MARKET WRAPS

Watch For:

U.S. Housing Starts for September; Johnson & Johnson 3Q results; Procter & Gamble 1Q results.

Opening Call:

Stock futures ticked up ahead of a slew of earnings that investors will parse for insight into how companies are faring with inflation and supply-chain disruptions.

A spate of companies are due to report quarterly earnings ahead of the market open, including Johnson & Johnson, Bank of New York Mellon, Travelers, Procter & Gamble and Philip Morris International. Netflix will report earnings after the closing bell.

Investors are using earnings and companies' guidance for the future to assess how corporations are faring with a number of issues. Inflation is expected to be stickier than originally anticipated by central-bank officials, exacerbated by continued supply-chain disruptions, higher energy costs and labor shortages.

About 81% of S&P 500 companies that have reported so far have beat earnings-per-share expectations, according to FactSet data through early Monday.

"It is a market now where you're going to see more differentiation because it is a more challenging environment," said Daniel Morris, chief market strategist at BNP Paribas Asset Management. "If you look at earnings so far, ex-financials, it's been very good."

U.S. housing starts, which are due at 8:30 a.m. ET, are expected to have moderated in September. Builders have been caught between strong demand from buyers-spurred in part by low interest rates-and shortages of materials, labor and lots.

Forex:

The dollar fell broadly, with the DXY dollar index dropping 0.4% to a three-week low of 93.5850, as risk appetite improves and amid uncertainty over whether U.S. President Joe Biden will give Federal Reserve Chairman Jerome Powell a second term, MUFG said.

Although Powell remains favorite to keep the job, questionable trading activities by two Fed bank presidents cast a cloud over his prospects, The Wall Street Journal reported last week.

"The decision does not appear as much as a done deal as before which has increased uncertainty and downside risks for the U.S. dollar," MUFG currency analyst Lee Hardman said. He added that recent dollar weakness has coincided with a rebound in global equity markets.

Bitcoin's dollar value edged up 1.3% from its 5 p.m. ET level Monday, trading at $62,258.17 Tuesday. The U.S.'s first bitcoin exchange-traded fund will start trading Tuesday under the ticker symbol BITO. Cryptocurrency analysts say they will be watching to see how strong flows into the fund are, to assess whether the cryptocurrency's recent price rally will hold.

The Bank of England could start raising interest rates in November but the pound is still likely to depreciate in coming months, MUFG Bank said.

"GBP is more likely to weaken heading into year-end given the more challenging backdrop of slowing global growth, higher inflation and tightening liquidity conditions, which should be less supportive for risk assets and high beta currencies like the pound," MUFG currency analyst Lee Hardman said.

BOE policy tightening could also be viewed as a policy mistake if the U.K. economy slows more notably, which would dent sterling, he said.

Bonds:

Inflation pressures are persistent but are likely to ease, said BlackRock, which doesn't consider the current situation as stagflation.

The asset manager keeps its moderately pro-risk investment stance on a tactical basis, even as it sees a narrower path for risk assets to rise.

It attributes inflationary pressures to the economic restart after the pandemic rather than to rising energy prices and it expects the near-term supply-demand imbalances to ease.

"We see the restart price pressures eventually resolving themselves, and believe central banks with credible policy frameworks will look through most of them," BlackRock said.

J.P.Morgan expects the European Central Bank's monetary policy meeting on Oct. 28 to provide some clarity on the form of monetary policy accommodation for the era after the Pandemic Emergency Purchase Programme, said rates strategists Fabio Bassi and Sampathh Vijay. In the short term, European rates will face uncertainty around the Bank of England's delivery in early November, they said.

However, JPM remains confident in fading the amount of excessive tightening expectations that are currently priced at the short end of the EUR curve. Eurozone government bonds sold off heavily Monday, causing yields to rise, amid inflation fears and some spillover from U.K. rate-rise expectations, but yields trade lower Tuesday.

Commodities:

Oil prices were higher, with both benchmarks paring most of their gentle Monday losses that came with the news of a fall in U.S industrial production and weaker GDP numbers out of China according to ING's Warren Patterson.

Markets were generally calm Tuesday, though investors are awaiting the release of the API's weekly inventory figures later in the day and the EIA's inventory data due Wednesday.

Benchmark European gas prices were down 2.3% after a volatile Monday during which worries that Russian producers won't follow through with more supply caused temporary price spikes.

Gold gained as the dollar slipped and investors worry about the impact of the energy crunch on inflation. Expectations that central banks will raise interest rates to tamp down inflation are keeping the precious metal in check, said TD Securities.

However, investors are likely overestimating how quickly the Fed will move to raise rates. The Fed is likely to look through inflation driven by the energy shock, they said. "This suggests gold is an ideal hedge against rising stagflationary winds, and reasons to own the yellow metal are growing more compelling," the bank said.

Copper prices rose on a weaker dollar and worries about supply disruptions in major producer Peru. A Peruvian community said they'd block a key road used by mining companies in protest over pollution and poverty.

Analysts said that even without those disruptions, the background for copper is bullish. Inventories are dwindling while demand remains strong, said Anna Stablum, at the brokerage Marex. "Focus was still on the tightening of spreads as traders scrambled to get hold of available metals and scrap markets were tight," she said.

TODAY'S TOP HEADLINES

Ericsson Net Profit Beats Despite China Sales Drop and Supply-Chain Issues

Ericsson AB on Tuesday posted a third-quarter net profit that beat expectations, as strong sales of 5G equipment in North America, Europe and Latin America helped offset a hefty sales decline in mainland China.

The telecommunications-equipment company reported second-quarter net profit attributable to shareholders of 5.75 billion kronor ($665 million) compared with SEK5.35 billion for the year-earlier period.

Read More ->

App Deal Highlights a Push to Lure Workers Back Into Offices

Real-estate software and data firm VTS has agreed to acquire an app company that aims to simplify office life as more workers are heading back to their desks.

VTS, whose primary business is providing online tools to landlords for managing leases and tenant data, said it is buying Toronto-based Lane Technologies Inc. The price is about $200 million, according to people familiar with the matter, making it one of the largest proptech acquisitions ever.

Read More ->

BHP First-Quarter Iron Ore, Copper Output Falls

BHP Group Ltd. produced less iron ore, copper and steelmaking coal in its first fiscal quarter mostly because of planned maintenance work at its operations.

The world's biggest mining company by market value said it produced 63.3 million metric tons of iron ore in the three months through September, down 4% year-over-year and 3% lower than the quarter immediately prior.

Read More ->

Chip-Designer Arm Sees Chip Shortage Lasting Through Next Year

The boss of chip-design specialist Arm Holdings says the semiconductor shortage will persist through next year, joining the growing list of executives forecasting that crippling supply pressures won't disappear soon.

"What we're seeing from our licensees is that they could all be selling more, if only...there was more capacity to go around. Everyone is seeing huge demand," Arm Chief Executive Simon Segars said Monday at The Wall Street Journal's Tech Live conference.

Read More ->

J&J Used Lenient Bankruptcy Rules to Push Talc Liabilities to Charlotte

Johnson & Johnson used the lenient venue-selection rules of U.S. bankruptcy law to push tens of thousands of talc-related cancer claims to its bankruptcy court of choice, roughly 600 miles south of the company's New Jersey headquarters.

The New Brunswick, N.J consumer goods giant follows other companies and nonprofits that have filed chapter 11 cases in venues far from their headquarters to weather lawsuits over harmful products or other alleged wrongdoing. Known as forum-shopping, the strategy of steering chapter 11 cases to specific courts feeds the perception that bankruptcy rules tilt the playing field in favor of large institutions, according to some scholars.

Read More ->

Microsoft Xbox Chief Sees Game-Buying Spree Continuing

Microsoft isn't done with its acquisition spree in gaming as it looks for more companies to help make content for its popular Xbox, the software giant's gaming chief said.

"We're always out there looking for people who we think would be a good match and teams that would be a good match with our strategy, so we're definitely not done," Phil Spencer, Microsoft's executive vice president of gaming, said at The Wall Street Journal's Tech Live conference Monday.

Read More ->

'CoComelon' Owner Moonbug Weighs Sale, IPO

Moonbug Entertainment Ltd., the company behind the hit children's show "CoComelon," is looking to cash in on its popularity by either selling itself or going public, according to people familiar with the matter.

"CoComelon," with its lilting nursery rhymes on subjects like putting on shoes, has been a breakout hit of the Covid-19 pandemic, with busy parents parking their children in front of the TV to sing along with computer-generated toddlers. It became even more popular when Netflix Inc. in July struck a deal to launch a spinoff of the series for three seasons.

Read More ->

Reddit Seeking More Individual Investors to Participate in Its Share Offering

Reddit Inc. is considering ways to make its share offering more accessible to individual investors as it plans to go public, Chief Executive Steve Huffman said.

Mr. Huffman the market is evolving in a way that makes it easier for even small investors to buy into new offerings, he said at The Wall Street Journal's Tech Live conference Monday. It is often difficult for individual investors to buy into hot initial public offerings.

Read More ->

U.S. Lawmakers Step Up Pressure to Adopt Tougher Tech Laws

WASHINGTON-Legislation to curb the influence of big technology companies, including putting new restrictions on online content, is starting to gain traction in Congress as lawmakers narrow their targets and seek to build on public attention.

A bipartisan group of senators including Amy Klobuchar (D., Minn.) and Chuck Grassley (R., Iowa) came out last week in favor of legislation that would prohibit dominant platforms from favoring their own products or services, boosting similar efforts already under way in the House.

Read More ->

Yellen Says Debt-Limit Deal Will Keep Government Funded Through Dec. 3

Treasury Secretary Janet Yellen on Monday said the debt-limit deal enacted by Congress last week will allow the government to keep paying its bills through Dec. 3.

In a letter to Capitol Hill leaders, Ms. Yellen said the deal "provides only a temporary reprieve" and urged lawmakers to take further action to ensure that the government can continue to borrow money.

Read More ->

Behind the Energy Crisis: Fossil Fuel Investment Drops, and Renewables Aren't Ready

An energy price shock is serving as a reminder of the world's continued dependency on fossil fuels-even amid efforts to shift to renewable sources of energy.

Demand for oil, coal and natural gas has skyrocketed world-wide in recent weeks as unusual weather conditions and resurgent economies emerging from the pandemic combine to create energy shortages from China to Brazil to the U.K.

Read More ->

Global Climate Finance Falling Short of What Is Needed, Report Suggests

Global investment in climate-change-related projects rose in 2019 and 2020, but remained far below the level that would be needed to finance the transition to a low-carbon economy and minimize the impacts of climate change, new data showed.

The Climate Policy Initiative, a nonprofit research group that publishes a survey of climate finance every two years, identified $623 billion of climate-related investment in 2019 and $640 billion in 2020. Those were record figures, but growth has slowed, according to the CPI. It monitors a broad spectrum of public and private spending, spanning areas such as electric-car purchases and infrastructure funding.

Read More ->

SEC's GameStop Report Questions 'Game-Like' Trading Apps

WASHINGTON-A trading frenzy in shares of GameStop Corp. earlier this year should lead regulators to consider whether "game-like" brokerage apps are encouraging investors to trade too much, the Securities and Exchange Commission said on Monday.

The highly anticipated SEC report attributed the episode primarily to a rapid increase in trading by individual investors, many of whom used social-media platforms like Redditto swap ideas and strategies. The agency poured cold water on a number of alternative hypotheses for why the struggling videogame retailer's share price soared from less than $20 at the end of 2020 to an intraday high of $483 on Jan. 28.

Read More ->

North Korea Fires Ballistic Missile off East Coast, South Korea Says

SEOUL-North Korea launched a ballistic missile off its east coast Tuesday, Seoul's military said, in what is Pyongyang's fifth weapons test in recent weeks.

The weapon was fired at 10:17 a.m. local time from the Sinpo area in North Korea's South Hamgyong province, according to Seoul's military. The distance flown and altitude were not immediately known. South Korea is closely monitoring the situation with the U.S., Seoul's military said, while maintaining military preparedness.

Read More ->

Biden Administration to Constrain Use of Sanctions in Foreign-Policy Shift

WASHINGTON-The Biden administration plans to limit the use of economic and financial sanctions in a shift that Treasury Department officials said should strengthen the impact of a tactic that U.S. foreign policy has relied on in recent years.

After a nine-month Treasury-led audit of sanctions policy, the officials said Monday that sanctions will remain a critical policy tool but need to be better calibrated. To that end, the officials said, the interagency vetting process for sanctions will be refocused to more heavily weigh the potential for unintended harm to vulnerable groups, resistance from allies and other economic and geopolitical fallout.

Read More ->

FDA Nearing Approval for Mixing and Matching Covid-19 Booster Shots

The Food and Drug Administration is moving to soon allow people to receive booster shots that are different from their first Covid-19 vaccine doses, people familiar with the matter said.

The FDA won't recommend any booster over the others but will permit people to get a booster shot that is different from the shot they first received, one of the people familiar with the matter said.

Read More ->

Donald Trump Sues to Prevent Records From Being Disclosed to Jan. 6 Committee

WASHINGTON-Former President Donald Trump filed suit Monday to block records from his time in the White House from being turned over to the House committee investigating the Jan. 6 assault on the U.S. Capitol.

In a lawsuit filed in federal court in Washington, D.C., an attorney representing the former president asked a federal judge to stop the National Archives from turning over records from Mr. Trump's time in office to Capitol Hill investigators, alleging that the requests were improper and the documents contained privileged material.

Read More ->

Write to sarka.halas@wsj.com

TODAY IN CANADA

Earnings:

Canadian Natl Railway (CNR.T) 3Q

Economic Indicators (ET):

Nothing major scheduled

Stocks to Watch:

Invesco Suddenly Pulls Its Bitcoin ETF Application -- Barrons.com

The Bitcoin ETF race just got a little less crowded.

Invesco, which appeared just days away from launching an exchange-traded fund that would track Bitcoin futures, pulled its application on Monday.

Given that the Securities and Exchange Commission had not objected to the application, it was expected to start trading as soon as Wednesday. Invesco, which oversees $1.5 trillion in assets, was expected to be a major player in the market once its ETF launched.

"We have determined not to pursue the launch of a Bitcoin futures ETF in the immediate near-term; however we will continue to work in partnership with Galaxy Digital to offer investors full shelf of products with exposure to this transformative asset class, including pursuing a physically backed, digital asset ETF," the company said in a statement.

ProShares, another fund provider, is ready to list the first U.S.-traded Bitcoin ETF on Tuesday after the SEC declined to object to its filing.

Invesco's latest filing had included a slightly different set of investments than ProShares. The company had said it would invest in futures, but also might invest in other Bitcon-related assets, including Canadian ETFs that hold Bitcoin itself and the Grayscale Bitcoin Investment Trust (ticker: GBTC), a closed-end fund provided by digital asset manager Grayscale.

Other News:

Bank of Canada Survey Finds Widespread Hiring, Investment Plans

Businesses in Canada say they are planning to increase their investments and hire staff as they deal with continued supply-chain disruptions and labor shortages, a Bank of Canada survey found.

The central bank's quarterly business outlook survey, released Monday, found companies' domestic and foreign sales prospects remained strong in the late summer, with businesses that provide in-person services expecting to benefit from easing Covid-19 restrictions and pent-up consumer demand. However, some businesses said continuing supply constraints could limit their future sales.

"To meet demand and alleviate capacity constraints, most businesses plan to increase their capital expenditures and staffing levels over the next year," the bank said in a report detailing the survey's findings.

Businesses said supply-chain disruptions have worsened since the previous quarter and are expected to continue until the second half of 2022, the survey found, longer than previously anticipated. A growing proportion of companies also said that labor shortages are preventing them from meeting growing demand, compared with prior surveys.

Market Talk:

North American Companies Register More Bonds, Equity to Sell in Markets

U.S. and Canadian companies registered more debt and equity to sell in the markets in September, CUSIP Global Services said Monday. Requests for corporate CUSIP codes, which are akin to serial numbers for securities, climbed 3.3% in September compared with the previous month, said CUSIP, which registers the codes. On a year-over-year basis, corporate CUSIP requests were up by 0.1%.

Bank of Canada Could Raise Rates in July 2022 On Business Optimism, Inflation Worries

The results of the Bank of Canada's latest business outlook survey could help convince policy makers to raise interest rates a little sooner than anticipated, Desjardins Securities chief economist Jimmy Jean says. Jean says the firm now expects an initial, post-pandemic rate increase in July 2022, about three months ahead of its earlier forecast. The business outlook survey showed widespread confidence and higher expectations for inflation and wage growth, Jean said. He also pointed to remarks from Gov. Tiff Macklem last week, which he said suggest the central bank's tolerance for high inflation has limits.

Expected Major Events for Tuesday

11:45/US: Weekly Chain Store Sales Index

12:30/US: Sep New Residential Construction - Housing Starts and Building Permits

12:55/US: 10/16 Johnson Redbook Retail Sales Index

18:00/US: Sep Monthly Treasury Statement of Receipts & Outlays of the U.S. Govt

20:30/US: 10/15 API Weekly Statistical Bulletin

23:01/UK: Sep Scottish Retail Sales Monitor

23:50/JPN: Sep Provisional Trade Statistics for the Month

All times in GMT. Powered by Kantar Media and Dow Jones.

Expected Earnings for Tuesday

AmeriServ Financial Inc (ASRV) is expected to report for 3Q.

Bank First Corp (BFC) is expected to report $1.42 for 3Q.

Bank of New York Mellon Corp (BK) is expected to report $1.01 for 3Q.

CCUR Holdings Inc (CCUR) is expected to report for 4Q.

Cambridge Bancorp (CATC) is expected to report $1.83 for 3Q.

Canadian National Railway Co (CNI,CNR.T) is expected to report $1.42 for 3Q.

Century Bancorp (CNBKA,CNBKB) is expected to report for 3Q.

Commerce Bancshares Inc (CBSH) is expected to report $0.99 for 3Q.

Dover Corp (DOV) is expected to report $1.67 for 3Q.

Equity BancShares Inc (EQBK) is expected to report $0.72 for 3Q.

FTI Consulting (FCN) is expected to report $1.49 for 4Q.

Fifth Third Bancorp (FITB) is expected to report $0.91 for 3Q.

First Midwest Bancorp (FMBI) is expected to report $0.42 for 3Q.

Halliburton Co (HAL) is expected to report $0.28 for 3Q.

Hingham Institution for Savings (HIFS) is expected to report for 3Q.

Intuitive Surgical Inc (ISRG) is expected to report $0.88 for 3Q.

Iridium Communications Inc (IRDM) is expected to report $-0.02 for 3Q.

Johnson & Johnson (JNJ) is expected to report $2.31 for 3Q.

Kansas City Southern (KSU) is expected to report $2.02 for 3Q.

MainStreet Bancshares Inc (MNSB) is expected to report $0.55 for 3Q.

Manhattan Bridge Capital (LOAN) is expected to report $0.11 for 3Q.

ManpowerGroup (MAN) is expected to report $1.91 for 3Q.

Mercantile Bank Corp (MBWM) is expected to report $0.85 for 3Q.

Mueller Industries (MLI) is expected to report for 3Q.

NanoViricides Inc (NNVC) is expected to report for 4Q.

Netflix Inc (NFLX) is expected to report $2.57 for 3Q.

Ocwen Financial Corp (OCN) is expected to report for 3Q.

Old National Bancorp (ONB) is expected to report $0.36 for 3Q.

OrganiGram Holdings Inc (OGI,OGI.T) is expected to report $-0.04 for 4Q.

Philip Morris International (PM) is expected to report $1.57 for 3Q.

Procter & Gamble (PG) is expected to report $1.59 for 1Q.

Signature Bank (SBNY) is expected to report $3.72 for 3Q.

Silvergate Capital Corp (SI) is expected to report for 3Q.

Synchrony Financial (SYF) is expected to report $1.44 for 3Q.

Synovus Financial (SNV) is expected to report $1.08 for 3Q.

TSR (TSRI) is expected to report for 1Q.

The Travelers Companies (TRV) is expected to report $2.09 for 3Q.

United Airlines Holdings Inc (UAL) is expected to report $-0.81 for 3Q.

United Bancorp Inc (UBCP) is expected to report $0.26 for 3Q.

WD 40 (WDFC) is expected to report $1.16 for 4Q.

Powered by Kantar Media and Dow Jones.

ANALYST RATINGS ACTIONS

Antero Resources Raised to Buy From Neutral by Mizuho

Apple Hospitality REIT Cut to Underweight From Equal-Weight by Wells Fargo

Avaya Holdings Cut to Neutral From Overweight by JP Morgan

CatchMark Timber Trust Cut to Underperform From Outperform by Raymond James

Consolidated Edison Cut to Underperform From Neutral by B of A Securities

Contura Energy Raised to Buy From Neutral by Mizuho

Corteva Cut to Hold From Buy by Loop Capital

DexCom Cut to Neutral From Buy by Guggenheim

Disney Cut to Equal-Weight From Overweight by Barclays

Dow Cut to Underperform From Peer Perform by Wolfe Research

Five9 Raised to Overweight From Equal-Weight by Morgan Stanley

Fortune Brands Raised to Outperform From Sector Perform by RBC Capital

Goosehead Insurance Cut to Underperform From Neutral by B of A Securities

Hersha Hospitality Raised to Overweight From Equal-Weight by Wells Fargo

Host Hotels & Resorts Raised to Equal-Weight From Underweight by Wells Fargo

Infinera Cut to Underweight From Neutral by JP Morgan

Latch Cut to Neutral From Buy by Goldman Sachs

Martin Marietta Raised to Buy From Neutral by DA Davidson

NetApp Cut to Sell From Neutral by Goldman Sachs

Occidental Petroleum Raised to Buy From Hold by Truist Securities

Ocular Therapeutix Is Maintained at Strong Buy by Raymond James

Park Hotels & Resorts Cut to Equal-Weight From Overweight by Wells Fargo

PTC Therapeutics Cut to Underperform From Neutral by B of A Securities

Public Storage Raised to Outperform From Peer Perform by Wolfe Research

Service Properties Trust Cut to Underweight From Equal-Weight by Wells Fargo

Snap Is Maintained at Outperform by Credit Suisse

Steel Dynamics Cut to Equal-Weight From Overweight by Morgan Stanley

Summit Materials Cut to Sector Perform From Outperform by RBC Capital

Upstart Holdings Cut to Underperform From Neutral by B of A Securities

US Steel Cut to Underweight From Overweight by Morgan Stanley

Virgin Galactic Cut to Sell From Neutral by UBS

Vulcan Materials Raised to Buy From Neutral by DA Davidson

Westlake Chemical Raised to Buy From Neutral by B of A Securities

Williams Cos Is Maintained at Strong Buy by Raymond James

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

October 19, 2021 06:12 ET (10:12 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.