Stock Market Update

There hasn't been a quick impulse to buy into yesterday's weakness. The futures for the major indices are on the softer side of things so far, which is setting the stage for a lower open.

The S&P 500 futures are down 35 points and are trading 0.5% below fair value, the Nasdaq 100 futures are down 176 points and are trading 0.7% below fair value, and the Dow Jones Industrial Average futures are down 166 points and are trading 0.4% below fair value.

Once again, there is a ton of earnings news for the market to digest, and once again, there are many stocks with outsized gains and outsized losses on the other side of their reports.

Stocks like JFrog (FROG), Affirm (AFRM), and Expedia (EXPE) are among the outsized gainers, while stocks like Sweetgreen (SG), Block (XYZ), and DraftKings (DKNG) are among the outsized losers.

Growth stocks, in general, have had a tough week, with concerns about valuations and excess speculation tempering buyer interest. The Russell 3000 Growth Index is down 2.7% week-to-date, while the Vanguard Mega-Cap Growth ETF (MGK) is down 2.6%.

There is general softness again this morning. All of the Magnificent 7 stocks are lower this morning, including Tesla (TSLA), which is down 0.6% following the news that shareholders approved a pay package for Elon Musk that could possibly get to $1 trillion.

There isn't a lot of macro news drawing extra attention outside of China's disappointing trade data for October and, of course, the ongoing government shutdown, which is responsible for increased flight cancellations.

The Senate is expected to hold another funding vote today, yet reports suggest approval is still not assured. Separately, there will be some economic data to get through today. The preliminary Univ. of Michigan Consumer Sentiment Index (Briefing.com consensus: 54.0; prior 53.6) is at 10:00 a.m. ET and will be followed by the September Consumer Credit report (Briefing.com consensus: $8.0 billion; prior $0.4 billion) at 3:00 p.m. ET.

The 2-yr note yield is down two basis points to 3.55%, and the 10-yr note yield is unchanged at 4.09%.

In corporate news:

• Affirm (AFRM 70.73, +4.77, +7.2%): beats by $0.12, beats on revs; guides Q2 revs in-line
• Airbnb (ABNB 124.95, +4.42, +3.7%): misses by $0.10, reports revs in-line; guides Q4 revs in-line, expects GBV to grow low-double-digits yr/yr
• Block (XYZ 60.16, -10.77, -15.2%): misses by $0.10, misses on revs
• DraftKings (DKNG 26.22, -1.76, -6.3%): beats by $0.17, misses on revs; guides FY25 revs below consensus; increases share repurchase program to $2 bln from $1 bln
• Expedia (EXPE 253.00, +33.30, +15.2%): beats by $0.60, beats on revs; raises FY25 revs above consensus
• JFrog (FROG 58.51, +11.25, +23.8%): beats by $0.06, beats on revs; guides Q4 EPS above consensus, revs above consensus
• MP Materials (MP 48.10, -3.85, -7.4%): beats by $0.07, reports revs in-line
• Sweetgreen (SG 5.29, -0.96, -15.4%): misses by $0.15, misses on revs; lowers FY25 revs below consensus; same-store sales -9.5%
• Tesla (TSLA 443.20, -2.71, -0.6%): shareholders approve CEO Elon Musk's $1 trillion pay package; at annual meeting says it is "probably going to have to build a gigantic chip fab"

Reviewing overnight developments:

Equity indices in the Asia-Pacific region ended the week on a lower note. Japan's Nikkei: -1.2%, Hong Kong's Hang Seng: -0.9%, China's Shanghai Composite: -0.3%, India's Sensex: -0.1%, South Korea's Kospi: -1.8%, Australia's ASX All Ordinaries: -0.7%.

In news:

• China reported a smaller-than-expected trade surplus of October ($90.07 bln) due to weak imports and exports.
• The U.S. government is reportedly banning NVIDIA's throttled-down AI chip that was designed for the Chinese market.
• Japan's Financial Services Agency will support joint issuance of a stablecoin by three major banks.

In economic data:

• China's October trade surplus $90.07 bln (expected surplus of $96.90 bln; last surplus of $90.45 bln). October Imports 1.0% yr/yr (expected 3.2%; last 7.4%) and Exports -1.1% yr/yr (expected 3.0%: last 8.3%). October Foreign Reserves $3.343 trln (expected $3.320 trln; last $3.339 trln)
• Japan's September Household Spending -0.7% m/m (last 0.6%); 1.8% yr/yr (expected 2.5%; last 2.3%)

Major European indices trade in the red.  STOXX Europe 600: -0.7%, Germany's DAX: -0.8%, U.K.'s FTSE 100: -0.6%, France's CAC 40: -0.3%, Italy's FTSE MIB: -0.5%, Spain's IBEX 35: -0.9%.

In news:

• Germany reported a smaller-than-expected trade surplus due to strong growth in imports.
• The Dutch government will give up control of Chinese chipmaker Nexperia if China restarts exports of some chips, according to Bloomberg.
• British airline conglomerate IAG reported a yr/yr drop in net profit due to lower demand for flights to the U.S.

In economic data:

• Germany's September trade surplus EUR15.3 bln (expected surplus of EUR16.7 bln; last surplus of EUR16.9 bln). September Imports 3.1% m/m (expected 0.5%; last -1.4%) and Exports 1.4% m/m (expected 0.5%; last -0.8%)
• U.K.'s October Halifax House Price Index 0.6% m/m (expected 0.1%; last -0.3%); 1.9% yr/yr (expected 1.5%: last 1.3%)
• France's September trade deficit EUR6.6 bln (expected deficit of EUR5.9 bln; last deficit of EUR5.2 bln). September Current Account deficit EUR1.60 bln (last surplus of EUR1.40 bln)
• Swiss Q4 SECO Consumer Climate -37 (expected -36; last -28)