Markets

Daily Markets: Equities Look for Relief at Week's End

Close-up of the street sign for Wall Street
Credit: Andrew Kelly - Reuters / stock.adobe.com

Today’s Big Picture

Asia-Pacific equity markets finished the day mixed. Japan’s Nikkei declined 0.52% as Bank of Japan governor Kazou Ueda maintained that the bank would consider taking action to raise rates in response to inflationary pressures after announcing no change in the country’s -0.10% rate target. India’s SENSEX fell 0.33% and South Korea’s KOSPI gave back 0.27%. Australia’s ASX All Ordinaries closed flat, eking out a 0.05% gain, and Taiwan’s TAIEX rose 0.17%. On reports that regulators are considering lifting foreign ownership limits, China’s Shanghai Composite rose 1.55% and Hong Kong’s Hang Seng closed 2.28% higher in a broad rally led by Technology Services names.

European markets are lower in midday trading and U.S. equity futures point to a positive open. Traders and investors alike have had time since Wednesday to contemplate comments from Fed Chair Powell as well as digest the news that a potential government shutdown might be in the cards as soon as next week. Still, two days of lower returns don’t necessarily establish a trend. Seeing that futures are pointing to a higher open today, perhaps the past two days are a kind of ten-year anniversary celebration of sorts of the 2013 “Taper Tantrum” as opposed to a significant change in either Fed policy or market sentiment.

That being said, while Powell’s comments almost a year ago about the economy feeling pain seem to have been largely ignored by the markets to date, participants do seem to be finally acknowledging that the state of the economy can affect equity valuations. Once today is in the books, we will see if the weekend pause is enough to refresh markets for Monday as we head closer to closing out the third quarter.

Data Download

International Economy

Last night gave us the August update for Japanese CPI. Top line YoY inflation came in at 3.20%, 0.20% higher than estimates but lower than the previous 3.3% figure. Core CPI ended up 0.05% lower than estimates and in line with July’s reading.

Eurozone September PMI data was released this morning and, despite Manufacturing PMI results coming in slightly below consensus at 43.4, the region’s Services and Composite PMI figures were higher than estimates, reported as 48.4 and 47.1, respectively. Germany’s PMI survey results showed improvement over the previously reported figures but still had Services at 49.8 and Manufacturing at 39.8. France saw both Services (43.9) and Manufacturing (43.6) post lower than both the previous month and expectations. A reminder that PMI figures above 50 indicate expanding markets, while anything below 50 points to a contraction in activity.

Domestic Economy

9:45 am ET has S&P Global (SPGI) providing the results of September's Purchasing Manager’s Index (PMI) survey for both Manufacturing and Services, as well as the Composite. Expectations are for Manufacturing to remain steady at 47.9 and Services to decline slightly to 50.2 from August’s 50.5, putting estimates for the Composite at an even 50, down 0.20 from the previous reading. 

Markets

Yesterday’s sector results showed just where fear is starting to creep into traders’ psyche. Real Estate fell the most, down 3.47%, followed by Consumer Discretionary (-2.73%). and Materials (2.01%). Industrials and Financials gave back 1.64% and 1.65%, respectively. The only sector to not decline over 1.00% was Healthcare (0.87%). Accordingly, the Dow declined 1.08%, the Russell 2000 fell 1.56%, the S&P 500 gave back 1.64% and the Nasdaq Composite closed 1.82% lower. In individual names, FedEx Corporation (FDX) shares gained 4.52% after the company announced a strong quarter after hours on Wednesday.

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

  • Dow Jones Industrial Average: 2.79%
  • S&P 500: 12.78%
  • Nasdaq Composite: 26.35%
  • Russell 2000: 1.17%
  • Bitcoin (BTC-USD): 60.05%
  • Ether (ETH-USD): 32.24%

Stocks to Watch

Scholastic Corporation (SCHL) reported a per-share loss of $2.20, 65% lower than last year's $1.33 loss. Revenues were also lower, at $228.5 million from last year’s $262.9 million. The company’s CEO stated that “Looking ahead, we’re excited about fiscal 2024 and are affirming guidance.” He went on to say that “Scholastic made solid progress this summer, implementing our newly integrated School Reading Events Strategy while optimizing and investing in the areas of our business for long-term growth.”

Darden Restaurants (DRI) announced an 11.6% increase in quarterly sales to $2.7 billion, led by growth in Longhorn Steakhouse (8.1%), and Olive Garden (6.1%) properties. The company estimated that the acquisition of 77 Ruth’s Chris locations had an $0.18 impact on EPS, putting that figure at $1.60 per share in the past quarter. Regarding the Ruth’s Chris acquisition, management stated that those properties will be incorporated into overall results after 16 months of operation under the Darden umbrella. Darden CEO Rick Cardenas commented that “our strategy is working. we continue to grow share, strengthen margins, and make meaningful investments in our business while returning capital to shareholders.” 

Factset Research Systems (FDS) reported in-line revenue of $535.8 million which fell in the middle of the expected range of estimates from $532.8-539.9 million. EPS was reported at $2.93, coming in significantly lower than estimates of $3.51. Organic growth saw a 7.20% increase YoY as compared to the consensus estimate of 6.80%. The platform saw 151 new clients in the past quarter bringing the total to 7,947 and a 2,127 increase in users to 189,972. Both figures came in slightly under estimates for the period. 2024 guidance sees EPS of $15.65 to $16.15 from revenues of $2.21 to $2.23 billion. CEO Philip Snow commented in the earnings call that “Looking forward, we have started seeing green shoots of market recovery, particularly in new business.”

IPOs

There are no IPOs scheduled for today. Readers looking to dig deeper into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.

After Today’s Market Close

Hey hey hey! It’s Friday and that means we have no companies reporting quarterly results after equities stop trading. Those looking for more on upcoming quarterly earnings reports should head on over to Nasdaq’s Earnings Calendar

On the Horizon

Monday, September 25

  • Germany: Ifo Business Climate – September
  • US: Chicago Fed National Activity Index - August
  • US: Dallas Fed Manufacturing Index – September

Tuesday, September 26

  • US: S&P/Case-Shiller Home Price YoY - July
  • US: S&P/Case-Shiller Home Price MoM - July
  • US: CB Consumer Confidence - September
  • US: New Home Sales MoM - August
  • Korea: Business Confidence - September

Wednesday, September 27

  • Germany: GfK Consumer Confidence – October
  • US: MBA 30-Year Mortgage Rate - September 22
  • US: Durable Goods Orders – August
  • US: Weekly EIA Crude Oil Inventories 

Thursday, September 28

  • Germany: Inflation Rate – September
  • US: GDP Growth Rate (Final) - Q2
  • US: GDP Price INDex  (Final) - Q2
  • Initial Jobless Claims - September 23
  • US: Pending Home Sales - August
  • Japan: Unemployment Rate - August
  • Japan: Industrial Production (Preliminary) - August

Friday, September 29

  • France: Inflation Rate – September
  • UK: BoE Consumer Credit - August
  • Eurozone: Inflation Rate (Flash) – September
  • Eurozone: Core Inflation Rate (Flash) – September
  • US: Core PCE Price Index - August 
  • US: PCE Price Index - August
  • US: Personal Spending - August
  • US: Personal Income - August
  • US: Retail Inventories Ex Autos - August
  • US: Wholesale Inventories - August
  • US: Chicago PMI - September
  • US: Michigan Consumer Sentiment (Final) - September

Thought for the Day

“Hello, I must be going” ~ Groucho Marx

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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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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