Stock Market Update

The S&P 500 futures are down 14 points and are trading 0.2% below fair value, the Nasdaq 100 futures are down 40 points and are trading 0.2% below fair value, and the Dow Jones Industrial Average futures are down 118 points and are trading 0.2% below fair value.

The potential for further escalation in the Middle East is still impacting the market after reports indicated that Israel will launch a "significant retaliation" to Iran's attack, targeting oil production facilities, adding that attacks against nuclear facilities are also on the table, according to Axios.

WTI crude oil futures are 3.1% higher than Tuesday's settlement at $72.00/bbl. 

Treasury yields are little changed from yesterday. The 10-yr yield is up two basis points to 3.76% and the 2-yr yield is down one basis point to 3.61%. 

Earlier, the weekly MBA Mortgage Applications Index dropped 1.3% following last week's 11.0% jump. Other data today include the September ADP Employment Change estimate at 8:15 ET and the weekly EIA Crude Oil Inventories at 10:30 ET.

In corporate news:

• NIKE (NKE 82.61, -6.52, -7.3%): beats by $0.18, reports revs in-line, North America revenue down 11%; Withdrawing FY25 guidance given CEO transition; to provide quarterly guidance for balance of the year
• Humana (HUM 210.81, -68.42, -24.1%): discloses it has approximately 1.6 million, or 25%, of its members currently enrolled in plans rated 4 stars and above for 2025, a reduction from 94% in 2024
• Exxon Mobil (XOM 122.09, +2.16, +1.8%) and Chevron (CVX 152.20, +2.50, +1.7%): benefitting from the jump in oil prices 
• Lamb Weston (LW 62.52, -2.66, -4.1%): beats by $0.01, beats on revs; guides FY25 EPS below consensus, reaffirms FY25 revs guidance; announces restructuring
• Conagra (CAG 31.86, -0.86, -2.6%): misses by $0.07, misses on revs; reaffirms FY25 EPS guidance
• Cal-Maine Foods (CALM 77.86, +1.02, +1.3%): misses by $0.30, beats on revs (two ests); to pay dividend of $1.02/share

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended the midweek session on a mostly lower note while markets in China and India were closed for holidays. Japan's Nikkei: -2.2%, Hong Kong's Hang Seng: +6.2%, China's Shanghai Composite: HOLIDAY, India's Sensex: HOLIDAY, South Korea's Kospi: -1.2%, Australia's ASX All Ordinaries: -0.1%.
  • In economic data:
    • Japan's September Household Confidence 36.9 (expected 37.1; last 36.7)
    • South Korea's September CPI 0.1% m/m (last 0.4%); 1.6% yr/yr (last 2.0%). September Manufacturing PMI 48.3 (last 51.9)
    • Australia's September AIG Construction Index -19.8 (last -38.1) and AIG Manufacturing Index -33.6 (last -30.8)
  • In news:
    • Hong Kong's Hang Seng jumped more than 6.0% after returning from yesterday's closure with property names remaining in the lead.
    • South Korea's Manufacturing PMI (48.3) fell into contraction, reaching its lowest level since June 2023.
    • The Bank of Japan confirmed that bond purchases will be reduced this month.
    • Japan's Finance Minister Kato said that he has been instructed by the prime minister to pursue more wage hikes.
• Major European indices are mostly lower. STOXX Europe 600: -0.3%, Germany's DAX: -0.6%, U.K.'s FTSE 100: +0.1%, France's CAC 40: -0.1%, Italy's FTSE MIB: -0.5%, Spain's IBEX 35: -0.5%.
  • In economic data:
    • Eurozone's August Unemployment Rate 6.4%, as expected (last 6.4%)
    • France's August government budget deficit EUR171.9 bln (last deficit of EUR156.9 bln)
    • Italy's August Unemployment Rate 6.2% (expected 6.5%; last 6.4%)
    • Spain's September Unemployment Change 3,200 (expected 12,100; last 21,900)
  • In news:
    • European Central Bank policymaker Kazaks said that markets should not get ahead of themselves on rate cut expectations.
    • Germany's Machinery and Equipment Manufacturers Association said that August orders were up 7% thanks to 13% growth in foreign orders while orders from within the eurozone fell 7% yr/yr.
    • The Central Bank of Iceland unexpectedly lowered its policy rate by 25 bps to 9.00%, representing the first rate cut since the pandemic.