Watch For:

Construction Spending for August; ISM Report on Business Manufacturing PMI for September

Opening Call:

Stocks were looking to start October and fourth quarter trading on a bearish note, as worries lingered that the higher borrowing costs needed to crush multi-decade high inflation will damage the economy and hit corporate profits.

Richard Hunter, head of markets at Interactive Investor, said that recent comments from Federal Reserve officials had reiterated they intended to keep interest rates higher for longer in order to push inflation back to the Fed's 2% target. But the latest data showed price pressures were stubborn.

"The personal consumption index reading release on Friday underlined that this milestone [peak inflation] has not yet been reached, with prices excluding food and energy rising by 0.6% in August after a flat July. On a yearly basis the core number rose by 4.9%, ahead of the expected 4.7%. as such, the Fed is likely to keep a firm hand on the hiking tiller for the time being," said Hunter.

Adding to tension on Monday was concern about the health of the financial sector in Europe as shares in Credit Suisse plunged to fresh lows, noted Peter Ganry, head of equity strategy at Saxo Bank.

"S&P 500 futures pushed below the 3,600 level this morning, which is obviously a major level to watch and indicates that the equity market is still facing headwinds. The latest risk sources adding to the negative sentiment are talks about Credit Suisse and their financial strength," Ganry said.

There was some potentially calming news from the U.K. however, where a government U-turn on tax policy, that had so roiled equity and fixed income markets last week, helped push sovereign bond yields lower. The benchmark 10-year Treasury dipped 2.8 basis points to 3.803% as the equivalent duration U.K. bond eased 15 basis points to 3.996%.

Economic updates set for release on Monday include the S&P U.S. manufacturing PMI report for September, due at 9:45 a.m. Eastern. The ISM manufacturing index for September and the construction spending report will be published at 10 a.m.


The dollar edged lower against a basket of currencies but its declines are likely to be short-lived given the prospect of another strong nonfarm payrolls report on Friday, ING said.

"Our team looks for a solid 200,000 increase in jobs and the unemployment rate staying low at 3.7% [in September]-- both pointing to another 75 basis points [interest rate] hike from the Federal Reserve on November 2," ING said.

Foreign exchange interventions by Asian authorities along with the Bank of England's bond market intervention are potentially behind the dollar's correction lower but this move will be limited, ING added.


The British pound climbed early Monday as U.K. Prime Minister Liz Truss scrapped plans to cut taxes for the country's highest earners.

The policy was part of a package of tax cuts and spending plans, which sent U.K. financial markets into meltdown at the end of last month. The pound hit a record low of $1.0349 against the dollar a week ago.

After the reversal, confirmed by Chancellor Kwasi Kwarteng Monday, the pound rose above $1.12, close to where it was trading before the mini budget on Sept. 23.

Kwarteng said the policy of abolishing the 45% tax rate "has become a distraction." "We get it, and we have listened," he said in a statement.

MUFG said the boost to sterling is likely to be limited.

The U-turn is "another small step to help restore investor confidence in the U.K.'s public finances although it is unlikely to be sufficient on its own," MUFG said.

The measure is only a relatively small element of the recent mini-budget--costing GBP2 billion versus the total cost of the tax-cutting package at GBP45 billion--that sent the pound sliding, MUFG added.


Oil prices rose more than 3% in early European trade ahead of this week's OPEC+ meeting at which the cartel is expected to debate a one million barrel a day production cut.

If the group goes ahead with the cut it will be the second in as many meetings, though a one million barrel a day reduction in output would be ten times as large as its most recent cut. Members of the group are split, however.

DNB Markets said the cartel is currently missing its output targets by 3.5 million barrels a day due to tight spare capacity and poor infrastructure. A one million barrels a day reduction would likely translate into only a 400,000 barrels a day decline in actual output.

With most members of the cartel underproducing "the majority of the group will feel no pain by supporting a production cut," DNB said.

Read: OPEC+ to Weigh Production Cut to Bolster Oil Prices


Metals edged lower in London as growth jitters lingered and with analysts still mulling what impact an LME ban on Russian metals would have on European markets.

Goldman Sachs said a ban would make it harder, but not impossible, for Western buyers to obtain Russian metals, with aluminum likely to be the most affected by any restrictions.

Trading volumes were muted, with Chinese markets closed for a weeklong holiday.

Read: LME Ban on Russian Metal Wouldn't Halt Imports




Credit Suisse Seeks to Calm Market Jitters

Credit Suisse Group AG tried to assuage fears about its health in a memo to employees and in a round of phone calls to investors and clients over the weekend, according to people familiar with the matter.

Credit Suisse shares tumbled 9% early Monday and are down nearly 30% over the past month. Spreads on its credit-default swaps, a type of insurance against default, rose to their highest level of the year on Friday. The deteriorated market condition indicates that Credit Suisse could struggle to raise new shares to pay for a planned restructuring and that its funding costs could rise sharply.


ConEd Agrees to Sell Clean Energy Business for $6.8 Billion to RWE

Consolidated Edison Inc. has agreed to sell its renewable energy business to German energy company RWE AG for $6.8 billion, the companies said Saturday.

The deal nearly doubles RWE's renewable energy portfolio in the U.S. and will make it the second-largest solar operator in the country, the company said in a statement. ConEd's portfolio includes more than 10 gigawatts of renewable projects in operation or under development.


Nike's Inventory Woes Stretch to China as Covid Recovery Remains a Challenge for Brands

Nike Inc.'s quarterly results highlight how some U.S. brands have too much inventory at home and in markets like China, where the companies have placed big financial bets.The sneaker giant on Thursday said revenue from China in the August quarter fell 16% to $1.65 billion, citing Covid-19 lockdowns in different cities hurting store traffic.

The announcement came as the company posted weaker quarterly profit and soaring inventory levels, two developments that helped send its shares down about 13% Friday.


Tesla Deliveries Bounce Back to Record, Though Dented by Distribution Delays

Tesla Inc. vehicle deliveries rebounded to a record in the most recent quarter, though the figure was short of Wall Street's forecasts and leaves the company requiring a further increase in the final three months of 2022 to meet annual growth objectives.

Tesla on Sunday said it had delivered 343,830 vehicles to customers in the three-month period ended in September, up from about 255,000 in the prior quarter that was dented by a temporary shutdown of its factory in China.


Disney Reaches Deal to Restore Its Channels on Dish Network

TV channels owned by Walt Disney Co. are back on Dish Network Corp.'s satellite broadcasting and streaming platforms after the two companies reached a tentative agreement on a new contract.

The accord ends a weekend blackout that saw millions of Dish customers lose access to several popular Disney networks including ESPN and ABC. Dish has 10 million subscribers nationwide although the company declined to say how many were affected by the blackout.


Defense Contractor L3Harris Near Deal to Buy Part of Viasat's Government-Systems Unit

Defense contractor L3Harris Technologies Inc. is near a deal to buy a military-communications business from satellite specialist Viasat Inc., according to people familiar with the matter.

L3Harris would pay nearly $2 billion in a deal set to be unveiled Monday, the people said.


Walgreens Turns to Prescription-Filling Robots to Free Up Pharmacists

Walgreens Boots Alliance Inc. is turning to robots to ease workloads at drugstores as it grapples with a nationwide shortage of pharmacists and pharmacist technicians.


Producer Bets Streamers Want the Next 'Judge Judy,' Not 'Game of Thrones'

When "Judge Judy" Sheindlin's quarter-century run on broadcast TV came to an end last year, she looked for a second act in the streaming-video world.

Enter Scott Koondel, a former CBS executive who now runs the production and distribution firm Sox Entertainment. Mr. Koondel negotiated a two-year deal on behalf of Ms. Sheindlin with Inc.'s ad-supported streaming platform Freevee.


FTC Probes Market Power of One of Country's Biggest Anesthesia Providers

WASHINGTON-The Federal Trade Commission is investigating one of the country's largest anesthesiology providers, U.S. Anesthesia Partners, over whether it has amassed too much power in some regional markets through acquisitions, according to people familiar with the matter.

USAP has 4,500 anesthesia providers in nine states, including Texas, Colorado and Florida. The company, founded in 2012 by private-equity firm Welsh, Carson, Anderson & Stowe, has grown by acquiring smaller anesthesiology groups and rolling them up into a consolidated entity that manages hospital contracts, billing, insurance agreements and other functions.


Dish, Sling Subscribers Lose Access to Disney Networks in Contract Dispute

Subscribers to Dish Network Corp.'s satellite and streaming services no longer have access to channels owned by Walt Disney Co., including ABC and ESPN, amid a contract dispute between the two companies.

That means college football games on ESPN on Saturday as well as the NFL's "Monday Night Football" and other big sporting events will be unavailable to those subscribers if a resolution isn't reached between the two companies.


Why Lyft Is Eating Uber's Dust

The investment case for Lyft was once a question of perspective.

Compared with Uber Technologies, and its global reach and businesses other than rideshare, the purported benefits of a more localized, focused company certainly made sense. But, as the dust settles on the pandemic, Lyft is emerging a little dusted itself. Its distinctions are now looking more like reasons to sell.


Fast Food Chains Raise Millions to Oppose California Wage Law

McDonald's Corp., Starbucks Corp., Chipotle Mexican Grill Inc. and other big restaurant chains are joining to spend millions of dollars to try to overturn a new California law that could set the state's minimum wage for the fast food industry as high as $22 an hour next year.

The "Save Local Restaurants" coalition said Friday it has raised around $12.7 million to fight the law, known as the FAST Recovery Act. Corporate brands have contributed $9.9 million and individual franchisees have given $2 million, including owners of KFC and McDonald's restaurants. Trade associations account for the rest, the coalition said.


U.K. Government Abandons Plan to Cut Rate of Income Tax for Top Earners

LONDON-The U.K. government Monday said it won't proceed with the removal of a 45% top rate of income tax, scrapping a key element of a plan announced late last month that triggered turmoil in the country's financial markets and an intervention by the Bank of England.

The decision to retain the tax rate on high incomes was announced during the ruling Conservative Party's annual conference, where a number of lawmakers had expressed their opposition to the move. But the government was defending the measure as recently as Sunday.


OPEC+ to Weigh Production Cut to Bolster Oil Prices

OPEC+ is set to consider Wednesday its most drastic reduction of production since the pandemic in order to help prop up falling oil prices, a move that could put pressure on global economic growth.

The Organization of the Petroleum Exporting Countries and Moscow-led allies, collectively known as OPEC+, is considering a cut of more than 1 million barrels a day, delegates in the group said.


Battered Investors Now Find Thrills in T-Bills

James DiCio spent much of the last eight years riding cryptocurrencies' double-digit gains and losses. Lately, the 24-year-old has found a new hot investment: short-term government debt.

Weary of big swings in digital currencies, the pilot from Bohemia, N.Y., sold most of his crypto holdings last year, shifting his money from one of the most volatile investments to one of the safest. Now about 20% of his portfolio is in four-week to 13-week Treasury bills, these days yielding as much as 3.3%, the most since he was 9.


Central Banks' Higher Rates, Bond Sales Clash With Government Needs

FRANKFURT-Central banks and governments are on a collision course.

For 15 years, central bankers around the world worked hand in glove with elected leaders to bolster economic growth and inflation.


Inflation Keeps the U.S. From Stepping In to Slow Dollar's Rapid Rise

WASHINGTON-U.S. policy makers aren't likely to take action to slow the dollar's rapid rise despite rising risks of global financial turmoil, analysts say, largely because a strong greenback helps fight domestic inflation.

The U.S. dollar has soared in value as the Federal Reserve raises interest rates to fight the highest U.S. inflation in decades and investors move money into dollar-denominated assets. The WSJ Dollar Index, which measures the dollar against a basket of other currencies, is up roughly 16% so far this year.


Cargo Shipowners Cancel Sailings as Global Trade Flips From Backlogs to Empty Containers

Ocean carriers are canceling dozens of sailings on the world's busiest routes during what is normally their peak season, the latest sign of the economic whiplash hitting companies as inflation weighs on global trade and consumer spending.

The October cancellations are a sharp reversal from just a few months ago, when scarce shipping space pushed freight rates higher and carriers' profits to record levels. Last October, companies like Walmart Inc. and Home Depot Inc. were chartering their own ships to get around bottlenecks at ports to meet a surge in demand for imports.


After Punishing Year for Stocks, Investors Aren't Betting on Post-Midterm Rally

U.S. stocks have a spotless eight-decade record of rising after midterm elections, but investors and strategists are skeptical over whether November races will spark a rebound in this year's bruised markets.

The S&P 500 has moved higher in the one-year period following every midterm election since 1942, according to Dow Jones Market Data. The benchmark on average has gained nearly 15% in post-midterm years since World War II.


China Stocks Near a Bottom, But Recovery Path Unclear -- Talking Markets

After months of roller coaster trading, Chinese stocks have dropped back to their lowest levels of the year. A path to full recovery remains unclear, but stocks with exposure to government stimulus efforts or defensive earnings could offer opportunities, analysts say.

The Shanghai Composite and CSI 300 indexes fell 11% and 15%, respectively, in the third quarter, leaving both benchmarks at their lowest levels in about five months. Hong Kong's Hang Seng Index lost 21%.


Crypto Volatility Creates Opportunity for Wall Street Traders

Wall Street is preparing for the next round of crypto volatility with tried and true tactics, according to brokers and analysts.

Leverage is building again among crypto investors. The market for bitcoin and other digital assets has swung wildly in 2022, pushing prominent crypto firms into bankruptcy. It has also made for the kind of conditions in which savvy, deep-pocketed traders can thrive.


Supermarket Discounts Are Harder to Find as Food Prices Rise

In U.S. supermarkets, toilet paper and noodles are back in stock, but one prepandemic staple has yet to fully return: discounts.

With food inflation running at the highest rate in more than 40 years, American shoppers are finding less relief from deals like "buy one, get one free" promotions, or 99-cent two-liter bottles of soda, according to supermarket executives and analysts.


Britain's Financial Disaster Is a Warning to the World

A toxic mix of politics, inflation and higher interest rates is threatening the financial system in the U.K., sending a shock wave through global markets and providing a warning to governments everywhere of the dangers of the new economic era we are entering.

A surprise tax cut by the new British government just over a week ago sparked investor concern about the country's fiscal credibility and crashed both the pound and the market for U.K. government bonds, known as gilts.


House Republicans Ask GAO to Probe Foreign Ownership of U.S. Farmland

WASHINGTON-The top Republicans on the House Agriculture and Oversight committees have asked the Government Accountability Office to investigate foreign investment in U.S. farmland, questioning whether Chinese acquisitions in particular could pose a national-security threat.

In a letter released Monday, Reps. Glenn Thompson (R., Pa.) and James Comer (R., Ky.), as well as more than 100 other House Republicans, asked GAO to conduct a study examining foreign countries' acquisition of U.S. farmland and its impact on national security, trade and food security.


Probe Into Nord Stream Pipeline Damage Faces Hurdles at Sea, Ashore

When Bjorn Lund's team at the Swedish National Seismic Network first recorded tremors in the Baltic Sea, it didn't initially notice anything unusual.

The area, off the coasts of Denmark and Sweden, is used for naval exercises by both countries. The institute, part of Uppsala University, regularly records the impact of explosive blasts there.


Ukraine Gains Full Control of Lyman, Days After Putin Claimed Russia Rules There

KYIV, Ukraine-Ukrainian President Volodymyr Zelensky said the eastern city of Lyman had been cleared of Russian forces and that Ukrainian flags were flying again, scoring a symbolic military and political victory against Moscow on the very territory President Vladimir Putin said last week Russia would annex.

Russia's Defense Ministry said it was withdrawing troops from the city following days of advances by Ukrainian forces to surround them, but Moscow kept several thousand troops there, most likely encircled until fighting ended.


Ian's Hardest-Hit Areas Rev Up Recovery Efforts

PINE ISLAND, Fla.-Millions of people across the southeast U.S. are tallying their losses and assessing the damage left by former Hurricane Ian, a devastating storm that claimed dozens of lives.

The number of confirmed storm-related deaths in Florida stood at 58, a number the state released late Sunday. The storm also played a role in the deaths of four people in North Carolina and two in Cuba.


Lawmakers Go Home to Fight for Control of the House

WASHINGTON-House lawmakers headed back to their districts ready to campaign in earnest for the next month, with Democrats seeking to protect their fragile majority and Republicans eager to retake control of a chamber they lost four years ago.

Democrats currently hold 220 seats and Republicans have 212, with three vacancies, meaning Republicans need a net gain of a handful of seats to flip the House in their favor. Nonpartisan election analysts see Republicans likely to win the majority, even as Democrats' poll numbers have improved and some candidates have posted stronger-than-expected results in a handful of special elections.


Supreme Court Term Opens With New Justice and Weighty Cases

WASHINGTON-The Supreme Court opens its new term Monday with a new member, Justice Ketanji Brown Jackson, and a docket that could reshape features of American society ranging from college admissions to political redistricting.

Monday's first case, Sackett v. Environmental Protection Agency, could offer an early sign of whether the court's 6-3 conservative majority will continue the refashioning of federal law they pursued last term, with opinions that eliminated the constitutional right to an abortion and expanded religion's place in public education. The justices will be hearing arguments on whether to curb the federal government's power to fight water pollution, following last term's decision limiting the agency's authority to combat greenhouse-gas emissions.




None scheduled

Economic Indicators (ET):

0930 Sep Manufacturing PMI

Quebec provincial elections in Canada


Expected Major Events for Monday

00:30/JPN: Sep Japan Manufacturing PMI

05:00/JPN: Sep Auto sales

06:00/RUS: Sep Russian Manufacturing PMI

07:45/ITA: Sep Italy Manufacturing PMI

07:50/FRA: Sep France Manufacturing PMI

07:55/GER: Sep Germany Manufacturing PMI

08:30/UK: Sep S&P Global / CIPS UK Manufacturing PMI

13:30/CAN: Sep Canada Manufacturing PMI

13:45/US: Sep US Manufacturing PMI

14:00/US: Sep ISM Report On Business Manufacturing PMI

14:00/US: Aug Construction Spending - Construction Put in Place

15:00/US: Sep Global Manufacturing PMI

20:00/US: Sep Domestic Auto Industry Sales

23:30/JPN: Sep CPI (Tokyo), CPI ex-Food (Tokyo)

23:50/JPN: Sep Monetary Base

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


Expected Earnings for Monday

Trisura Group Ltd (TSU.T) is expected to report $0.38 for 3Q.

Vinco Ventures Inc (BBIG) is expected to report for 2Q.

Powered by Onclusive and Dow Jones.



Bed Bath & Beyond Raised to Hold From Sell by Odeon Capital

Cboe Global Markets Raised to Neutral From Sell by Goldman Sachs

Century Aluminum Cut to Underperform From Peer Perform by Wolfe Research

Charles River Labs Raised to Buy From Hold by Jefferies

JB Hunt Cut to Sector Weight From Overweight by Keybanc

Micron Technology Raised to Buy From Hold by Summit Insights Group

NOV Raised to Buy From Neutral by B of A Securities

Rithm Capital Raised to Neutral From Underweight by Piper Sandler

Schneider National Cut to Sector Weight From Overweight by Keybanc

Solid Biosciences Raised to Neutral From Underweight by JP Morgan

Voya Financial Raised to Overweight From Neutral by Piper Sandler

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


(END) Dow Jones Newswires

October 03, 2022 05:29 ET (09:29 GMT)

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