Stock Market Update

The S&P 500 futures are up 45 points and are trading 0.8% above fair value, the Nasdaq 100 futures are up 296 points and are trading 1.5% above fair value, and the Dow Jones Industrial Average futures are up 170 points and are trading 0.4% above fair value.

Better-than-expected earnings results and guidance from chip maker Micron (MU 111.37, +15.60, +16.3%), which pointed to robust AI demand, and China jawboning further policy support measures, has put a nice bid in the equity futures market. Also, the Swiss National Bank is the latest central bank to announce a rate cut, taking its policy rate down by 25 basis points to 1.00% and suggesting more cuts are likely to follow.

These developments also helped put a nice bid in foreign markets, which went into rally mode, riding the leadership of technology stocks.

Today is a busy day for Fedspeak and economic data. There is also a $44 billion 7-yr note auction.

Fed Governor Kugler (FOMC voter) speaks at 9:10 a.m. ET followed by Fed Governor Bowman (FOMC voter) at 9:15 a.m. ET, Fed Chair Powell (FOMC voter) at 9:20 a.m. ET, New York Fed President Williams (FOMC voter) at 9:25 a.m. ET, Fed Vice Chair Barr (FOMC voter) at 10:30 a.m. ET, Fed Governor Cook (FOMC voter) at 10:30 a.m. ET, and Minneapolis Fed President Kashkari (non-FOMC voter) at 1:00 p.m. ET.

The economic release lineup includes weekly initial and continuing jobless claims, August Durable Goods Orders, and the third estimate for Q2 GDP, all at 8:30 a.m. ET. The August Pending Home Sales Report will be out at 10:00 a.m. ET.

The 2-yr note yield is down one basis point to 3.54% and the 10-yr note yield is down one basis point to 3.77%. The U.S. Dollar Index is down 0.1% to 100.84.

In corporate news:

• Micron (MU 111.37, +15.60, +16.3%): beats by $0.07, beats on revs; guides Q1 EPS above consensus, revs above consensus; robust AI demand drove a strong ramp of data center DRAM products and industry-leading high bandwidth memory
• CarMax (KMX 69.08, -5.41, -7.3%): reports EPS in-line, beats on revs; Retail used unit sales increased 5.1% and comparable store used unit sales increased 4.3%
• Accenture (ACN 349.00, +11.95, +3.6%): beats by $0.01, reports revs in-line; guides Q1 revs in-line; guides FY25 EPS in-line, revs in-line; approves $4.0 bln buyback and 15% increase in quarterly dividend
• NRG Energy (NRG 95.29, +6.05, +6.8%): raises FY24 adjusted EBITDA and free cash flow before growth guidance
• H.B. Fuller Co. (FUL 73.39, -7.24, -9.0%): misses by $0.10, misses on revs; guides FY24 EPS below consensus, revs below consensus
• Pfizer (PFE 28.79, -0.14, -0.5%): voluntarily withdrawing all lots of OXBRYTA (voxelotor) for the treatment of sickle cell disease (SCD) at this time, in all markets where it is approved
• Southwest Airlines (LUV 29.71, +1.32, +4.7%): raises Q3 RASM to up 2-3% from flat to down 2%; authorizes new $2.5 bln share repurchase plan
• Starbucks (SBUX 98.10, +2.48, +2.6%): Bernstein upgrades to Outperform from Market Perform
• Jabil (JBL 122.88, +9.45, +8.3%): beats by $0.08, beats on revs; guides Q1 EPS in-line, revs in-line; guides FY25 EPS above consensus, revs in-line; authorizes $1 bln buyback; approved a restructuring plan

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended Thursday on a firmly higher note. Japan's Nikkei: +2.8%, Hong Kong's Hang Seng: +4.2%, China's Shanghai Composite: +3.6%, India's Sensex: +0.8%, South Korea's Kospi: +2.9%, Australia's ASX All Ordinaries: +1.1%.
  • In economic data:
    • Hong Kong's August trade deficit $33.1 bln (last deficit of $21.8 bln). August Imports 7.9% m/m (last 9.9%) and Exports 6.4% (last 13.1%)
    • Singapore's August Industrial Production 6.7% m/m (expected -4.0%; last 10.2%); 21.0% yr/yr (expected 9.6%; last 2.0%)
  • In news:
    • China's Politburo said that necessary spending will be deployed to meet this year's growth targets; there was also a report that China plans to inject nearly $150 bln of capital into its largest banks.
    • Technology stocks showed strength after Micron (MU) beat quarterly expectations and issued strong guidance.
    • Australia's treasurer will travel to China for the first time in seven years.
    • Japan's LDP leadership election will be held tomorrow.
• Major European indices trade in the green. STOXX Europe 600: +1.0%, Germany's DAX: +1.2%, U.K.'s FTSE 100: +0.2%, France's CAC 40: +1.5%, Italy's FTSE MIB: +1.3%, Spain's IBEX 35: +1.0%.
  • In economic data:
    • Eurozone's August M3 Money Supply 2.9% yr/yr (expected 2.5%; last 2.3%). August Private Sector Loans 0.6% yr/yr, as expected (last 0.5%) and Loans to Nonfinancials 0.8% (last 0.6%)
    • Germany's October GfK Consumer Climate -21.2 (expected -22.4; last -21.9)
    • Italy's September Business Confidence 86.7 (expected 87.1; last 87.0) and Consumer Confidence 98.3 (last 96.1)
    • Spain's August Retail Sales 2.3% yr/yr (expected 1.9%; last 1.1%)
  • In news:
    • The French government will reportedly ask the EU to grant a two-year extension for achieving the 3.0% deficit/GDP target.
    • Several European Central Bank officials are reportedly pushing for another rate cut in October while others would prefer to wait until December.
    • BASF will reorganize some of its operations.
    • The Swiss National Bank lowered its policy rate by 25 bps to 1.00% with more cuts likely to follow.