Stock Market Update

The S&P 500 futures are down five points and are trading 0.1% below fair value, the Nasdaq 100 futures are down 34 points and are trading 0.2% below fair value, and the Dow Jones Industrial Average futures are down 70 points and are trading 0.2% below fair value.

Contracts linked to the S&P 500, Dow industrials, and Nasdaq 100 are lower. Investors are in wait-and-see mode in front of Friday's release of the September Employment Situation report. Today's lineup features weekly jobless claims at 8:30 ET and the September ISM Services Index at 10:00 ET.

Pre-open losses in some mega cap names are another contributing factor in the early bias, along with worries around a potential escalation in the Middle East. Rising oil prices are another manifestation of geopolitical worries. WTI crude oil futures are 1.9% higher at $71.46/bbl. 

The 10-yr yield is up one basis point to 3.80% and the 2-yr yield is up two basis points to 3.66%.

In corporate news:

• Bank of America (BAC 39.08, -0.15, -0.4%): 10% owner Berkshire Hathaway's (BRK.A / BRK.B) Warren Buffett sold 8,547,947 shares at $39.25 - $39.785 worth approx. $337.9 mln
• Southwest Air (LUV 30.01, +0.44, +1.5%): higher following Director Rakesh Gangwal insider buy disclosures
• Levi Strauss (LEVI 18.66, -2.40, -11.4%): beats by $0.02, misses on revs; guides FY24 EPS in-line, lowers FY24 revenue guidance; initiates review of strategic alternatives for Dockers brand
• Constellation Brands (STZ 258.00, +2.33, +0.9%): beats by $0.24, reports revs in-line; reaffirms FY25 EPS guidance, revs guidance
• Tesla (TSLA 245.80, -3.22, -1.3%): aiming to recall 27K CyberTrucks due to rear view display issue, according to CNBC

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended Thursday on a mixed note while markets in China and South Korea were closed for holidays. Japan's Nikkei: +2.0%, Hong Kong's Hang Seng: -1.5%, China's Shanghai Composite: HOLIDAY, India's Sensex: -2.1%, South Korea's Kospi: HOLIDAY, Australia's ASX All Ordinaries: +0.1%.
  • In economic data:
    • Japan's September Services PMI 53.1 (expected 53.9; last 53.7)
    • Hong Kong's August Retail Sales -10.1% yr/yr (last -11.8%)
    • Australia's September Services PMI 50.5 (expected 50.6; last 52.5). August trade surplus AUD5.644 bln (expected surplus of AUD5.510 bln; last surplus of AUD5.636 bln). August Imports -0.2% m/m (last -0.6%) and Exports -0.2% m/m (last 0.3%)
  • In news:
    • Hong Kong's Hang Seng (-1.5%) pulled back after its sharp rally.
    • There has been some focus on Japan's new Prime Minister Ishiba appearing to be more supportive of easy monetary policy than he was prior to assuming his new post.
    • Japan's Services PMI expanded for the third consecutive month in the final reading for September (53.1) while Australia's PMI (50.5) remained in expansion for the eighth month in a row.
• Major European indices trade mostly lower. STOXX Europe 600: -0.5%, Germany's DAX: -0.3%, U.K.'s FTSE 100: +0.5%, France's CAC 40: -0.6%, Italy's FTSE MIB: -0.4%, Spain's IBEX 35: +0.4%.
  • In economic data:
    • Eurozone's September Services PMI 51.4 (expected 50.5; last 52.9). August PPI 0.6% m/m (expected 0.4%; last 0.7%); -2.3% yr/yr (expected -2.4%; last -2.2%)
    • Germany's September Services PMI 50.6, as expected (last 51.2)
    • U.K.'s September Services PMI 52.4 (expected 52.8; last 53.7)
    • France's September Services PMI 49.6 (expected 48.3; last 55.0)
    • Italy's September Services PMI 50.5 (expected 51.2; last 51.4)
    • Spain's September Services PMI 57.0 (expected 54.0; last 54.6)
    • Swiss September CPI -0.3% m/m (expected -0.1%; last 0.0%); 0.8% yr/yr (expected 1.1%; last 1.1%)
  • In news:
    • The British pound is down more than 1.0% against the dollar after Bank of England Governor Bailey said in a newspaper interview that the central bank can be more aggressive with cuts if inflation remains subdued.
    • British food retailer Tesco reported above-consensus results for the first half of the year.
    • Automakers Aston Martin, Stellantis, and Mercedes-Benz have been pressured by analyst downgrades.