Daily Markets: Will Stocks Find a Respite Today?

Today’s Big Picture

Asia-Pacific equity indexes ended today’s session mixed as India’s Sensex and Hong Kong’s Hang Seng closed essentially flat, down 0.07% and up 0.03%, respectively while South Korea’s KOSPI eked out a 0.13% gain on the day. In other markets, Taiwan’s TAIEX rose 0.35%, Australia’s ASX All Ordinaries advanced 0.43% and Japan’s Nikkei closed 0.53% higher. China’s Shanghai Composite led the way, gaining 1.40% on strong Technology sector results. By mid-day trading, European equity indices are up across the board and U.S. futures point to a strong open later this morning.

Following five days of losses that put the S&P 500 at its lowest level since 2020 with market breadth at its worst level in 32 years according to Bespoke Investment Group, equities look to attempt a rebound. We’d remind readers that some of the sharpest short-term rallies happen in bear markets. That being said, higher interest rates ahead, slowing enterprise spending, currency headwinds, and the upcoming September quarter earnings season will be a test for these markets. That next earnings season kicks off on October 13, led by the usual parade of bank earnings. Between now and then, we’ll get several key pieces of economic data that will lead the Atlanta Fed to update its GDPNow model for the current quarter. Investors, traders, and economists will be watching to see if it moves from its current reading of 0.3% into negative territory, matching the GDP readings for the first two quarters of 2022.

Data Download

International Economy

Strict COVID curbs in several big cities, a weakening yuan, and a further slowdown in factory activity due to severe heatwaves led profits earned by China's industrial firms to decline 2.1% YoY to CNY 55.25 trillion for the first eight months of 2022, steeper than the 1.1% drop reported for the previous period.

Vietnam evacuated more than 400,000 people ahead of the arrival of Typhoon Noru, the strongest the country has seen in two decades. Noru has the potential to renew supply chain disruptions for the textile, apparel, footwear, and electronics industries.

Loans to households in the Euro area rose 4.5% YoY in August, unchanged from the previous month and remaining close to the 2008-high of 4.6% in June. Loans to non-financial corporations in the Euro area jumped 8.7% YoY in August, the steepest increase since January 2009 and up from 7.6% in July.

Bloomberg reports that European authorities are probing “unprecedented” damage to the Nord Stream pipeline system that transports Russian gas to the region. There have been reports of Germany getting close to filling natural gas storage ahead of the upcoming winter, but the rest of Europe continues to worry about its energy situation. While sales of Russian natural gas have been restricted, they have not been entirely cut off and increasingly, Nord Stream 1 (and Nord Stream 2) have had operating issues that seem to point to potential sabotage, keeping Europe on tenterhooks.

Domestic Economy

The pace of economic data quickens today with several August releases, including Durable Orders at 8:30 AM ET and New Home Sales at 10:00 AM ET. Even as we get ready to close the books later this week on September, July data is still being published, including the FHFA Housing Price Index and the S&P Case-Shiller Home Price Index, both of which will be out at 9 AM ET. Rounding out the day’s gauntlet, at 10 AM ET, the September print for Consumer Confidence will be had, and it is expected to rebound from 103.2 in August.

The Congressional Budget Office estimated President Biden's executive action to cancel $10,000 of student loans per borrower will cost the government ~$400 billion.

Hurricane Ian strengthened to a Category 3 hurricane and is expected to make landfall near Tampa, FL later this week, a city that hasn’t had a direct hit from a hurricane in 100 years. Mandatory evacuations have been declared in several areas of Tampa and Clearwater, FL.

Markets

Yesterday saw markets continue to extend losses as all sectors except Consumer Staples traded lower. The Nasdaq Composite declined 0.60%, the S&P 500 dropped 1.03%, the Dow lost 1.11% and the Russell closed down 1.41%. While Consumer Staples names Costco (COST) gained 2.98% yesterday, it was gaming stocks that beat the house as Las Vegas Sands Corp (LVS) jumped 11.81% and Wynn Resorts Ltd (WYNN) rose 11.99% on news of the resumption of e-visa issuance in Macau. Here’s how the major market indicators stack up year-to-date:

• Dow Jones Industrial Average: -19.48%
• S&P 500: -23.31%
• Nasdaq Composite: -30.95%
• Russell 2000: -26.25%
• Bitcoin (BTC-USD): -58.64%
• Ether (ETH-USD): -63.86%

Stocks to Watch

Before trading kicks off for U.S.-listed equities, Cracker Barrel (CBRL), Jabil (JBL), and United Natural Foods (UNFI) will be among the companies issuing their latest quarterly results and guidance.

Intel (INTC) will hold its annual innovation conference today and the event will include a keynote address by CEO Pat Gelsinger and updates on the 13th Gen Intel Core series. Given the reported weakness in the PC market, we would look to an update on what Intel is seeing for that as well as the data center market. We’ll also be curious to hear what Intel has to say about its developing foundry business as well as spending associated with the recently passed CHIPS Act.

Splunk (SPLK) reaffirmed its revenue guidance for the current quarter and its fiscal 2023. For the current quarter, the company sees revenue of $835-$855 million vs. the $847.3 million consensus estimate, and $3.35-$3.40 billion for fiscal 2023 vs. the $3.39 billion estimate. The company also shared that its CFO, Jason Child, is leaving for a position with a pre-IPO semiconductor company and Splunk has already begun a search for a suitable replacement.

Later this week, even as Starbucks (SBUX) opens its 6,000th store in mainland China, it continues to forecast 9,000 stores across 300 Chinese cities by 2025 and 2,500 Starbucks Greener Stores by 2025 as well.

Stellantis (STLA) and Uber (UBER) are working together with Free2Move to tackle the French electric vehicle market. Free2Move would enable Uber to transform 50% of its fleet in France into electric models.

Aurora Mobile (JG) announced a strategic agreement with Chinese EV maker BYD Company (BYDDY) which will allow BYD to expand its EV business in Europe using Aurora's overseas messaging cloud solution.

Shareholders in steel companies such as Nucor (NUE), Steel Dynamics (STLD), and US Steel (X), will want to note the latest weekly report from the American Iron and Steel Institute showed U.S. raw steel production fell 0.6% to 1.683M net tons for the week ending September 24. The capability utilization rate for the week slipped to 76.4%, its lowest rate in 20 months.

Nautilus (NLS) announced it has commenced a comprehensive review of strategic alternatives, which may include a potential sale of the company.

IPOs

Shares of Luxury real estate developer Lead Real Estate (LRE) are expected to start trading later today and the IPO offering for tech firm Beamr Imaging (BMR) is slated for September 30. Prepared meals marketer Home Bistro filed for a proposed $14 million IPO. Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.

After Today’s Market Close

Blackberry (BB), Cal-Maine Foods (CALM), and Progress Software (PRGS) 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

Wednesday, September 28

• Germany: GfK Consumer Climate - October
• US: Weekly MBA Mortgage Applications
• US: Pending Home Sales - August
• US: Weekly EIA Crude Oil Inventories

Thursday, September 29

• UK: BoE Consumer Credit - August
• Eurozone: Business and Consumer Survey, Consumer Confidence, Consumer Inflation Expectations - September
• Germany: CPI - September (Preliminary)
• US: Weekly Initial & Continuing Jobless Claims
• US: 2Q 2022 GDP - Third Estimate
• US: Weekly EIA Natural Gas Inventories

Friday, September 30

• Japan: Retail Sales - August
• China: Manufacturing and Non-Manufacturing PMIs - September
• China: Caixin Manufacturing PMI - September
• Germany: Import/Export Prices, Retail Sales - August
• Eurozone: Consumer Price Index - September
• US: Personal Income & Spending - August
• US: PCE Price Index - August:
• US: Chicago PMI - September
• US: University of Michigan Consumer Sentiment (Final) - September

Thought for the Day

“I am no longer afraid of becoming lost because the journey back always reveals something new.” ~ Billy Joel

Disclosures

• Blackberry (BB), Splunk (SPLK) are constituents of the Foxberry Tematica Research Cybersecurity & Data Privacy Index
• Intel (INTC) is a constituent of the Tematica BITA Digital Infrastructure & Connectivity Index
• Costco Wholesale (COST) 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.

Other Topics

Stocks Economy Earnings Central Banks