its first day back in trading, after announcing that its $2.6 billion asset sale fell through, pushing it closer to a formal default. Investors will be closely watching what happens on Saturday when the 30-day grace period to make interest payments on a key U.S.-dollar denominated bond ends.

Data Download

International Economy

South Korea’s Producer Price Index (PPI) in September slowed to 0.2% MoM from 0.5% previously, the 11th consecutive month over month increase leaving PPI up 7.5% YoY, accelerating from an upwardly revised 7.4% in August. On a more positive note, the rate of change looks to be slowing.

Foreign Direct Investment into China rose 19.6% YoY for the January to September period. Service sector investment rose 22.5%, while high-tech rose 33.4%. The source of investment were 31.4% from ASEAN countries and 31.9% from nations along the Belt and Road.

Business confidence in October in France remained steady from an upwardly revised 107 in September, versus expectations for a slight decline to 105.

The UK’s CBI Industrial Trends for Orders dropped much more than the expected 4 points in October, falling instead 13 points to +9 from September’s all-time high of +22. This marks the lowest reading since April, driven by rising raw material costs and labor shortages. The CBI’s gauge of optimism in the manufacturing sectors for Q4 fell 25 points from 27 in Q3 to just 2. This has been an enormous decline from the 48-year high of 38 in Q2.

Later today brings the flash estimate for Eurozone Consumer Confidence in October, the September CPI report for Japan, and overnight we’ll receive the September Retail Sales report for the UK.

Domestic Economy

The Fed's latest Beige Book reports a majority of districts seeing modest to moderate growth but notes the pace of growth has slowed due to widespread disruptions and persistent Delta impacts.

Reports indicate Democrats are working toward a consensus around a "soft" stimulus bill in the ~$1.7 - 1.9 trillion range and could reach a framework deal by Friday.

The Washington Post reports the Biden administration is looking at taxing stock buybacks and new taxes on billionaires as a corporate tax rate hike seems less likely.

In a speech yesterday, Fed Governor Quarles shared the opinion that it is clear the Fed has met the test of substantial progress toward both employment and inflation mandated targets, and he would support a decision at the November Fed monetary policy meeting to start cutting asset purchases.

Today’s domestic economic data includes Weekly Jobless Claims, Philly Fed Manufacturing Index for October, and Existing Home Sales for September.


The U.S. equity markets closed mixed yesterday, with the Dow rising 0.4% to close at a new record high, the S&P rising 0.4%, its sixth consecutive positive day to put it within 0.02% of its last record high, while the Nasdaq dipped slightly, falling less than 0.1% to close just 1.6% below what would be a new record high. Consumer Discretionary, Tech, and Communication Services were the only sectors to close lower while defensive sectors led the way higher with Health Care, Real Estate, and Utilities all gaining around 1.5%.

After seeing its value cut by more than 50% just over six months ago, Bitcoin yesterday rose to a new all-time high of more than $66,000.

Stocks to Watch

Earnings Announcements & Guidance

Before markets open this morning, Alaska Air (ALK), American Airlines (AAL), AT&T (T), Crocs (CROX), Nucor (NUE), Tractor Supply (TSCO), and Union Pacific (UNP) are among the companies slated to report their quarterly results.

Adobe (ADBE) forecasts online U.S. holiday retail shopping will grow 10% in 2021 to $207 billion after soaring 33% a year ago during the worst of the pandemic.

Tesla (TSLA) yesterday reported EPS 11% better than expected on revenue that was 1% below forecasts with Q4 EPS guidance 22% below expectations. While that may not sound all that fantastic on its own, when taken in the context of the struggles in the global auto sector, the results are noteworthy, as is operating cash flow that 31% YoY to reach over $3.1 billion:

  • Auto gross margins came in at over 30%, 2.1 percentage points above expectations.
  • Unit production rose 64% YoY, driven by the Model 3 and Y, but Model S and X production dropped 47% YoY.
  • Energy storage saw 71% YoY growth in MWh of deployed storage.
  • The company’s solar installation business enjoyed a 46% YoY increase to 83 megawatts installed.
  • The number of Supercharger stations rose 49% YoY, adding over 1,100 new stations.

One of the items of note discussed during the Elon-absent earnings call was its pilot insurance program, just launched in Texas. The company’s CFO pointed out that the driving data it possesses is much more predictive of drivers’ behavior than those data points typically used by auto insurers. Point taken, but oy vey on privacy.

For some insight into the state of household finances, Discover (DFS) reported a new high for loan net interest margin of 10.8% and a continued decline in credit card and personal loan delinquencies. Private student loan delinquency was up six basis points YoY, but overall delinquencies across all products were down 37 basis points to 1.4%, with charge-offs down 154 basis points YoY to 1.46%. EPS came nearly 1% below expectations. Share rose 1.4% during regular trading yesterday.

The tech OG International Business Machines (IBM) missed on the top line by just over 1% and EPS by a penny. Revenue from cloud and cognitive software, tech services, systems, and financing all came in below expectations, with only business service revenue coming in stronger than expected. Shares were relatively unchanged during regular trading hours but fell nearly 4.4% in extended trading yesterday.

With all the supply chain drama we hear about these days, railroad giant CSX Corp (CSX) reported revenue 8% above expectations and EPS that beat by 13%, with average revenue per carload up 21% YoY and 8% above forecasts. Share rose over 1% yesterday during regular trading hours and more than 2.4% in after-hours.


Lovers of Chicago street food will cheer today’s IPO of Portillo’s, whose shares are expected to begin trading today on the Nasdaq Global Select Market under the ticker symbol “PTLO.” If only a jumbo chili cheese dog came with every share.

For more, visit Nasdaq’s Latest & Upcoming IPOs page.

M&A Activity

Reports suggest PayPal (PYPL) is considering acquiring social media company Pinterest (PINS) in a transaction that, according to Bloomberg, would pin Pinterest shares around $70, valuing the company at $39 billion. Those same reports also point out negotiations between the two companies are ongoing and may not result in a transaction.

Raymond James Financial (RJF) announced it will acquire TriState Capital Holdings (TCS) in a cash and stock transaction valued at ~$1.1 billion.

Former President Trump is launching his own media network called Trump Media and Technology Group (TMTG), which will include a social media platform “TRUTH Social” and a subscription VOD service featuring “non-woke” entertainment, news, and podcasts. The company is expected to go public via a SPAC merger with Digital World Acquisition (DWAC). TRUTH Social is expected to have a beta launch in November, with a full rollout in Q1 2022.

After Today’s Market Close

Boston Beer (SAM), Chipotle Mexican Grill (CMG), Intel (INTC), Mattel (MAT), Snap (SNAP), and Whirlpool (WHR) are slated to report their quarterly results. Those looking to get a jump on the earnings reports in the coming days should visit Nasdaq’s earnings calendar page.

On the Horizon

  • October 22: Markit Service and Marketing PMIs (flash)
  • October 25: Chicago Fed National Activity Index, Dallas Fed Manufacturing Index
  • October 26: S&P/Case-Shiller Home Price Index, New Home Sales, CB Consumer Confidence
  • October 27: Durable Goods Orders, Wholesale Inventories, Durable Goods, Goods Trade Balance
  • October 28: Q3 GDP (advance estimate), Weekly Jobless Claims, Pending Home Sales
  • October 29: Personal Income & Spending, PCE Price Index, Employment Cost Q3, Chicago PMI, Michigan Consumer Sentiment

Thought for the Day

Autumn shows us how beautiful it is to let things go.” – Unknown


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

Chris Versace

Christopher (Chris) Versace is the Chief Investment Officer and thematic strategist at Tematica Research. The proprietary thematic investing framework that he’s developed over the last decade leverages changing economic, demographic, psychographic and technology landscapes to identify pronounced, multi-year structural changes. This framework sits at the heart of Tematica’s investment themes and indices and builds on his more than 25 years analyzing industries, companies and their business models as well as financial statements. Versace is the co-author of “Cocktail Investing: Distilling Everyday Noise into Clear Investing Signals” and hosts the Thematic Signals podcast. He is also an Assistant Professor at NJCU School of Business, where he developed the NJCU New Jersey 50 Index.

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Lenore Elle Hawkins

Lenore Elle Hawkins serves as the Chief Macro Strategist for Tematica Research. With over 20 years of experience in finance, her focus is on macroeconomic influences that create investing headwinds or tailwinds. Lenore co-authored the book Cocktail Investing and in addition to her Tematica work, provides M&A consulting services for companies in Europe looking to expand globally. She holds a degree in Mathematics and Economics from Claremont McKenna College, an MBA in Finance from the Anderson School at UCLA and is a member of the Mont Pelerin Society.

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Mark Abssy

Mark Abssy is Head of Indexing at Tematica Research focused on index and Exchange Traded Product development. He has product development and management experience with Indexes, ETFs, ETNs, Mutual Funds and listed derivatives. In his 25 year career he has held product development and management positions at NYSE|ICE, ISE ETF Ventures, Morgan Stanley, Fidelity Investments and Loomis Sayles. He received a BSBA from Northeastern University with a focus in Finance and International Business.

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