Stock Market Update

The S&P 500 futures are down 20 points and are trading 0.2% below fair value, the Nasdaq 100 futures are down 120 points and are trading 0.5% below fair value, and the Dow Jones Industrial Average futures are down 98 points and are trading 0.2% below fair value.

Contracts tied to the S&P 500, Nasdaq 100, and Dow industrials are lower after last week's gains in equities. Earnings season ramps up this week with reports from Tesla (TSLA), Boeing (BA), Coca-Cola (KO), IBM (IBM), UPS (UPS), and many others. 

This week's calendar also features the September Existing Home Sales report on Wednesday, the weekly jobless claims and September New Home Sales reports on Thursday, and the final October University of Michigan Consumer Sentiment survey on Friday.

The 10-yr yield is up six basis points to 4.13% and the 2-yr yield is up four basis points to 3.99%.

In corporate news:

• Boeing (BA 160.00, +5.00, +3.2%): IAM/Boeing negotiated resolution contract 2024; received a negotiated proposal and resolution to end the strike; mulling asset sales as it remains in a vulnerable financial position, according to WSJ
• Cigna (CI 323.95, -12.05, -3.6%): dropping after resuming merger discussions with Humana (HUM) following a breakdown in talks last year, according to Bloomberg
• Kenvue (KVUE 23.68, +1.96, +9.0%): Starboard Value built sizable stake in Kenvue, according to WSJ
• Sirius XM (SIRI 28.39, +0.78, +2.8%): 10% owner Berkshire Hathaway's (BRK.A / BRK.B) Warren Buffett bought 1,557,702 shares at $26.505 - $27.50 worth approx. $42.1 mln
• Humana (HUM 278.01, +10.87, +4.1%) files lawsuit to reverse reduction of Medicare quality ratings, according to Bloomberg
• Spirit Airlines (SAVE 1.99, +0.52, +35.4%): expects to end 2024 with over $1.0 bln of liquidity
• Southwest (LUV 30.56, -0.42, -1.4%): Elliott and Southwest discussing a possible settlement, according to Bloomberg

Reviewing overnight developments: 

• Equity indices in the Asia-Pacific region were mixed, showing modest changes on either side of the unchanged line. Japan's Nikkei: +0.1%, Hong Kong's Hang Seng: -1.6%, China's Shanghai Composite: +0.2%, India's Sensex: -0.1%, South Korea's Kospi: +0.4%, Australia's All Ordinaries: +0.6%.
  • In economic data:
    • South Korea's Oct 1-20 Exports -2.9% yr/yr (last -1.1%) and Imports -10.1% yr/yr (last -4.5%)
    • New Zealand's September Credit Card Spending -3.2% yr/yr (last -3.1%)
  • In news:
    • Hong Kong's Hang Seng dropped 1.6% on the heels of last week's 2.1% decline. There was no specific news catalyst for that underperformance, which took a backseat to the news that the PBOC cut its 1-yr loan prime rate and 5-yr loan prime rate by 25 basis points to 3.10% and 3.60%, respectively. That was slightly more than the 20 bps expected by the market but in-line with Governor Pan's guidance last week that pointed to the likelihood of a 20-25 basis points cut.
    • South Korea's exports for the first 20 days of October were down 2.9% yr/yr with Bloomberg indicating the decline was led by oil products and mobile phones; however, chip exports were up strongly. South Korea's imports were down 10.1% yr/yr.
• Major European indices have done some backtracking in Monday's trade, meeting some resistance that is also showing up in the U.S. equity futures market. STOXX Europe 600: -0.5%, Germany's DAX: -1.0%, U.K.'s FTSE 100: -0.3%, France's CAC 40: -1.0%, Italy's FTSE MIB: -0.7%, Spain's IBEX 35: -0.8%.
  • In economic data:
    • Germany's September PPI -0.5% m/m (expected -0.2%; last 0.2%) and -1.4% yr/yr (last -0.8%)
    • UK's October Rightmove House Price Index 0.3% (last 0.8%) and 1.0% yr/yr (last 1.2%)
  • In news:
    • The session has been marked by a lack of material news catalysts, although some attention has been paid to comments from ECB officials steering the market to the possibility of more rate cuts but perhaps not as aggressive as some would like to see.
    • Fitch Ratings affirmed Italy's sovereign rating at BBB, but revised its outlook to positive from stable. EUR/USD -0.1% to 1.0850.