MARKET WRAPS
Watch For:
U.S. Advance Estimate GDP for 3Q; U.S. Weekly Jobless Claims;
Merck & Co. Inc. 3Q results; Caterpillar Inc. 3Q results;
Mastercard Inc. 3Q results; Comcast Corp. 3Q results; Apple Inc. 4Q
results; Amazon.com Inc. 3Q results; Starbucks Corp. 4Q
results.
Opening Call:
Stocks headed for muted opening gains as investors awaited data
on U.S. economic growth and earnings from Apple and Amazon.com,
among other major companies.
Ahead of the bell, shares of Ford Motor jumped 9%. The car maker
late Wednesday restored its dividend and raised guidance for
profits in 2021. eBay shares slid more than 5% premarket after the
online marketplace gave projections for earnings that fell short of
Wall Street expectations.
Forecast-beating results have soothed worries that supply-chain
difficulties would dent profits, sending stocks higher in October.
Earnings season continues at pace, with private-equity firm Carlyle
Group and chocolate maker Hershey among those due to file before
the opening bell, followed by Amazon and Apple after markets
close.
"Earnings growth has been very strong," said Kiran Ganesh,
multiasset strategist at UBS Global Wealth Management, adding that
investors had also taken succor from slow progress in Washington
toward legislation that would raise taxes on companies and wealthy
individuals.
Still, the market has remained jittery at times as investors,
lawmakers and central banks navigate the uneven economic recovery
from the pandemic. Stocks fell Wednesday, for example, after the
Bank of Canada's decision to end quantitative easing sparked
volatility in global bond markets.
Data on how fast the U.S. economy grew in the third quarter will
be released at 8:30 a.m. ET. Growth likely cooled as households and
businesses confronted supply-chain disruptions, labor-market
mismatches and the Covid-19 Delta variant. There is a range of
estimates as to how much the economy slowed.
Overseas markets were broadly lower. The Stoxx Europe 600 fell
0.2%, led lower by shares of energy, travel and leisure companies.
Anheuser-Busch InBev, the world's largest brewer, reported a rise
in revenue and profits, boosting shares 7.2%.
Royal Dutch Shell shares slipped 2.4% after the energy company
said it would halve emissions by 2030. The stock jumped Wednesday
when The Wall Street Journal reported that Daniel Loeb's Third
Point had taken a big stake in Shell and urged the company to break
up.
Investors will also pay attention to the European Central Bank's
decision on asset purchases and interest rates at 7:45 a.m. ET.
Officials are expected to stick to loose-money policies, following
the Bank of Japan, which maintained its target for short-term
interest rates at minus 0.1% and its target for 10-year government
bond yields at around zero on Thursday.
Forex:
The dollar could fall in reaction to data later that are
expected to show U.S. economic growth slowed in the third quarter,
although only temporarily, ING said.
ING analysts said their forecasts are broadly in line with the
consensus estimate of 2.6% quarter-on-quarter annualised growth for
third quarter gross domestic product, compared to the second
quarter's 6.7% growth, but they don't rule out a weaker number.
"Yet we are confident of the fourth-quarter U.S. rebound--the
consumer and businesses are in good shape--such that any dollar
weakness on the GDP data should find good buying interest," they
said.
The euro edged lower as investors await the ECB's policy
decision later. The ECB is likely to err on the side of caution and
stick to its expansionary monetary policy so the market's
expectations for the withdrawal of stimulus will be "disappointed,"
Commerzbank currency analyst Antje Praefcke said. "In my view the
downside risks in EUR dominate today."
Sterling's appreciation potential looks limited as the Bank of
England is likely to accept a "fairly significant" overshoot of its
2% inflation target given the headwinds facing the economy,
Commerzbank said.
The 100 basis points of interest rate rises priced in by the
market over the course of a year is unlikely, Commerzbank currency
analyst Esther Reichelt said.
"The headwinds to be expected in the coming months from supply
bottlenecks, the consequences of Brexit and the pandemic situation
seem too substantial."
If the BOE doesn't counter rising price pressures with
sufficient policy tightening, higher inflation will weigh on
sterling's purchasing power, Reichelt said.
The Japanese yen seems "unattractive," particularly against the
dollar, as the Bank of Japan is unlikely to change its loose
policies any time soon, Commerzbank said after the central bank's
interest rate decision.
Thursday's policy decision illustrated that the BOJ's "hands are
tied" when it comes to monetary policy and that the market might be
correct with its view that inflation will remain subdued,
Commerzbank currency analyst Antje Praefcke said.
The BOJ left its policies unchanged and cut its inflation and
economic growth forecasts, while the central bank's governor
Haruhiko Kuroda said the yen's recent weakness wasn't "bad" for the
economy.
Bonds:
The yield on 10-year U.S. Treasury notes rose to 1.556% Thursday
from 1.528% Wednesday.
Santander Asset Management expects the first interest rate rise
by the U.S. Federal Reserve by June 2023 and anticipates three rate
hikes that year, with this outlook pulling U.S. Treasury yields
higher, it said.
"We expect the 10-year [Treasury yield] to trade in the range
1.50%-1.70% in the coming months," the asset manager said. It also
upgrades its view on U.S. government bonds slightly as yields have
increased and closed part of the gap to its target.
That said, even after the upgrade, Santander AM views U.S.
Treasurys as "underweight" versus "strong underweight" before.
Pimco expects the ECB to reduce asset purchases gradually in the
coming months, it said. Pimco forecasts a monthly asset purchase
pace between EUR40 billion-EUR60 billion over the second quarter of
next year, following the phasing out of the Pandemic Emergency
Purchase Programme in March 2022, said portfolio manager Konstantin
Veit.
The current pace is around EUR90 billion, with around EUR70
billion bought under the PEPP and EUR20 billion under the Asset
Purchase Programme. The ECB is also likely to continue to review
the asset purchases quarterly, with a view to gradually relegating
them from a duration extraction tool to a pure policy rate
signaling device over time, Veit said.
Commodities:
Oil prices were lower, with both benchmarks extending this
week's losses to between 2% and 3% after EIA inventory data showed
a larger build up in U.S. crude inventories than either the market
or Tuesday's API data predicted, said ING's Warren Patterson.
Also pressuring oil during the past couple of sessions has been
the growing prospect that Iran and the EU could resurrect nuclear
talks which have the potential to see oil export sanctions on Iran
lifted.
European benchmark gas prices were down 11% after Russian
President Putin told Gazprom to increase supplies to Europe once
the country fills its own stocks in early November.
Metals prices were edging higher ahead of U.S. GDP and
unemployment data. Investors are awaiting the U.S. economic data
for insight into the strength of the economy.
The data could also inform how quickly the Fed moves to raise
interest rates. Copper is often seen as a barometer for economic
growth, while gold is highly sensitive to investors' interest rate
expectations.
TODAY'S TOP HEADLINES
Profit Falls at GM and Ford as Chip Shortage Takes Toll
The two largest U.S. auto makers reported steep drops in
third-quarter profit as the computer-chip shortage dented factory
output, and each said the problem would leave dealership lots
nearly bare well into 2022.
Executives from General Motors Co. and rival Ford Motor Co. said
the supply-chain disruptions should slowly improve in the fourth
quarter and throughout next year, although strong car demand will
make it difficult to restock dealership lots.
Hertz Links Up With Uber to Offer 50,000 Tesla Rentals
Hertz Global Holdings Inc. said Wednesday it is linking up with
Uber Technologies Inc. to make 50,000 Teslas available in Uber's
ride-sharing network by 2023, the latest in the rental-car
company's efforts to build momentum postbankruptcy.
The deal comes days after Hertz, which collapsed into bankruptcy
at the start of the Covid-19 pandemic last year, said it is making
a significant investment in an EV rental fleet, including an
initial order of 100,000 Teslas by the end of 2022 and new
EV-charging infrastructure across the globe. The company exited
Chapter 11 in June and has a stock listing planned for this
year.
Shell 3Q Adjusted Earnings Fell as Hurricane Ida Hurt Business
-- Update
Royal Dutch Shell PLC on Thursday reported that its earnings
fell 25% in the third quarter after Hurricane Ida hurt its
operations in the Gulf of Mexico.
The Anglo-Dutch oil-and-gas major said its adjusted earnings
were $4.13 billion for the period, down from $5.53 billion in the
second quarter and below market expectations of $5.31 billion,
provided by Vara Research and averaged from 22 analysts'
estimates.
WPP 3Q Revenue Grew in All Regions and Markets; Lifts 2021
Guidance
WPP PLC said Thursday that its third-quarter revenue grew and
raised its full-year guidance.
Total revenue for the quarter was 3.24 billion pounds ($4.45
billion), up 9.1% on a reported basis and 14.7% on a like-for-like
basis on year.
BOJ Lowers Outlook for Japan Growth, Inflation
TOKYO-The Bank of Japan lowered its growth forecast, reflecting
supply-chain constraints that have weighed on exports and
production, and said it didn't see significant inflation
coming.
In its quarterly outlook report released Thursday, the bank's
policy board projected the Japanese economy would expand 3.4% in
the current fiscal year ending March 2022, compared with its
previous projection of 3.8% released in July. It said it expects
2.9% growth in the year ending March 2023, up from a previous
projection of 2.7% growth.
Iran to Return to Nuclear Deal Talks in Vienna Next Month
Iran will return to nuclear talks before the end of November,
its chief negotiator said Wednesday, restoring the Biden
administration's hopes that it can revive the 2015 nuclear
deal.
Iran's return to the negotiations would end a five-month hiatus
in talks that has enabled Tehran's new hardline government to press
ahead with its nuclear program.
Democrats Drop Paid Leave From $1.75 Trillion Proposal
WASHINGTON-Democrats abandoned plans to include a paid-leave
program in their social spending and climate bill, according to
people familiar with the talks, while prospects for a billionaires'
levy to help fund the package faded and a potential surtax on
wealthy Americans' income gained traction.
The White House is pushing for Democrats to come together around
the bill, expected to cost around $1.75 trillion, by the end of the
week, which could also unlock possible passage of a parallel
bipartisan infrastructure package that has been held up by
progressives in the House. President Biden is set to attend the
Glasgow climate conference next week, and the Virginia and New
Jersey gubernatorial elections end Tuesday, making the White House
eager to show progress on his agenda.
SEC Won't Approve Leveraged Bitcoin Fund
The Securities and Exchange Commission asked at least one asset
manager not to proceed with plans for a leveraged bitcoin
exchange-traded fund, according to a person familiar with the
matter.
The SEC indicated it wants to limit new bitcoin-related products
to those that provide unleveraged exposure to bitcoin futures
contracts, such as the ProShares Bitcoin Strategy ETF, which was
launched last week, the person said.
CFTC Chief Says Recent Crypto Cases Are 'Tip of the Iceberg'
WASHINGTON-The acting head of the Commodity Futures Trading
Commission said Wednesday that he plans to continue aggressively
policing cryptocurrency markets and called on Congress to consider
expanding his agency's authority to do so.
Rostin Behnam, the CFTC's acting chairman, noted that the agency
has settled two enforcement actions against cryptocurrency
companies totaling $140 million. "But this is the tip of the
iceberg," he said in a confirmation hearing before the Senate
Agriculture Committee.
Antidepressant Significantly Reduces Covid-19
Hospitalization
A widely available antidepressant holds promise as a treatment
for Covid-19, according to a new study.
Covid-19 patients who received fluvoxamine were significantly
less likely to require hospitalization than those who didn't, in
the largest clinical trial evaluating the antidepressant's effect
on Covid-19 to date.
Democrats Drop Paid Leave From $1.75 Trillion Proposal
WASHINGTON-Democrats abandoned plans to include a paid-leave
program in their social spending and climate bill, according to
people familiar with the talks, while prospects for a billionaires'
levy to help fund the package faded and a potential surtax on
wealthy Americans' income gained traction.
The White House is pushing for Democrats to come together around
the bill, expected to cost around $1.75 trillion, by the end of the
week, which could also unlock possible passage of a parallel
bipartisan infrastructure package that has been held up by
progressives in the House. President Biden is set to attend the
Glasgow climate conference next week, and the Virginia and New
Jersey gubernatorial elections end Tuesday, making the White House
eager to show progress on his agenda.
More Travelers Are Heading to Europe in 2022 After the Pandemic
Sank Vacation Plans
More travelers are starting to think big about vacations
again.
After a long stretch of mainly short-term travel planning,
inquiries are picking up for trips well into 2022, according to
data from hotels and travel-industry analysts. The booking rates
are starting to trend closer to pre-pandemic levels, analysts
say.
Write to sarka.halas@wsj.com
TODAY IN CANADA
Earnings:
Aecon Grp Inc. (ARE.T) 3Q
AltaGas Ltd. (ALA.T) 3Q
ATCO Ltd. (ACO.Y.T) 3Q
ATCO Ltd. Class I (ACO.X.T) 3Q
Bombardier Inc. Class A (BBD.A.T) 3Q
Bombardier Inc. Class B (BBD.B.T) 3Q
Canadian Utilities Ltd (CU.T) 3Q
Canadian Utilities Limited (CU.X.T) 3Q
Crescent Point Energy (CPG.T) 3Q
Eldorado Gold Corp. (ELD.T) 3Q
Newmont Corp.(NGT.T) 3Q
Nexa Resources S.A.(NEXA.T) 3Q
OceanaGold Corp. (OGC.T) 3Q
Secure Energy Svcs (SES.T) 3Q
Shopify Inc. Class A (SHOP.T) 3Q
Taseko Mines Limited (TKO.T) 3Q
TFI Intl Inc. (TFII.T) 3Q
Whitecap Resources Inc. (WCP.T) 3Q
Yamana Gold Inc.(YRI.T) 3Q
Economic Indicators (ET):
0830 Aug Payroll employment, earnings & hours
Stocks to Watch:
Waste Connects Raises 2021 Outlook
Waste Connections Inc. raised its outlook for 2021 following a
favorable third quarter.
The Toronto-based solid waste services firm said it now expects
revenue of $6.11 billion, compared with its previous outlook of
roughly $5.98 billion.
It expects its adjusted earnings before interest, taxes,
depreciation, and amortization to be $1.91 billion. It had
previously guided for an adjusted EBITDA of $1.875 billion.
It also said it expects net income of $633 million.
For the third quarter, the company reported adjusted earnings of
89 cents a share on revenue of $1.6 billion, with both measures
beating analysts' expectations.
Other News:
*Bank of Canada Gov. Tiff Macklem: Labor Market Frictions,
Supply Disruptions More Pronounced Than Expected
Market Talk:
No items published
Expected Major Events for Thursday
00:30/JPN: Sep Detailed Import & Export Statistics
07:55/GER: Oct Labour market statistics (incl unemployment)
08:00/GER: Oct Bavaria CPI
08:00/ITA: Oct Consumer Confidence Survey
08:00/ITA: Oct Business Confidence Survey
08:00/GER: Oct Brandenburg CPI
08:00/GER: Oct Hesse CPI
08:00/GER: Oct Baden-Wuerttemberg CPI
08:30/GER: Oct North Rhine Westphalia CPI
08:59/JPN: Japan Monetary Policy Meeting decision
09:00/GER: Oct Saxony CPI
10:00/ITA: Sep PPI
12:00/GER: Oct Provisional CPI
12:30/US: 3Q Advance estimate GDP
12:30/CAN: Aug Payroll employment, earnings & hours
12:30/US: 10/23 Unemployment Insurance Weekly Claims Report -
Initial Claims
12:30/US: U.S. Weekly Export Sales
13:00/RUS: Weekly International Reserves
13:45/US: Bloomberg Consumer Comfort Index
14:00/US: Sep Pending Home Sales Index
14:30/US: 10/22 EIA Weekly Natural Gas Storage Report
15:00/US: Oct Federal Reserve Bank of Kansas City Survey of
Tenth District Manufacturing
20:30/US: Foreign Central Bank Holdings
20:30/US: Federal Discount Window Borrowings
23:01/UK: 3Q BRC-LDC Vacancy Monitor
23:30/JPN: Oct CPI (Tokyo), CPI ex-Food (Tokyo)
23:30/JPN: Sep Labour Force Survey
23:50/JPN: Sep Preliminary Industrial Production
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Thursday
AllianceBernstein Holding LP (AB) is expected to report $0.90
for 3Q.
Amalgamated Financial Corp (AMAL) is expected to report for
3Q.
American Electric Power Co Inc (AEP) is expected to report $1.45
for 3Q.
Baxter International Inc (BAX) is expected to report $0.90 for
3Q.
Bryn Mawr Bank Corp (BMTC) is expected to report $0.66 for
3Q.
Capitol Federal Financial (CFFN) is expected to report $0.12 for
4Q.
Carpenter Technology (CRS) is expected to report $-0.43 for
1Q.
Caterpillar Inc (CAT) is expected to report $2.17 for 3Q.
Comcast Corp (CMCSA) is expected to report $0.68 for 3Q.
Diebold Nixdorf Inc (DBD) is expected to report $0.21 for
3Q.
Eagle Financial Services (EFSI) is expected to report for
3Q.
First Financial Northwest Inc (FFNW) is expected to report $0.29
for 3Q.
Huntington Bancshares (HBAN) is expected to report $0.31 for
3Q.
Illinois Tool Works (ITW) is expected to report $2.03 for
3Q.
Intercontinental Exchange Inc (ICE) is expected to report $1.03
for 3Q.
J.W. Mays Inc (MAYS) is expected to report for 4Q.
Laboratory Corp of America Holdings (LH) is expected to report
$4.54 for 3Q.
Lincoln Electric Holdings (LECO) is expected to report $1.50 for
3Q.
Mastercard Inc (MA) is expected to report $2.19 for 3Q.
Merck & Co Inc (MRK) is expected to report $1.43 for 3Q.
Molson Coors Brewing Co - Class B (TAP,TAPA) is expected to
report $1.46 for 3Q.
Northrop Grumman Corp (NOC) is expected to report $6.06 for
3Q.
Old Republic International Corp (ORI) is expected to report
$0.60 for 3Q.
Oshkosh Corp (OSK) is expected to report $1.07 for 4Q.
PBF Energy Company LLC (PBF) is expected to report $-0.18 for
3Q.
PBF Logistics LP (PBFX) is expected to report $0.62 for 3Q.
Patterson-UTI Energy Inc (PTEN) is expected to report $-0.45 for
3Q.
Reliance Steel & Aluminum Co (RS) is expected to report
$5.98 for 3Q.
Richmond Mutual Bancorporation Inc (RMBI) is expected to report
for 3Q.
Sirius XM Holdings Inc (SIRI) is expected to report $0.07 for
3Q.
SolarWinds Corp (SWI) is expected to report for 3Q.
Stanley Black & Decker Inc (SWK) is expected to report $2.39
for 3Q.
Summit Financial (SMMF) is expected to report $0.83 for 3Q.
T Rowe Price Group Inc (TROW) is expected to report $3.30 for
3Q.
Tradeweb Markets Inc (TW) is expected to report for 3Q.
Valley National Bancorp (VLY) is expected to report $0.30 for
3Q.
WNS (Holdings) Ltd - ADR (WNS) is expected to report $0.59 for
2Q.
West Bancorporation Inc (WTBA) is expected to report $0.71 for
3Q.
West Pharmaceutical Services Inc (WST) is expected to report
$1.81 for 3Q.
Whitecap Resources (WCP.T) is expected to report for 3Q.
Powered by Kantar Media and Dow Jones.
ANALYST RATINGS ACTIONS
AGNC Investment Cut to Equal-Weight From Overweight by
Barclays
Carrols Restaurant Cut to Hold From Buy by Craig-Hallum
Cloudflare Cut to Hold From Buy by Jefferies
CommVault Systems Cut to Market Perform From Outperform by
William Blair
Cortexyme Cut to Underperform From Neutral by B of A
Securities
Ecolab Cut to Underweight From Neutral by JP Morgan
Entegris Raised to Buy From Hold by Craig-Hallum
Kennametal Raised to Neutral From Underperform by B of A
Securities
Medical Properties Trust Raised to Buy From Neutral by B of A
Securities
Omega Healthcare Cut to Underperform From Neutral by B of A
Securities
Toro Cut to Underperform From Neutral by B of A Securities
Trex Co Raised to Overweight From Equal-Weight by Stephens &
Co.
United Parcel Service Cut to Hold From Buy by Loop Capital
This article is a text version of a Wall Street Journal
newsletter published earlier today.
(END) Dow Jones Newswires
October 28, 2021 06:09 ET (10:09 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.