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Futures Pointing To Roughly Flat Open On Wall Street
US Market
The major U.S. index futures are currently pointing to a roughly flat open on Wednesday, with stocks likely to show a lack of direction after trending higher over the past few sessions.
Traders may take a breather following the notable advance seen in recent days, which lifted the major averages to their best closing levels in a month on Tuesday.
Upbeat earnings news has helped propel stocks higher, although traders remain concerned about the outlook for inflation and the Federal Reserve scaling back stimulus.
Later in the day, the Federal Reserve is due to release its Beige Book, a compilation of anecdotal evidence on economic conditions in each of the twelve Fed districts.
The Beige Book may provide further clues about the Fed’s plans for monetary policy, with the central bank widely expected to begin tapering its asset purchases as early as next month.
U.S. stocks closed on a firm note on Tuesday, with the major averages reaching their best closing levels in a month, as investors reacted positively to some upbeat earnings news from big-name companies. Worries about slowing growth amid supply chain bottlenecks did weigh a bit and limit the gains.
The major averages all ended with solid gains. The Dow ended higher by 198.70 points or 0.6 percent at 35,457.31. The S&P 500 surged up 33.17 points or 0.7 percent to settle at 4,519.63, while the tech-laden Nasdaq advanced 107.28 points or 0.7 percent to 15,129.09.
Upbeat earnings news from insurance giant Travelers Companies Inc. (TRV), Johnson & Johnson (JNJ), and Procter & Gamble (PG) lifted sentiment.
Energy stocks had a fairly good outing as falling temperatures in China pushed oil prices higher. Technology stocks moved higher, extending recent gains. Pharmaceuticals and utilities stocks advanced as well.
On the economic front, a report released by the Commerce Department showed an unexpected decrease in new U.S. residential construction in the month of September.
The report said housing starts fell by 1.6 percent to an annual rate of 1.555 million in September from a revised rate of 1.580 million in August. Economists had expected housing starts to inch up to a rate of 1.620 million from the 1.615 million originally reported for the previous month.
The report also showed building permits plunged by 7.7 percent to an annual rate of 1.589 million from a revised rate of 1.721 million in August.
Building permits, an indicator of future housing demand, were expected to drop to a rate of 1.680 million from the 1.728 million originally reported for the previous month.
Johnson & Johnson shares climbed nearly 2.5 percent and Travelers shares gained 1.6 percent.
Netflix edged up marginally. However, Procter & Gamble drifted lower, with concerns about rising costs overshadowing the company’s strong quarterly results.
Pharmaceuticals shares Merck & Co. (MRK), Boston Scientific (BSX), Edwards Lifesciences (EW) and Intuitive Surgical (ISRG) gained ground.
In the technology space, Apple (AAPL) shares surged higher thanks to positive comments on the company’s new Macbook Pro line. Intel (INTC), Verizon (VZ) and Cisco Systems (CSCO) also moved higher.
U.S. Economic Reports
The Energy Information Administration is scheduled to release its report on oil inventories in the week ended October 15th at 10:30 am ET.
Crude oil inventories are expected to increase by 2.2 million barrels after jumping by 6.1 million barrels in the previous week.
At 12 pm ET, Atlanta Federal Reserve President Raphael Bostic is due to give remarks before a virtual Racism and the Economy: Focus on the Wealth Divide event hosted by the Federal Reserve district banks.
Minneapolis Federal Reserve President Neel Kashkari and Chicago Federal Reserve President Charles Evans are also due to participate in the event.
At 1 pm ET, the Treasury Department is scheduled to announce the results of this month’s auction of $24 billion worth of twenty-year bonds.
Federal Reserve Board Governor Randal Quarles is also due to speak on the economic outlook before the Milken Institute Global Conference at 1 pm ET.
At 1:45 pm ET, St. Louis Federal Reserve President James Bullard is scheduled to participate in a closing panel before the virtual Racism and the Economy: Focus on the Wealth Divide event hosted by the Federal Reserve district banks.
The Federal Reserve is due to release its Beige Book, a compilation of anecdotal evidence on economic conditions in each of the twelve Fed districts, at 2 pm ET.
At 8:35 pm ET, San Francisco Federal Reserve President Mary Daly is scheduled to participate in virtual a fireside chat before the Symposium on Asian Banking and Finance co-hosted by the San Francisco Fed.
Stocks in Focus
Shares of Brinker International (EAT) are moving sharply lower in pre-market trading after the restaurant company said industry-wide labor and commodity challenges have impacted their margins and bottom line more than anticipated.
Lubricant maker WD-40 (WDFC) is also likely to see initial weakness after reporting fiscal fourth quarter results that missed analyst estimates on both the top and bottom lines.
Shares of Novavax (NVAX) are also seeing substantial pre-market weakness after a report from Politico said the drugmaker is having trouble meeting Food and Drug Administration quality standards for its Covid-19 vaccine.
On the other hand, shares of Winnebago (WGO) are likely to see initial strength after the recreational vehicle maker reported better than expected fiscal fourth quarter results.
Europe
European stocks have struggled for direction on Wednesday as a relentless surge in commodity prices fuels worries about inflation spiraling out of control.
The downside has remained limited, however, as expectations for Fed tightening pulled back somewhat after weak U.S. factory production data.
While the U.K.’s FTSE 100 Index is just above the unchanged line, the French CAC 40 Index and the German DAX Index are both up by 0.1 percent.
ASML Holding shares have declined. The Dutch chip equipment maker reported third quarter revenue that fell short of expectations.
Paints and coatings maker Akzo Nobel has also moved to the downside after reporting a decrease in third quarter net profit.
Luxury goods group Kering has also moved notably lower in Paris amid signs of slowing growth at Gucci, its biggest brand.
Mining giant BHP is also posting a steep drop in London after raising its offer for Canadian nickel explorer Noront Resources by $128 million.
Antofagasta has also slumped after the mining group reported weak copper production for the third quarter and forecast lower output for next year.
Meanwhile Nestleé has rallied as the Swiss food giant reported higher sales for the first nine months of the year and lifted its full-year guidance for organic sales growth.
Food delivery company Deliveroo has also shown a significant move to the upside after upgrading its full-year forecast.
In economic news, German producer prices increased 14.2 percent year-on-year in September after rising 12 percent in August, Destatis reported. Prices were expected to gain 12.7 percent. This was the highest growth since October 1974, when prices surged 14.5 percent amid the first oil crisis.
U.K. consumer price inflation slowed slightly to 3.1 percent from 3.2 percent in August, official data showed, while economists had forecast the rate to remain unchanged.
The euro area current account surplus fell to 13 billion euros in August from 23 billion euros in July, the European Central Bank said.
Eurostat’s final CPI reading for September came in at 3.4 percent on a yearly basis, in line with the flash estimate of 3.4 percent and the 3.4 percent expected.
Asia
Asian stocks ended mixed on Wednesday as investors fretted about slowing growth amid supply chain bottlenecks.
The International Monetary Fund on Tuesday slashed its 2021 economic growth outlook for Asia and warned that supply chain disruptions, inflation pressures and a looming fresh wave of COVID-19 infections pose downside risks. However, it raised the economic growth outlook for 2022.
Chinese shares fell slightly amid renewed uncertainty around monetary policies and China Evergrande Group’s debt crisis.
The benchmark Shanghai Composite Index dipped 6.15 points, or 0.2 percent, to 3,587, with property developers and coal stocks tumbling even as China’s central bank maintained its benchmark lending rate for corporate and household loans for an 18th month at its October fixing. Hong Kong’s Hang Seng Index rallied 348.81 points, or 1.4 percent, to 26,136.02.
Japanese markets ended off their day’s highs amid concerns about rising U.S. Treasury yields and as data showed the country’s export growth weakened to its slowest in seven months in September.
The Nikkei 225 Index ended up 40.03 points, or 0.1 percent, at 29,255.55, after having risen as much as 0.9 percent earlier in the day. The broader Topix settled marginally higher at 2,027.67.
Global start-up investor SoftBank Group climbed 4.4 percent and electronic parts maker TDK added 3.2 percent. Higher bond yields lifted banks, with Mitsubishi UFJ Financial and Sumitomo Mitsui Financial rising over 1 percent.
Australian markets gained ground, with banks rising on expectations they will benefit from a recent uptick in the Australian 10-year bond yield.
The benchmark S&P/ASX 200 Index rose 38.80 points, or 0.5 percent, to 7,413.70, while the broader All Ordinaries Index ended up 37 points, or 0.5 percent, at 7,727.20.
The big four banks rose between 0.6 percent and 1.1 percent. BHP gained half a percent after the mining giant increased its all-cash offer for Canadian nickel developer Noront Resources.
Online retailer Kogan.com surged 6.7 percent after delivering strong growth in quarterly sales.
Whitehaven Coal plunged 7.9 percent and fellow coal miner Yancoal Australia lost 6.2 percent after the Chinese government said it would intervene to curb surging coal prices.
Seoul stocks gave up early gains to end lower amid an institutional selloff. The Kospi slid 15.91 points, or 0.5 percent, to settle at 3,013.13.
Commodities
Crude oil futures are slumping $0.85 to $82.11 a barrel after rising $0.52 to $82.96 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,783.40, up $12.90 compared to the previous session’s close of $1,770.50. On Tuesday, gold rose $4.80.
On the currency front, the U.S. dollar is trading at 114.20 yen compared to the 114.38 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1636 compared to yesterday’s $1.1633.
