Stock Market Update

The S&P 500 futures are up 15 points and are trading 0.3% above fair value, the Nasdaq 100 futures are up 67 points and are trading 0.3% above fair value, and the Dow Jones Industrial Average futures are up 80 points and are trading 0.2% above fair value.

There's a positive bias in early trading as earnings season rolls on. The upside bias has been supported by positive responses to earnings from names like Capital One (COF), L3Harris (LHX), and Western Digital (WDC).

Pre-open gains in some mega cap names have also boosted the broader equity market. The calm activity in Treasuries has also supported the upside bias in equities. The 10-yr yield is down one basis point to 4.19% and the 2-yr yield is down two basis points to 4.05%.

In other news, the People's Bank of China left its medium-term lending facility rate at 2.0%.

In corporate news:

• Capital One (COF 160.49, +7.23, +4.7%): beats by $0.74, beats on revs; reported September card metrics
• L3Harris (LHX 254.00, +9.83, +4.0%): beats by $0.09, reports revs in-line; raises FY24 EPS and revenue guidance
• Western Digital (WDC 73.24, +6.92, +10.4%): beats by $0.07, reports revs in-line; guides DecQ EPS in-line, revs in-line; Growth opportunities bolstered by the AI data cycle
• Mohawk (MHK 140.00, -11.87, -7.8%): beats by $0.01, reports revs in-line; guides Q4 EPS below consensus
• Centene (CNC 22.24, -19.36, -46.6%): beats by $0.26, beats on revs; guides FY24 EPS above consensus, revs above consensus
• AutoNation (AN 156.50, -6.70, -4.1%): misses by $0.34, misses on revs
• Colgate-Palmolive (CL 98.90, -0.84, -0.8%): beats by $0.02, reports revs in-line; raises FY24 EPS in-line, revs in-line
• Aon (AON 370.00, +13.15, +3.7%): beats by $0.24, reports revs in-line
• Booz Allen Hamilton (BAH 184.01, +17.46, +10.5%): beats by $0.34, beats on revs; raises FY25 EPS above consensus, revs in-line

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended the week on a mostly higher note. Japan's Nikkei: -0.6% (-2.7% for the week), Hong Kong's Hang Seng: +0.5% (-1.0% for the week), China's Shanghai Composite: +2.9% (+1.2% for the week), India's Sensex: -0.8% (-2.2% for the week), South Korea's Kospi: +0.1% (-0.4% for the week), Australia's ASX All Ordinaries: +0.2% (-1.0% for the week).
  • In economic data:
    • China's September FDI -30.4% YTD (last -31.5%)
    • Japan's October Tokyo CPI 1.8% yr/yr (last 2.1%) and Tokyo Core CPI 1.8% yr/yr (expected 1.7%; last 2.0%). October Corporate Services Price Index 2.6% yr/yr (expected 2.7%; last 2.7%). August Leading Index 106.9 (expected 106.7; last 109.3) and Coincident Indicator -3.2% m/m (expected -3.7%; last 3.1%)
    • Singapore's Q3 URA Property Index -0.7% qtr/qtr (expected -1.1%; last -1.1%). September Industrial Production 0.0% m/m (expected -2.8%; last 6.9%); 9.8% yr/yr (expected 3.5%; last 22.0%)
  • In news:
    • China's agriculture ministry expects a bumper grain harvest this fall.
    • Meanwhile, The People's Bank of China left its medium-term lending facility rate at 2.0%.
    • Chinese automakers have reportedly been instructed to stop expansion into the EU due to the ongoing tariff dispute.
    • Japan will hold a general election on Sunday and there is a risk that Prime Minister Ishiba's party could lose control of parliament.
    • Reserve Bank of Australia Governor Bullock said that inflation will need another year or two to return to target.
• Major European indices trade just below their flat lines. STOXX Europe 600: -0.2% (-1.3% week-to-date), Germany's DAX: -0.1% (-1.1% week-to-date), U.K.'s FTSE 100: -0.2% (-1.3% week-to-date), France's CAC 40: -0.2% (-1.7% week-to-date), Italy's FTSE MIB: +0.1% (-1.3% week-to-date), Spain's IBEX 35: -0.3% (-1.0% week-to-date).
  • In economic data:
    • Eurozone's September M3 Money Supply 3.2% yr/yr (expected 2.9%; last 2.9%). September Private Sector Loans 0.7% yr/yr (expected 0.8%; last 0.6%) and loans to nonfinancials 1.1% (last 0.8%)
    • Germany's October ifo Business Climate Index 86.5 (expected 85.6; last 85.4). October Current Assessment 85.7 (expected 84.4; last 84.4) and Business Expectations 87.3 (expected 86.8; last 86.4)
    • France's October Consumer Confidence 94, as expected (last 95)
    • Italy's October Business Confidence 85.8 (expected 87.0; last 86.6) and Consumer Confidence 97.4 (expected 98.5; last 98.3)
    • Spain's September PPI -5.2% yr/yr (last -1.3%). Q3 Unemployment Rate 11.21% (expected 11.40%; last 11.27%)
  • In news:
    • European Central Bank Chief Economist Lane said that the disinflation process is on track, expected to reach target in 2025.
    • The latest business survey from Germany's ifo Institute reported no improvement in orders and called for more rate cuts from the ECB.
    • The U.K.'s Autumn Budget Statement will be presented on October 30 and there is speculation that capital gains taxes could be increased.