MARKET WRAPS

Watch For:

Employment Report for September; Canada Labour Force Survey for September

Opening Call:

U.S. stock futures edged lower Friday ahead of the pivotal jobs report, with investors also weighing a profit warning at microchip maker AMD.

Economists polled by The Wall Street Journal expect jobs growth to slow to 275,000, but for the unemployment rate to stay steady at 3.7%.

Oxford Economics expects the employment growth to decelerate more quickly in the fourth quarter as employers reduce hiring against a backdrop of a slowing economy and declining corporate profits, but the firm doesn't see outright job losses until 2023, when the economy may enter a mild recession.

"If the details are as expected, the September jobs report will provide evidence of only a minor easing of labor market tightness and wage pressures and won't alter the course of monetary policy," said Nancy Vanden Houten, lead economist at Oxford Economics.

John Porter, chief investment officer at Newton Investment Management, also expects the employment report is just "a part of the mosaic."

"We're not sure that tomorrow's jobs number will be seminal data point that certainly lingers in investors minds for more than a day or two," Porter said.

Stocks to Watch:

Chip stocks headed lower as a revenue warning from Advanced Micro Devices spread concerns across the sector.

Samsung, one of the world's largest chipmakers, didn't help matters overnight, flagging a 32% drop in third-quarter operating profit.

That would be the first year-on-year fall in three years for the South Korean tech giant.

AMD said on Thursday it will miss its revenue guidance in the third quarter, citing weakening demand for PCs. The company said it now expects third-quarter revenue of $5.6 billion, down from a previous forecast for $6.7 billion plus or minus $200 million.

The stock fell 5.5% in premarket trading.

Read more here .

Forex:

A weaker jobs report could cause the dollar to fall, as investors speculate the Fed might soon pause raising rates, but any dollar weakness is unlikely to last, MUFG said.

"Any dollar weakness on a weak NFP [non-farm payrolls] print that fuels easing expectations next year is in our view unlikely to last," MUFG said.

As of now there is "certainly no evidence" of Fed officials shifting their rhetoric and plenty of data have suggested the labor market "remains resilient."

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Current levels in sterling above $1.10 look "unsustainable" given fragility in the bond market and the U.K.'s deteriorated fiscal and current account position, ING said.

"A return to sub-1.10 levels in cable [GBP/USD] is a question of when rather than if, in our view," ING said, adding that solid jobs data may favor "a more rapid descent" in the pound.

Energy:

Oil futures rose in Europe, with Brent crude on course to end the week with its biggest weekly gain since February, buoyed by OPEC+'s large cut to production quotas.

With OPEC+ having largely exhausted its spare capacity, the cut had to happen at some point, JPMorgan said.

"The outcome of the October 5th OPEC+ meeting was already largely embedded into our baseline supply forecast," the bank added.

Metals:

Metals wavered, with prices swayed recently by macroeconomic sentiment, so Friday's U.S. jobs report is likely to impact how investors react to risk assets.

TODAY'S TOP HEADLINES

Credit Suisse Launches $3 Billion Bond Buyback

Credit Suisse said it will spend around $3 billion to buy back senior bonds to save on interest payments as it prepares to reshape itself as a smaller and safer bank.

Credit Suisse stock and bond prices fell in recent weeks as investors anticipate it could raise new shares to fund its restructuring. An online frenzy also sparked concerns about the bank's financial health.

Meta's Virtual Reality Meets Facebook's Harsh Real World

There is never a good time to make an awkward pivot to the metaverse.

It seemed a good time a year ago, when the company once known as Facebook renamed itselfMeta Platforms. Co-founder and Chief Executive Officer Mark Zuckerberg said at the time that he sees the metaverse as "the successor to the mobile internet." But the timing was awfully convenient, as scandals around privacy and politics had continued to build around the ubiquitous social network. Just the month prior, The Wall Street Journal published a scathing series called "The Facebook Files" based on a trove of internal documents that showed the company's awareness of, and failure to address, the wide-ranging problems on its platform.

Samsung Expects Earnings to Slump as Consumer Spending Slips

SEOUL-Samsung Electronics Co. is expected to see its third-quarter profit slump as the company's mainstay memory-chip and smartphone businesses feel the effects of curbed consumer spending on tech products in the midst of high inflation and other economic pressures.

On Friday, the tech company projected third-quarter operating profit of 10.8 trillion South Korean won, or roughly the equivalent of $7.7 billion, a 32% drop from the prior year's 15.8 trillion won.

Twitter, Elon Musk Trial Postponed as Deal Talks Stall

A Delaware judge presiding over the clash between Elon Musk and Twitter Inc. postponed a trial in the matter Thursday, adding fresh uncertainty to efforts to close the $44 billion deal.

The surprise ruling, granting a request by Mr. Musk, effectively ends negotiations for a settlement that would allow the parties to quickly close the deal. Mr. Musk now has until Oct. 28 to do so.

Tesla Aims to Deliver First Semitrailer Trucks in December to PepsiCo

Elon Musk said Tesla Inc. plans to deliver its first all-electric semitrailer truck to food and beverage maker PepsiCo Inc. in December, roughly five years after the billionaire revealed the vehicle.

Mr. Musk reiterated Thursday that the truck would be able to travel 500 miles on a single charge, as had been planned. The truck, introduced in 2017, initially was due out in 2019.

Chevron Faces Tough Job Restarting Venezuela's Damaged Oil Fields

As the Biden administration looks at relaxing sanctions to allow Chevron Corp. to pump oil in Venezuela again, the company is preparing to navigate myriad challenges in the country that could limit its ability to increase production quickly.

Chevron will have to manage everything from fuel shortages to accident-prone oil infrastructure to security and corruption risks that could hamper its efforts to revitalize the country's gutted oil industry.

Binance Estimates $100 Million Was Stolen in Blockchain Hack

Crypto exchange Binance said late Thursday that $100 million was likely stolen as a result of a hack on its Binance Smart Chain blockchain network.

Binance Smart Chain has temporarily suspended transactions and fund transfers, after detecting what it said was an exploit on a bridge between two blockchains.

Appeals Court Allows Florida to Prohibit Businesses From Requiring Proof of Covid-19 Vaccination

A federal appeals court ruled Thursday that Florida can bar businesses from requiring proof of Covid-19 vaccination of their customers.

The 2-1 ruling from the 11th U.S. Circuit Court of Appeals tossed out a lower-court ruling that had found the state's prohibition on proof of vaccination violated the speech rights of Norwegian Cruise Line Holdings Ltd., which challenged it in court.

Celsius Executives Cashed Out $18 Million in Crypto Before Bankruptcy

Former Celsius Network LLC executives withdrew $18 million in cryptocurrencies in the two months before the company filed for chapter 11, according to documents filed Wednesday to the bankruptcy court.

Alex Mashinsky, the former chief executive of the crypto lender, withdrew $10 million dollars in tokens between May and the bankruptcy filing on July 13, according to the court documents. His lawyer confirmed the size of his withdrawals. Mr. Mashinsky stepped down from his role in late September following a request from Celsius' creditors.

AMD Cuts Revenue Forecast Amid Worst Slump in PC Shipments in Years

Advanced Micro Devices Inc. cut its revenue forecast for the most recent quarter citing weaker-than-expected demand for the personal computers that use its chips.

The chip maker, which sells central processing units for laptops and desktops alongside a large videogame graphics chip business, on Thursday said it expected about $5.6 billion of sales in the just-ended quarter, about $1.1 billion less than it previously said it was expecting when it issued a subdued outlook in August.

The S&P 500 Still Looks Expensive. The Average Stock Doesn't.

Even after all of the S&P 500's declines this year, the market benchmark still looks expensive. But the average stock is more reasonably valued, leaving opportunity for those who look beneath the surface.

The S&P 500 has dropped more than 20% from the record high it hit in January. And the index now trades for about 16 times the aggregate per-share earnings its component companies are supposed to produce over the next year, down from about 21.5 times to start 2022.

September Jobs Numbers Come as Hot Labor Market Cools Some

The U.S. employment report for September will show whether the job market continued to cool last month as high inflation and rising interest rates weighed on the economy.

The still-tight labor market loosened some in August, according to Labor Department figures that detailed a slower pace of hiring, a sharp decline in job openings and a slight increase in layoffs. The department will release the September employment report on Friday at 08:30 a.m. ET, with details on payrolls, wage growth, labor-force participation and the unemployment rate.

Fed Officials Say Stubborn Inflation Justifies Continued Rate Increases

High inflation is proving to be more persistent than anticipated and has created a strong case for the Federal Reserve to lift and then hold interest rates at levels that will slow economic activity, a central bank official said Thursday.

The Fed will need to keep rates at restrictive levels "until we are confident that inflation is firmly on the path toward our 2% goal," said Fed governor Lisa Cook in remarks at the Peterson Institute for International Economics, where she made her first speech since joining the central bank's board this May.

U.S. Takes Aim at OPEC for Oil Production Cuts

WASHINGTON-OPEC's decision to slash oil production has the U.S. considering responses that could include measures aimed at breaking the cartel's hold on markets or limiting U.S. oil exports should shortages emerge.

The cutback by the Organization of the Petroleum Exporting Countries and its Russia-led allies is the latest dilemma for President Biden, who has sought to transition the U.S. away from fossil fuels while at the same time keeping consumer prices in check.

Elon Musk's Revived Twitter Deal Could Saddle Banks With Big Losses

Banks that agreed to fund Elon Musk's takeover of Twitter Inc. are facing the possibility of big losses now that the billionaire has shifted course and indicated a willingness to follow through with the deal, in the latest sign of trouble for debt markets that are crucial for funding takeovers.

The $44 billion deal, which Mr. Musk had been trying to walk away from, would be paid for in part with some $13 billion of debt seven banks including Morgan Stanley, Bank of America Corp. and Barclays PLC agreed to provide when the takeover was sealed in April.

EU Leaders Set to Clash Over Energy Prices at Prague Gathering

PRAGUE-European leaders who have been compromising on their response to Russia's war in Ukraine all year now face a growing rift over how to offset the rising damage of high energy prices to their domestic economies.

Italy and several other countries will square off against Germany at a summit in Prague on Friday, in a spat that mirrors clashes from past crises. Heavily indebted countries fear that their wealthier neighbors will gain an unfair edge by supporting their businesses and consumers.

Higher Australian Interest Rates Pushing Some Borrowers Closer to Default, RBA Says

SYDNEY-The Reserve Bank of Australia said Friday that higher official interest rates are already hitting the ability of some borrowers to repay loans, identifying a small group of borrowers who run the risk of defaulting.

In its latest report card of financial stability, the RBA said "there is a small group of borrowers who could fail to meet debt payments due to low savings and high levels of debt."

Glynn's Take: RBA Has Stuck Its Neck Out by Slowing Rate Increases

SYDNEY-The Reserve Bank of Australia stuck its neck out a long way this week by slowing the pace of interest-rate increases despite global central banks continuing to tighten policy aggressively and warning of more to come.

For RBA Gov. Philip Lowe, raising the official cash rate by 25 basis points rather than the expected 50 basis points was a clear declaration that the RBA will set policy according to Australian conditions.

Higher Australian Interest Rates Pushing Some Borrowers Closer to Default, RBA Says

SYDNEY-The Reserve Bank of Australia said Friday that higher official interest rates are already hitting the ability of some borrowers to repay loans, identifying a small group of borrowers who run the risk of defaulting.

In its latest report card of financial stability, the RBA said "there is a small group of borrowers who could fail to meet debt payments due to low savings and high levels of debt."

German Industry Contracted in August, Energy Intensive Branches Particularly Hurt

Germany's industrial production fell in August as demand for goods moderated and factories grappled with high energy prices and supply bottlenecks.

Total industrial output--comprising production in manufacturing, energy and construction--decreased 0.8% on month in August, data from the German statistics office Destatis showed Friday. Economists polled by The Wall Street Journal had expected a 0.5% decline.

U.N. Nuclear Agency Warns of Increased Risk at Ukraine's Largest Nuclear Plant

KYIV, Ukraine-The head of the United Nations' nuclear agency warned on Thursday that staff at Europe's largest nuclear-power plant are under increasing pressure after Russian authorities attempted this week to deepen their control over the plant, posing a heightened safety risk.

Russia's capture of the Zaporizhzhia nuclear-power plant in southeastern Ukraine in March and a resulting struggle with Ukraine, along with shelling near the occupied facility, have raised global concern about the risk of an atomic catastrophe. The Ukrainian engineers staffing the plant have continued to operate it since Russia's military took control of it.

Donald Trump PAC Jumps Into Ohio, Pennsylvania Senate Races

Donald Trump is jumping into the midterm-election ad wars with a pair of spots in the hotly contested Pennsylvania and Ohio Senate races, the first wave in what is expected to be millions of dollars in spending from the former president's new political-action committee.

Mr. Trump, who has faced pressure to use his fundraising resources to help Republican candidates, had before this week spent modestly-and not on TV ads for candidates. He preferred instead to stage boisterous rallies in battleground states.

Appeals Court Allows Florida to Prohibit Businesses From Requiring Proof of Covid-19 Vaccination

A federal appeals court ruled Thursday that Florida can bar businesses from requiring proof of Covid-19 vaccination of their customers.

The 2-1 ruling from the 11th U.S. Circuit Court of Appeals tossed out a lower-court ruling that had found the state's prohibition on proof of vaccination violated the speech rights of Norwegian Cruise Line Holdings Ltd., which challenged it in court.

Prosecutors Hold Off Final Hunter Biden Case Decision Amid Talks With Defense Lawyers

Prosecutors are holding off on a final decision on whether to bring a case against President Biden's son, Hunter, while they review defense evidence in the long-running investigation, people familiar with the matter said.

Investigators for months have believed there is enough evidence to charge the younger Mr. Biden with tax crimes and a false statement related to a gun he purchased, and had expected a case to be brought by the end of the summer, the people said.

Trump Hasn't Returned All Documents, DOJ Officials Believe

A senior Justice Department official recently told Donald Trump's legal team that law-enforcement officials don't believe the former president returned all of the government documents he took with him when he left the White House, people familiar with the matter said.

The communication from Jay Bratt, chief of the Department of Justice's counterintelligence and export-control section, was the latest indication that the government is still seeking some records it believes Mr. Trump should have relinquished at the end of his administration. The National Archives and Records Administration told Congress late last month that it hadn't recovered all of the presidential records that were supposed to be turned over, adding that there was "no easy way to establish absolute accountability."

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

Earnings:

MTY Food 3Q

Tilray Brands 1Q

Economic Indicators (ET):

1230 Sep Labour Force Survey

Market Talk:

Bank of Canada Rate Peak Depends on Economy's Evolution

Bank of Canada Gov. Tiff Macklem said interest rates will continue to rise and remain elevated until the central bank is satisfied that consumer demand has sufficiently cooled and inflation expectations are in check. His comments came in a Thursday night interview broadcast on Canada's Global Television Network.

"How high rates go and for how long will depend on the evolution of the economy and the evolution of inflation," Macklem said.

Earlier Thursday, he said in a speech that further rate rises are warranted as there's little evidence underlying, or core, inflation has decelerated. He added in the broadcast interview that rate policy would also be contingent on how quickly or slowly there is a resolution to supply-chain constraints at the global and domestic level.

Expected Major Events for Friday

00:01/UK: Sep KPMG and REC UK Report on Jobs

05:00/JPN: Aug Indexes of Business Conditions - Preliminary Release

06:00/GER: Aug Foreign trade price indices

06:00/GER: Aug Retail Trade

06:00/GER: Aug Industrial Production Index

06:00/UK: Sep Halifax House Price Index

06:00/UK: 3Q Halifax House Price Index: UK Regional Breakdown quarterly release

06:45/FRA: Aug Foreign trade

06:45/FRA: Aug Balance of Payments

08:00/ITA: Aug Retail Sales

08:59/JPN: Aug Provisional Labour Survey - Earnings, Employment & Hours Worked

12:30/US: Sep U.S. Employment Report

12:30/CAN: Sep Labour Force Survey

14:00/US: Aug Monthly Wholesale Trade

19:00/US: Aug Consumer Credit

All times in GMT. Powered by Onclusive and Dow Jones.

Expected Earnings for Friday

Enochian Biosciences Inc (ENOB) is expected to report for 4Q.

MTY Food Group Inc (MTY.T) is expected to report $0.96 for 3Q.

Matrix Service (MTRX) is expected to report $-0.14 for 4Q.

Nautilus (NLS) is expected to report $-0.50 for 2Q.

Tilray Inc (TLRY) is expected to report $-0.07 for 1Q.

bebe stores (BEBE) is expected to report for 4Q.

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ANALYST RATINGS ACTIONS

Adeia Cut to Buy From Top Pick by BWS Financial

Ally Financial Inc Cut to Market Perform From Outperform by Raymond James

AutoNation Cut to Neutral From Overweight by JP Morgan

BTRS Holdings Cut to Sector Weight From Overweight by Keybanc

Cactus Cut to Equal-Weight From Overweight by Barclays

Carter Bankshares Cut to Neutral From Buy by DA Davidson

Central Pacific Cut to Market Perform From Outperform by Raymond James

ChampionX Cut to Equal-Weight From Overweight by Barclays

CMS Energy Raised to Buy From Neutral by Seaport Global

CrossFirst Bankshares Cut to Outperform From Strong Buy by Raymond James

Dominion Energy Cut to Neutral From Buy by Seaport Global

Equity Residential Cut to Market Perform From Outperform by BMO Capital

Fair Isaac Cut to Neutral From Outperform by Baird

Farmers National Banc Cut to Market Perform From Outperform by Raymond James

First Citizens Bancshares Cut to Neutral From Buy by DA Davidson

Fox Corp. Raised to Buy From Hold by Argus Research

Freeport-McMoRan Cut to Neutral From Outperform by Exane BNP Paribas

Global Medical REIT Cut to Market Perform From Outperform by BMO Capital

Group 1 Auto Raised to Overweight From Neutral by JP Morgan

Mercantile Bank Cut to Outperform From Strong Buy by Raymond James

PacWest Bancorp Cut to Neutral From Buy by DA Davidson

Palo Alto Networks Coverage Assumed by Evercore ISI Group at Outperform

Pinnacle Financial Cut to Market Perform From Outperform by Raymond James

Pinterest Raised to Buy From Neutral by Goldman Sachs

PPL Corp Raised to Buy From Neutral by Seaport Global

Reliance Steel Cut to Neutral From Buy by Goldman Sachs

RPM International Raised to Overweight From Neutral by JP Morgan

Silvergate Capital Cut to Underweight From Overweight by Wells Fargo

Sonic Auto Raised to Overweight From Neutral by JP Morgan

Splunk Cut to Neutral From Buy by UBS

Steel Dynamics Raised to Buy From Neutral by Goldman Sachs

Take-Two Interactive Raised to Buy From Neutral by Goldman Sachs

Third Coast Bancshares Cut to Market Perform From Outperform by Raymond James

Triumph Bancorp Cut to Outperform From Strong Buy by Raymond James

Twitter Cut to Neutral From Buy by Vertical Research

Verizon Raised to Outperform From Perform by Oppenheimer

Westlake Raised to Neutral From Sell by UBS

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

(END) Dow Jones Newswires

October 07, 2022 06:12 ET (10:12 GMT)

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