MARKET WRAPS

Watch For:

Canada Consumer Price Index for September; EIA Weekly Petroleum Status Report; results from Verizon; Canadian Pacific Railway; IBM; Tesla

Opening Call:

Stock futures wobbled ahead of corporate results that will provide insight into the effects on the technology industry of inflation and supply-chain disruptions, including from the global chip shortage.

Telecommunications giant Verizon is scheduled to post earnings before the opening bell. Tesla and IBM are expected to report after markets close.

Stocks have climbed in recent days as investors parsed strong earnings. Major companies have said that labor shortages, higher raw-materials prices and supply-chain issues haven't eroded profits substantially, reassuring investors.

For tech companies like the ones reporting Wednesday, investors will be watching for an update on disruptions in the semiconductor space and the ability of large firms to increase prices to consumers, according to Kiran Ganesh, a multiasset strategist at UBS Global Wealth Management.

"Markets are taking a bit of a breather after a very strong run. Earnings are very good so far, across a pretty broad range. We're looking out for margins, and comments on input costs, and we haven't really seen too much concern on that," he said. "This is what's really been supporting the rally."

Netflix shares slipped 1.3% in after hours trading. The company said it added more new users than expected in the last quarter, but its co-chief executive also apologized for defending a controversial comedy special by Dave Chappelle.

Investors are awaiting a Federal Reserve report about economic conditions known as the Beige Book, which is expected to be released at 2:30 p.m. ET.

Overseas, the pan-continental Stoxx Europe 600 advanced 0.2%, while in Asia, major benchmarks were mixed.

Forex:

The dollar was little changed in Europe, despite the slightly weaker sentiment in most stock markets.

Healthier risk conditions and the repricing of expectations for central banks' monetary policies worldwide could send the dollar lower in coming days, although any losses might ultimately prove modest, said Westpac.

The European Central Bank is likely to underscore its dovish guidance next week, while the Federal Reserve is expected to announce QE tapering at its Nov. 2-3 meeting, a backdrop that should underpin the dollar, Westpac added.

Commerzbank said the dollar is unlikely to suffer a sustained downward correction in the near term as elevated U.S. inflation forecasts support the market's expectations for interest-rate rises by the Fed.

The foundation for the dollar's strength is "anything but secure" as inflation could fall more rapidly and sharply than the market expects next year, said Commerzbank currency analyst Thu Lan Nguyen.

"But there is still no reason for the market to massively revise its inflation and thus interest rate expectations--at least as long as there are no clear signs that the global supply bottlenecks are starting to ease."

Bonds:

The yield on the benchmark 10-year Treasury note reached 1.673% early Wednesday, its highest level since May, up from 1.634% Tuesday. It then eased back slightly.

"Higher yields mean stock valuations start to look more challenging and it undermines the 'no alternatives' argument for stocks if bonds start to yield something meaningful," said UBS's Ganesh. "We're not near that point yet, but if we incrementally move up, investors will start to grow a little more concerned."

Tim Duy, chief U.S. economist at SGH Macro Advisors, said comments from the Fed are moving in an overall hawkish direction. He said it will be important to see if Jerome Powell pushes back on such talk at his upcoming speech on Friday.

Commodities:

Crude oil futures were down around 1% in Europe after the latest API data showed a bearish reading on U.S. inventories, according to DNB Markets' Helge Andre Martinsen.

While the market had expected a build of 1.3 million barrels in the most recent reporting week, crude stocks actually rose by 3.3 million barrels. Investors will be keeping an eye out to see whether Department of Energy data, released later Wednesday, back up those API figures, Martinsen added.

Base metals prices were lower after China said it was looking to intervene in energy markets.

China's National Development and Reform Commission suggested it was looking at ways to bring down soaring coal prices, a move that could ease pressure on metals makers and has already prompted a sharp drop in Chinese coal futures.

Rising energy prices have been driving production curtailments at smelters and pushing base metals prices higher.

TODAY'S TOP HEADLINES

Tesla Poised for Record Quarterly Earnings on Supply-Chain Resilience

Tesla Inc. is expected to notch a third consecutive quarterly profit, thanks in part to the electric-vehicle maker's ability to navigate persistent global supply-chain disruptions.

Tesla delivered around 241,300 vehicles to customers in the three months ended in September, up roughly 73% from a year earlier, despite parts shortages that have hindered auto makers this year.

Read More ->

Nestlé Sales Buoyed by Coffee, Pet Food

Nestlé SA raised its full-year sales guidance for the second straight quarter, buoyed by strong demand for coffee and pet food, despite the continuing challenges of rising input costs and supply-chain snags.

The world's largest packaged-food company on Wednesday reported a 6.5% rise in third-quarter organic sales growth, with revenue for the first nine months of the year coming in at 63.29 billion Swiss francs, equivalent to $68.60 billion. Nestlé said it now expected full-year growth between 6% and 7%, up from its previous guidance of between 5% and 6%.

Read More ->

Bank of New York Mellon's Profit Rises on New Business, Asset Growth

Bank of New York Mellon Corp. reported a higher third-quarter profit, as a robust stock market, busy clients and new business all helped lift revenue.

The custody bank's results joined rival State Street Corp. in beating Wall Street's expectations and extended gains for both companies' shares. BNY Mellon and State Street have each rallied by more than 30% so far this year.

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Boeing's First Astronaut Flight on Starliner Faces Further Delay

Boeing Co. executives said the company's Starliner space vehicle might not carry astronauts until the end of next year, potentially putting it a year behind a previous date to deliver people to orbit for NASA.

After completing a demonstration flight without crew members during the first half of 2022, a test mission with astronauts could occur "maybe by the end of the year," according to John Vollmer, a Boeing program manager overseeing the Starliner.

Read More ->

Credit Suisse to Pay $475 Million, Admits Defrauding Investors to Settle Mozambique Charges

Credit Suisse Group AG agreed to pay $475 million and forgive $200 million Mozambique owes to investors in coordinated settlements with U.S. and European authorities over loans the bank made in the country.

A subsidiary of the Swiss bank pleaded guilty to wire fraud conspiracy charges in New York federal court Tuesday. Credit Suisse, which previously had maintained it was a victim of rogue employees, admitted to defrauding investors who bought some of the debt and agreed to pay $275 million to resolve both a criminal probe by the Justice Department and a civil investigation by the Securities and Exchange Commission.

Read More ->

Snap CEO Evan Spiegel Says Regulation Alone Won't Fix Social Media

The boss of social-media company Snap Inc. says government regulation isn't a substitute for companies working to promote the well-being of their users.

"We've always been very open about regulation," Snap Chief Executive Evan Spiegel said Tuesday at The Wall Street Journal's Tech Live conference. "The important point to make is that regulation is not a substitute for moral responsibility and for business practices that support the health and well-being of your community, because regulation just happens far too late."

Read More ->

Netflix Co-CEO Says He 'Screwed Up' When Defending Dave Chappelle Special

Netflix Inc. Co-Chief Executive Ted Sarandos said he "screwed up" in his efforts to communicate with employees who were upset over "The Closer," a recent comedy special by Dave Chappelle in which he made remarks that some viewed as offensive to the transgender community.

In emails to Netflix staff after the special's debut earlier this month, Mr. Sarandos defended "The Closer," citing its popularity on the platform and the company's commitment to creative freedom. He also said the company believed "content on screen doesn't directly translate to real-world harm."

Read More ->

SPAC Shareholders Approve Deal That Will Take WeWork Public

Special purpose acquisition company BowX Acquisition Corp. said Tuesday its shareholders approved the previously announced business combination with shared-workspace company WeWork Inc.

BowX said the deal is expected to provide WeWork with cash proceeds of about $1.3 billion.

Read More ->

Netflix Finds Even 'Squid Game' Only Has So Much Reach

For Netflix, recovering from the post-pandemic slump is proving to be a complicated plotline.

One major twist came in the form of "Squid Game," the South Korean survival drama that made its debut on Sept. 17 and has quickly become the company's biggest TV series ever. Netflix co-Chief Executive Officer Ted Sarandos conceded at the Code Conference last month that its success took even the company by surprise. Netflix said Tuesday in its third-quarter report that 142 million households chose to watch the series in its first month, blowing past the 82 million who watched the company's previous record holder, "Bridgerton."

Read More ->

Omnicom's Revenue Improves as Effects of Pandemic Fade

Omnicom Group Inc. said its business continued to improve from the damage and disruption caused by the Covid-19 pandemic, with third-quarter organic revenue gains in each of the advertising company's major disciplines.

The New York-based company, which owns agencies including BBDO, DDB and TBWA, said organic revenue increased 11.5% compared with the third quarter of 2020. Organic revenue is a metric that removes the effects of currency fluctuations, acquisitions and disposals.

Read More ->

'Dave Chappelle Is Welcome on Substack,' CEO Says

Substack Inc. co-founder and CEO Chris Best said he wouldn't have removed a post or delisted Dave Chappelle if the comedian had published something on the platform that echoed his recent stand-up special on Netflix Inc.

Mr. Best's comments were in reference to "The Closer," which featured remarks deemed offensive to the transgender community. A Netflix transgender-employee group is encouraging staff to boycott work on Wednesday in protest.

Read More ->

The Elizabeth Holmes Trial: Former Product Manager Details Shortcuts as Devices Failed

SAN JOSE, Calif.-Testimony from a former Theranos Inc. product manager in the criminal fraud trial of Elizabeth Holmes has shed light on the startup's race to court investors and business partners and the shortcuts it took when its blood-testing devices failed.

Daniel Edlin has testified over two days about the five years he spent at Theranos, starting with his recruitment by Ms. Holmes's brother, Christian Holmes, a friend from Duke University. He stayed until December 2016, a year after The Wall Street Journal began reporting on problems with Theranos's technology.

Read More ->

Derby's Take: Waller Flags Inflation Expectations as Key to Fed Rate Outlook

The Federal Reserve's newest governor said the monetary policy outlook depends crucially on what financial markets expect for the future path of inflation.

In a speech Tuesday, Christopher Waller offered a clear warning about what inflation might do to the monetary policy outlook. Mr. Waller, who became a central bank governor late last year after serving as research director at the St. Louis Fed, said if currently high levels of inflation do not show clear signs of moderation by year's end, he would move forward into next year his expectation of central bank rate rises.

Read More ->

Bundesbank President Jens Weidmann to Step Down

FRANKFURT-German Bundesbank President Jens Weidmann, a prominent critic of the European Central Bank's easy-money policies as a member of the ECB's rate-setting committee, will leave the Bundesbank at the end of the year, five years before his term was due to end.

The Bundesbank said in a statement that Mr. Weidmann is leaving for personal reasons, without elaborating.

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German Producer Prices Rise at Fastest Annual Pace in More Than 46 Years

The index of producer prices for industrial products in Germany rose 14.2% in September compared with the prior year, the German statistics office Destatis said Wednesday.

This was the highest year-on-year increase since October 1974, when prices rose strongly during the first oil crisis, Destatis said.

Read More ->

UK Annual Inflation Eased in September

Annual inflation in the U.K. eased in September, ahead of an anticipated pickup in consumer prices later in the year.

Consumer prices rose 3.1% on the year in September, the Office for National Statistics said Wednesday, slightly slower than the 3.2% rise recorded in August.

Read More ->

Chinese Coal Companies Fall as Beijing Signals Intervention

Shares of Chinese coal companies were weaker Wednesday after Beijing said it would intervene to boost coal supply and cool prices in the wake of shortages that have forced blackouts in parts of the country and weighed on economic growth.

Hong Kong-listed shares of Yanzhou Coal Mining dropped 10%, China Coal Energy lost 9.9% and China Shenhua Energy fell 4.8% on concerns that lower coal prices could weigh on revenues. The companies' Shanghai-listed shares fell by 10%, 9.9% and 6.7%, respectively, by the midday break.

Read More ->

China PBOC Keeps Loan Prime Rate Unchanged

China's central bank kept its benchmark loan prime rate unchanged on Wednesday.

The one-year LPR remained at 3.85% and five-year LPR at 4.65%, the bank said.

Read More ->

China's New Home Prices Fall for First Time in Six Years as Rules Bite

BEIJING-New home prices in China fell on a monthly basis for the first time in more than six years in September, new official data showed, as Beijing's measures to curb housing speculation and cool the property sector begin to bite.

Average new home prices in 70 major cities edged down 0.08% in September from the previous month, China's National Bureau of Statistics said Wednesday. Though small, it is the first such month-on-month decline since March 2015, and follows August's 0.16% increase.

Read More ->

Covid-19 Safety Fight Heats Up Between Biden Administration and States

The Labor Department is moving to strip three Republican-led states of workplace safety oversight, saying they have failed to adopt more-rigorous Covid-19 safety standards. It is the latest development in a fight between the Biden administration and some states over federal coronavirus rules.

Officials at the Labor Department said Tuesday that it is starting the process of revoking state-level oversight of workforce-safety programs in Utah, Arizona and South Carolina. The federal government said it began taking steps after the three states didn't adopt, at minimum, the federal Covid-19 safety plans for healthcare workers, which the Occupational Safety and Health Administration, part of the Labor Department, released in June.

Read More ->

Congress Is Losing Patience With Big-Tech Resistance, Klobuchar Says

WASHINGTON-Congress is growing impatient with big technology companies for resisting legislative remedies aimed at addressing social harms from internet platforms, Sen. Amy Klobuchar said Tuesday.

"Every single thing we propose, they are against," Ms. Klobuchar (D., Minn.) said at The Wall Street Journal's Tech Live conference. "The more that time goes on, I'm not the only one that starts wondering if we should not just have the narrow changes" and start aiming for more ambitious legislation, she said.

Read More ->

GOP Congressman Jeff Fortenberry Indicted in Campaign Finance Probe

WASHINGTON-A federal grand jury indicted Nebraska Republican Rep. Jeff Fortenberry on charges of lying and misleading federal investigators about illegal campaign contributions tied to his 2016 campaign for Congress.

The charges issued on Tuesday allege Mr. Fortenberry repeatedly lied to and misled authorities during a federal investigation into $30,000 of contributions to his re-election campaign made by Nigerian billionaire Gilbert Chagoury. Foreign nationals are barred from donating to U.S. elections.

Read More ->

Write to paul.larkins@dowjones.com TODAY IN CANADA

Earnings:

Canadian Pacific Railway 3Q

Economic Indicators (ET):

0830 Sep CPI

Expected Major Events for Wednesday

05:00/JPN: Sep Convenience Store Sales

06:00/GER: Sep PPI

06:00/UK: Sep UK producer prices

06:00/UK: Sep UK monthly inflation figures

08:30/UK: Aug UK House Price Index

09:00/ITA: Aug Balance of Payments

10:00/UK: Sep Aluminium Production report

11:00/US: 10/15 MBA Weekly Mortgage Applications Survey

12:30/CAN: Sep CPI

14:30/US: 10/15 EIA Weekly Petroleum Status Report

18:00/US: U.S. Federal Reserve Beige Book

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

Expected Earnings for Wednesday

A&W Revenue Royalties Income Fund (AW.UN.T,AWRRF) is expected to report for 3Q.

Abbott Laboratories (ABT) is expected to report $0.64 for 3Q.

Anthem Inc (ANTM) is expected to report $6.02 for 3Q.

Armstrong Flooring Inc (AFI) is expected to report $-0.26 for 3Q.

Arrow Financial (AROW) is expected to report $0.80 for 3Q.

BOK Financial Corp (BOKF) is expected to report $1.78 for 3Q.

Baker Hughes Co (BKR) is expected to report $0.21 for 3Q.

Basic Energy Services (BASXQ) is expected to report for 2Q.

Biogen Inc (BIIB) is expected to report $3.66 for 3Q.

CPI Aerostructures (CVU) is expected to report $0.06 for 1Q.

Cadence Bancorp (CADE) is expected to report $0.51 for 3Q.

Canadian Pacific Railway (CP,CP.T) is expected to report $0.94 for 3Q.

Citizens Financial Group (CFG) is expected to report $1.16 for 3Q.

Comerica Inc (CMA) is expected to report $1.64 for 3Q.

Community Trust Bancorp (CTBI) is expected to report $1.16 for 3Q.

Elmira Savings Bank (ESBK) is expected to report for 3Q.

Farmers & Merchants Bancorp Inc (FMAO) is expected to report $0.55 for 3Q.

First Community Corp. (South Carolina) (FCCO) is expected to report $0.48 for 3Q.

First Horizon Corp (FHN) is expected to report $0.35 for 3Q.

FirstCash Inc (FCFS) is expected to report $0.85 for 3Q.

Flagstar Bancorp (FBC) is expected to report $1.68 for 3Q.

Healthcare Services Group Inc (HCSG) is expected to report $0.27 for 3Q.

Knight-Swift Transportation Holdings Inc (KNX) is expected to report $1.06 for 3Q.

Lithia Motors Inc (LAD) is expected to report $9.35 for 3Q.

M&T Bank Corp (MTB) is expected to report $3.50 for 3Q.

MSC Industrial Direct Co Inc (MSM) is expected to report $1.25 for 4Q.

MarketAxess Holdings Inc (MKTX) is expected to report $1.46 for 3Q.

NASDAQ Inc (NDAQ) is expected to report $1.58 for 3Q.

NextEra Energy (NEE) is expected to report $0.69 for 3Q.

Northern Trust Corp (NTRS) is expected to report $1.68 for 3Q.

Plumas Bancorp (PLBC) is expected to report for 3Q.

Popular Inc (BPOP) is expected to report $2.24 for 3Q.

Stepan Co (SCL) is expected to report $1.45 for 3Q.

Travelzoo (TZOO) is expected to report for 3Q.

UniFirst Corp (UNF) is expected to report $1.89 for 4Q.

Union Bankshares Inc (UNB) is expected to report for 3Q.

Universal Stainless & Alloy Products Inc (USAP) is expected to report $0.24 for 3Q.

Verizon Communications (VZ) is expected to report $1.35 for 3Q.

Watsco Inc (WSO,WSOB) is expected to report $3.53 for 3Q.

Winnebago Industries Inc (WGO) is expected to report $1.93 for 4Q.

Powered by Kantar Media and Dow Jones.

ANALYST RATINGS ACTIONS

Akero Therapeutics Cut to Equal-Weight From Overweight by Morgan Stanley

Albemarle Raised to Outperform From Sector Perform by RBC Capital

Albertsons Cut to Neutral From Buy by Citigroup

Consolidated Comm Hldgs Cut to Sell From Neutral by Citigroup

Crown Castle Raised to Outperform From Neutral by Credit Suisse

Diamondrock Raised to In-Line From Underperform by Evercore ISI Group

Enterprise Pdts Partners Cut to Peer Perform From Outperform by Wolfe Research

Esperion Therapeutics Cut to Neutral From Outperform by Credit Suisse

Eversource Energy Raised to Equal-Weight From Underweight by Morgan Stanley

Flexion Therapeutics Cut to Neutral From Buy by HC Wainwright & Co.

Galera Therapeutics Cut to Neutral From Buy by BTIG

Holly Energy Partners Cut to Equal-Weight From Overweight by Barclays

International Paper Cut to Neutral From Outperform by Exane BNP Paribas

Kaleido Biosciences Cut to Underweight From Equal-Weight by Morgan Stanley

Macerich Raised to In-Line From Underperform by Evercore ISI Group

Marriott Cut to In-Line From Outperform by Evercore ISI Group

Roth CH Acquisition II Raised to Outperform From Sector Perform by RBC Capital

SBA Communications Raised to Outperform From Neutral by Credit Suisse

Shell Midstream Partners Raised to Overweight From Equal-Weight by Barclays

Under Armour Cut to Mixed From Positive by OTR Global

US Ecology Cut to Hold From Buy by Stifel

WEC Energy Group Raised to Peer Perform From Underperform by Wolfe Research

Williams Cos Cut to Peer Perform From Outperform by Wolfe Research

Xcel Energy Raised to Equal-Weight From Underweight by Morgan Stanley

Zillow Group Cut to Neutral From Outperform by Wedbush

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

(END) Dow Jones Newswires

October 20, 2021 05:50 ET (09:50 GMT)

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