Stock Market Update

The S&P 500 futures are up 15 points and are trading 0.2% above fair value, the Nasdaq 100 futures are up 50 points and are trading 0.3% above fair value, and the Dow Jones Industrial Average futures are up 140 points and are trading 0.3% above fair value.

Stock futures indicate a higher open for the major indices. Pre-open gains in some mega cap stocks have supported the upside bias. NVIDIA (NVDA) is a standout from the space in front of its earnings report this afternoon.

Treasuries are weaker this morning after closing higher yesterday in response to geopolitical developments. The 10-yr yield is six basis points higher at 4.42% and the 2-yr yield is three basis points higher at 4.30%.

The People's Bank of China made no changes to its one-year and five-year loan prime rates, as expected.

Today's US economic calendar includes the weekly MBA Mortgage Applications Index, which increased 1.7% with purchase applications increasing 2% and refinance applications rising 2%. 

In corporate news:

• Target (TGT 127.90, -26.98, -17.4%): misses by $0.45, misses on revs; guides Q4 EPS below consensus
• TJX (TJX 120.38, +0.82, +0.7%): beats by $0.05, reports revs in-line; guides Q4 EPS below consensus; updates stock repurchase expectations
• Alphabet (GOOG 179.46, -0.12, -0.1%): Google Chrome could be worth $20 bln if judge orders a sale, according to Bloomberg
• Comcast (CMCSA 43.37, +1.05, +2.5%): will soon announce spinoff of NBCUniversal's cable networks into a separate company including MSNBC, CNBC, and USA Network, according to WSJ
• Delta Air Lines (DAL 64.35, -0.40, -0.6%): announces financial targets ahead of investor day; 10% EPS growth average annual; $3-5 bln free cash flow annual; sees mid-teens operating margin
• Keysight (KEYS 165.55, +13.42, +8.8%): beats by $0.08, beats on revs; guides Q1 EPS above consensus, revs above consensus

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended the midweek session on a mostly higher note. Japan's Nikkei: -0.2%, Hong Kong's Hang Seng: +0.2%, China's Shanghai Composite: +0.7%, India's Sensex: HOLIDAY, South Korea's Kospi: +0.4%, Australia's ASX All Ordinaries: -0.6%.
  • In economic data:
    • Japan's October trade deficit JPY461.2 bln (expected deficit of JPY360.4 bln; last deficit of JPY294.1 bln). October Imports 0.4% yr/yr (expected -0.3%; last 1.8%) and Exports 3.1% yr/yr (expected 2.2%; last -1.7%)
    • South Korea's October PPI -0.1% m/m (last -0.2%); 1.0% yr/yr (last 1.0%)
    • Australia's October MI Leading Index 0.2% m/m (last 0.0%)
  • In news:
    • There was some focus on China's customs data for October, which showed that shipments of antimony, a mineral used in production of defense equipment, collapsed 97%, fueling worries about a possible shortage.
    • The People's Bank of China made no changes to its one-year and five-year loan prime rates, as expected.
    • Japan's trade balance report for October showed a big jump in semiconductor equipment exports while auto exports declined.
• Major European indices trade near their flat lines. STOXX Europe 600: +0.2%, Germany's DAX: +0.3%, U.K.'s FTSE 100: -0.1%, France's CAC 40: +0.1%, Italy's FTSE MIB: +0.1%, Spain's IBEX 35: +0.2%.
  • In economic data:
    • Germany's October PPI 0.2% m/m (expected -0.1%; last -0.5%); -1.1% yr/yr, as expected (last -1.4%)
    • U.K.'s October CPI 0.6% m/m (last 0.0%); 2.3% yr/yr (expected 2.2%; last 1.7%). October Core CPI 0.4% m/m (last 0.1%); 3.3% yr/yr (expected 3.1%; last 3.2%). October Input PPI 0.1% m/m (expected 0.5%; last -0.5%); -2.3% yr/yr (last -1.9%) and Output PPI 0.0% m/m (expected -0.1%; last -0.4%); -0.8% yr/yr (last -0.6%)
  • In news:
    • The U.K.'s CPI report for October showed a larger than expected acceleration in CPI (to 2.3% yr/yr from 1.7%) and an unexpected rise in Core CPI (to 3.3% yr/yr from 3.2%), confirming concerns of the Bank of England's Monetary Policy Committee.
    • The U.K.'s Resolution Foundation believes that official British statistics have undercounted the employed population by about a million since the pandemic.
    • European Central Bank policymaker De Guindos said that low growth in the eurozone is due to structural policy rather than monetary policy.
    • The ECB's biannual financial stability review expressed concerns about threats to financial stability from rising trade tensions.