Stock Market Update

The S&P 500 futures are down 15 points and are trading 0.2% below fair value, the Nasdaq 100 futures are down 72 points and are trading 0.3% below fair value, and the Dow Jones Industrial Average futures are down 227  points and are trading 0.5% below fair value.

Rising Treasury yields continue to weigh on investor sentiment and provide an excuse to take some money off the table following a six-week win streak for the stock market. The 2-yr note yield is up one basis point to 4.05% and the 10-yr note yield is up three basis points to 4.23%.

The negative disposition of the equity futures market, though, is not tied solely to interest rate angst. Corporate news that features an E. coli outbreak linked to McDonald's (MCD) quarter pounders, an earnings warning from Starbucks (SBUX), notice of a license contract cancelation for Qualcomm (QCOM), disappointing results and guidance from Enphase Energy (ENPH), a sober view from Boeing (BA) that it will take time to return to its former legacy, and a Q4 profit warning from Hilton (HLT) have all contributed to the weakness.

The major indices are on track for a lower open, which in turn will create another buy-the-dip opportunity. Participants will be watching closely to see if that opportunity is embraced or if it is ignored.

The September Existing Home Sales Report (Briefing.com consensus 3.90M; prior 3.86M) will be released at 10:00 a.m. ET and will be followed by the Fed's Beige Book, which provides a summary of economic conditions across Fed districts, at 2:00 p.m. ET. Tucked in between will be the 1:00 p.m. ET results of the $13 billion 20-yr Treasury bond reopening.

Separately, Fed Governor Bowman (FOMC voter), who dissented in favor of a 25-basis points cut at the September FOMC meeting, will deliver opening remarks at 9:00 a.m. ET at the Fintech Conference hosted by the Federal Reserve Bank of Philadelphia.

In corporate news:

• McDonald's (MCD 293.18, -21.51, -6.8%): CDC confirms E. coli Outbreak Linked to McDonald’s quarter pounders
• Starbucks (SBUX 93.04, -3.78, -3.9%): projects Q4 revenue and earnings below consensus; global comps fell -7%; expects FY24 EPS below consensus; suspends FY25 guidance; increases quarterly dividend
• Coca-Cola (KO 68.00, -1.45, -2.1%): beats by $0.02, beats on revs; reaffirms FY24 EPS guidance
• Boeing (BA 159.00, -0.88, -0.6%) misses by $0.09, reports revs in-line, co says it will take time to return to its former legacy
• AT&T (T 22.12, +0.62, +2.9%): beats by $0.03, reports revs in-line; guides FY24 EPS in-line
• Texas Instruments (TXN 200.50, +6.53, +3.4%): beats by $0.06, reports revs in-line; guides Q4 EPS below consensus, revs below consensus; says results continue to reflect asynchronous market behavior
• Enphase Energy (ENPH 78.30, -13.93, -15.2%): misses by $0.13, misses on revs; guides Q4 revs below consensus
• Qualcomm (QCOM 168.00, -5.18, -3.0%): Arm Holdings (ARM) gives cancelation notice for architectural license agreement, according to Bloomberg
• Seagate Technology (STX 107.50, -5.14, -4.6%): beats by $0.10, beats on revs; guides Q2 EPS in-line, revs in-line
• Hilton (HLT 228.50, -9.63, -4.0%): beats by $0.08, misses on revs; guides Q4 EPS below consensus; guides FY24 EPS mostly below consensus

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended the midweek session on a mixed note. Japan's Nikkei: -0.8%, Hong Kong's Hang Seng: +1.3%, China's Shanghai Composite: +0.5%, India's Sensex: -0.2%, South Korea's Kospi: +1.1%, Australia's ASX All Ordinaries: +0.1%.
  • In economic data:
    • South Korea's October Consumer Confidence 101.7 (last 100.0)
    • Singapore's September CPI 0.3% m/m (last 0.7%); 2.0% yr/yr (expected 1.9%; last 2.2%). September Core CPI 2.8% yr/yr (expected 2.7%; last 2.7%)
  • In news:
    • Stimulus talk continued swirling about with a Chinese think tank opining that CNY2 trln worth of special government bonds should be issued to create a market stabilization fund.
    • China Securities Daily noted that about 500 domestic companies have announced buybacks over the past month.
    • The International Monetary Fund lowered its FY24 growth forecast for China to 4.8% from 5.0% and cut Japan's outlook to 0.3% from 0.7%.
    • South Korea is reportedly looking to provide support to chipmakers.
• Major European indices trade in the red. STOXX Europe 600: -0.3%, Germany's DAX: -0.3%, U.K.'s FTSE 100: -0.4%, France's CAC 40: -0.6%, Italy's FTSE MIB: -0.2%, Spain's IBEX 35: +0.1%.
  • In economic data:
    • There was no data of note today
  • In news:
    • European Central Bank policymaker Villeroy de Galhau said that persistent inflation is no longer the only risk and that the risk of reducing rates too late could increase. Meanwhile, policymaker Patsalides said that the debate is starting about the current level of rates relative to the neutral level.
    • Deutsche Bank reported a Q3 profit but also increased its provision for credit losses.
    • L'Oreal reported weak results for Q3 due in part to sluggish demand from China.
    • The International Monetary Fund raised its FY24 growth forecast for the U.K. to 1.1% from 0.7%.