Daily Markets: Fed Comments Unhurried Down Market Rally

Asia-Pacific equity indexes ended today’s session mixed. Australia’s ASX All Ordinaries ended the day at 0.00% with the index rising only 0.10 points. China’s Shanghai Composite declined 0.13%, India’s Sensex fell 0.28%, South Korea’s KOSPI was 0.34% lower and Japan’s Nikkei dropped 1.06%. Taiwan’s TAIEX gained 1.19% and Hong Kong’s Hang Seng set the pace, up 1.70% led by Finance and Technology Services with Communications and Energy the only lagging sectors.

By mid-day trading, major European equity indices are up, and U.S. futures point to a lower open later this morning.

Despite last week’s softer-than-expected October Consumer Price Index report, Federal Reserve Governor Christopher Waller said “we’ve still got a ways to go” before the U.S. central bank stops raising interest rates. Waller added, “This isn’t ending in the next meeting or two.” Those comments, a rebounding dollar, and rising Treasury yields suggest equities will start this week off by giving back some of last week’s gains. As the day develops, markets will inspect to see if there is a potential thawing in U.S.-China trade and political tensions following U.S. President Joe Biden and Chinese President Xi Jinping’s meeting ahead of the Group of 20 Summit in Indonesia.

Data Download

International Economy

COVID-19 cases climbed in China over the weekend, with Beijing and other huge cities reporting record infections earlier today. Nationwide, 16,072 modern locally transmitted cases were reported by the National Health Commission, up from 14,761 on Sunday and the most in China since April 25.

Industrial production in the Euro Area advanced 0.9% MoM in September, easily beating the expected 0.3% but far slower than the upwardly revised 2.0% reading for August. On a YoY basis, industrial output expanded 4.9% in September, the most since August 2021 and well above market forecasts of 2.8%.

Domestic Economy

There are no eventful economic data points today, but with inflation on investor minds and the softer-than-expected October Consumer Price Index the catalyst for last week’s market rally, we expect investors to inspect for confirmation in the October Producer Price Index. If the data paints a different picture, we could very well see the market give back some of last week’s gains.

The U.S. Department of Health and Human Services (HHS) did not notify state officials on Friday that it plans to finish the emergency status for COVID-19, signaling that the Biden administration will sustain the declaration past January.

Democrats retained control of the Senate with 50 seats, but we continue to wait for the definitive outcome of which party controls the House of Representatives. Republicans officially gain 212 House seats and Democrats gain 204, according to Associated Press calls. A party needs 218 for a majority in the chamber.

Markets

Markets ended last week on a positive note as the Dow gained 0.10%, the Russell 2000 rose 0.79%, the S&P 500 advanced 0.92% and the Nasdaq Composite closed 1.88% higher. Sectors were mixed but outside of Utilities being down 1.12%, Consumer Staples, Industrials, and Real Estate were down only 0.11% or less. Energy, Communications Services, and Consumer Discretionary drove the day with 2% + rallies. Inflation continues to plague consumers, but Energy isn’t the only sector reaping the benefits of higher prices as orthodontic and restorative dental device maker Align Technology (ALGN) gained 11.45% on Friday on increased earnings expectations after the latest CPI print.

Here’s how the major market indicators stack up year-to-date:

• Dow Jones Industrial Average: -7.13%
• S&P 500: -16.22%
• Nasdaq Composite: -27.62%
• Russell 2000: -16.15%
• Bitcoin (BTC-USD): -63.45%
• Ether (ETH-USD): -65.11%

Stocks to Watch

Before trading kicks off for U.S.-listed equities, Clear Secure (YOU), Dentsply Sirona (XRAY), Li Auto (LI), Monday.com (MNDY), Oatly Group (OTLY), Tower Semi (TSEM), and Tyson Foods (TSN) are slated to report their latest quarterly results. 

Global Foundries (GFS) informed its employees of the impending workforce reductions, without disclosing when exactly they would occur, or which divisions would be affected.

According to a memo to executives from CEO Bob Chapek, Walt Disney (DIS) will reveal employees that layoffs are likely as the media and entertainment giant will announce a series of cost-cutting measures.

United Rentals (URI) agreed to acquire family-owned Ahern Rentals, the eighth largest equipment rental company in North America, for ~$2 billion in cash. Ahern has 106 locations in 30 states serving approximately 44,000 customers in the construction and industrial sectors.

Washington Federal (WAFD) will acquire Luther Burbank (LBC) and its wholly-owned subsidiary, Luther Burbank Savings, in an all-stock transaction valued at ~$654 million.

Amazon (AMZN) announced “millions of deals at a variety of price points worldwide” will be available during its 48-hour Black Friday event starting on Thursday, November 24.

IPOs

Defense and tactical scheme manufacturer KWESST Micro Systems (KWE) is expected to start trading in the week ahead. Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.

After Today’s Market Close

Golub Capital (BDC), J&J Snack Foods (JJSF), Shaw Communications (SJR), and Valvoline (VVV) are expected to report quarterly results after equities stay trading today, but as we mentioned above, readers will want to hold note of any earnings pre-announcements and their implications. Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar.

On the Horizon

Tuesday, November 15

• Japan: 3Q 2022 GDP
• China: Industrial Production, Retail Sales – October
• UK: Unemployment Rate – September
• Eurozone: 3Q 2022 GDP
• Eurozone: ZEW Economic Sentiment – November
• US: Empire State Manufacturing Index – November
• US: Producer Price Index – October

Wednesday, November 16

• Japan: Core Machinery Orders – September
• UK: Consumer Price Index, Producer Price Index – October
• US: Weekly MBA Mortgage Applications
• US: Retail Sales – October
• US: Import/Export Prices – October 8:30
• US; Industrial Production & Capacity Utilization – October
• US: Business Inventories – September
• US; NAHB Housing Market Index – November
• US: Weekly EIA Crude Oil Inventories

Thursday, November 17

• UK: Car Registrations – October
• Germany: Car Registrations – October
• Eurozone: Consumer Price Index -October
• US: Weekly Initial & Continuing Jobless Claims
• US: Housing Starts & Building Permits – October
• US: Philadelphia Fed Index – November
• US: Weekly EIA Natural Gas Inventories

Friday, November 18

• UK: Retail Sales – October
• US: Existing Home Sales – October

Thought for the Day

“Never say ‘no’ to adventure.” ~ Ian Fleming

Disclosures

The views and opinions expressed herein are the views and opinions of the author and enact not necessarily reflect those of Nasdaq, Inc.

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