MARKET WRAPS
Watch For:
Weekly Jobless Claims; World Agricultural Supply & Demand Estimates (WASDE)
Today's Top Headlines/Must Reads:
- Goolsbee Says Fed Will Need to Monitor Risks of Overshooting on Rates
- Goldman adds half-point to estimate on where Fed rates will settle
- Google Antitrust Trial Exposes Deepening Rift With Microsoft
Opening Call:
Stock futures ticked higher as benchmark bond yields hovered near six-week lows and traders awaited comments from Jerome Powell.
The 10-year Treasury yield plunged from a 16-year peak around 5% to around 4.5% on hopes signs of a cooling jobs market means the Fed has finished raising interest rates this cycle.
Concerns that large supply of government debt could force bond prices down, and thus push yields higher, has also been ameliorated for now, following a mixed but nevertheless well-received $40 billion sale of 10-year paper on Wednesday.
"The bond market seemed to absorb the auction without sparking renewed concerns about oversupply, supporting the prevailing trend of lower yields, particularly in longer-duration assets," SPI Asset Management said.
The Treasury will look to sell $24 billion of 30-year bonds on Thursday.
Traders will be keen to see if Powell addresses the recent easing of financial conditions and whether it impacts the central bank's thinking on interest rates, when he makes comments at an International Monetary Fund panel on global monetary policy challenges.
Premarket Movers
Arm reported fiscal second-quarter adjusted earnings and revenue better than analysts' expectations but its forecasts for the third quarter and fiscal year were shy of estimates. U.S.-listed shares of Arm were down 6.1%.
Affirm Holdings reported a fiscal first-quarter loss that was narrower than expected and shares rose 12%. Revenue in the period of $497 million beat estimates of $444 million.
Applovin's third-quarter earnings of 30 cents a share beat projections of 27 cents as revenue jumped to $864 million from $713 million a year earlier. Shares were rising 16%.
Disney reported fiscal fourth-quarter adjusted earnings of 82 cents a share, beating analysts' estimates of 71 cents, as Disney +added nearly 7 million "core" subscribers in the period. It also announced a more ambitious cost-cutting plan. The stock was rising 4.3%.
Lyft reported third-quarter adjusted profit of 24 cents a share, beating Wall Street estimates of 15 cents, and the company said it expected fourth-quarter sales to grow "mid-single-digits quarter over quarter," higher than forecasts. The stock fell 1.4%.
Shares of Netflix, Warner Bros, and Paramount traded higher after striking Hollywood actors reached a tentative agreement with the major studios and streaming companies.
Topgolf Callaway Brands reduced its outlook for full-year profit and sales following what it said was a "challenging" third quarter. Shares dropped 18%.
Twilio was up 6.6% after the company beat Wall Street's third-quarter earnings estimates and raised its outlook for adjusted income from operations to $475 million to $485 million, up from a previous forecast of between $350 million and $400 million.
Forex:
The dollar's sharp selloff at the end of last week looks unlikely to be sustained, especially as U.S. rate-cut expectations priced in by the market "appear relatively more aggressive" than those for the eurozone, MUFG said.
"The U.S. economy would have to start slowing more notably in the coming quarters and/or inflation continue to fall more quickly than expected for the rate market to price in even deeper rate cuts."
This should help prevent a sharper selloff for the dollar in the near term, MUFG said.
Bonds:
The break below 4.5% for the 10-year Treasury yield prompts a deeper look at the notion that this market is moving away from higher real yield concerns, and moves more toward the more structural theme of probably lower official rates in 2024, ING Research said.
"The 10-year is holding on to an ambition to break lower, having managed to dip below 4.5% again."
Assuming a decent 30-year Treasury auction on Thursday, the next big impulse is set to come from next week's CPI report, which should be market supportive, ING said.
Energy:
Crude oil prices steadied as worries over fundamentals overshadow the risk presented by the Israel-Hamas war.
The relative price weakness is being driven by rising supply rather than demand weakness, UBS said.
U.S. and Brazilian production are at record highs, while Iranian production is rising, it added.
Still, the market is likely to remain volatile, with the market undersupplied, UBS said. It expects prices to recover to trade in a $90 to $100 a barrel range amid falling oil inventories.
Metals:
Base metals and gold prices were falling as a strong dollar and weak demand added pressure to commodities.
Deutsche Bank said that investors have become increasingly concerned about economic demand, not least after several weaker-than-expected data releases since the start of the month.
It highlighted several falling commodity prices amid the weak demand including gold, which is now down 2.2% this month. That said, lower commodity prices were helping to push down inflation expectations-a boost for central bankers, it added.
TODAY'S TOP HEADLINES
SoftBank Loses $6.2 Billion in Quarter as WeWork Weighs on Investments
TOKYO-SoftBank Group sank deeper into the red in the July-September period as it reported write-downs related to the bankruptcy of office-sharing company WeWork and technology shares stayed under pressure amid rising interest rates in the U.S.
The Japanese technology investor posted a net loss of 931.1 billion yen, equivalent to $6.2 billion, for the quarter ended Sept. 30. That is compared with a 477.6 billion yen loss in the April-June quarter and 3.034 trillion yen profit a year earlier, when it unwound its stake in Alibaba Group Holding.
Hollywood Actors Reach Agreement With Studios, Streamers to End Strike
Striking Hollywood actors reached a tentative agreement with major studios and streamers Wednesday that could clear the way for the entertainment industry to restart its content factory after six months of labor strife.
The Screen Actors Guild-American Federation of Television and Radio Artists said its TV and theatrical committee approved a tentative agreement with the Alliance of Motion Picture and Television Producers in a unanimous vote Wednesday afternoon. The strike is set to end at 12:01 a.m. Thursday.
AstraZeneca Raises Core EPS Guidance Despite Profit Miss
AstraZeneca raised its full-year guidance for core earnings per share and total revenue excluding Covid-19 medicines despite a lower third-quarter profit that missed forecasts after booking a tax charge compared with a credit for the comparable period.
The Anglo-Swedish pharmaceutical giant said Thursday that it expects core earnings per share to increase by a low double-digit percentage compared with previous guidance of a high single-digit to low double-digit percentage increase.
How to Rein In Loose-Lipped Bankers? Hong Kong Tries to Figure It Out
Hong Kong is wrestling with a question troubling financial regulators around the world: How much should banks be able to tell investors about deals that are brewing?
The city's Securities and Futures Commission wants to tighten rules governing what banks and brokers can say to investors when discussing potential transactions, including bond and share sales. The move is an attempt to level the playing field among investors, by making sure that the largest have fewer chances to trade on sensitive information.
Goldman's chief economist downplays recession fears from past Fed rate hikes
Economists worried about a recession next year often cite the lagged effect of the Federal Reserve's 11 increases in interest rates over the past 20 months. But Goldman Sachs's chief economist, Jan Hatzius, is not concerned.
In an interview Wednesday with CNBC, Hatzius said he thinks "the biggest negative impact is already behind us."
China Falls Back Into Deflation, Reviving Fears Over Weak Recovery
HONG KONG-China slipped back into deflation in October after a brief reprieve, highlighting how hard it is for Beijing to reinvigorate domestic demand in the world's second-largest economy.
In contrast to the U.S. and many advanced economies where taming inflation remains a high priority for central banks, China has struggled to revive inflation through most parts of the year-the latest evidence that a string of stimulus measures so far have failed to boost consumer confidence in the midst of a drawn-out property downturn.
America's Population Projected to Shrink by 2100, Census Figures Show
America's long streak of population growth is expected to come to an end.
Census Bureau projections released Thursday show that, under the most likely scenario, the U.S. will stop growing by 2080 and shrink slightly by 2100.
Democrats Grow More Confident in Campaign Message, but More Nervous About Biden
WASHINGTON-A year away from the 2024 election, Democrats see trends pulling in different directions: an electorate that appears motivated to vote in their favor, particularly on abortion, but is also deeply skeptical of handing another term to the party's standard-bearer-President Biden.
The 80-year-old incumbent faced flashing red warning lights this week in the form of fresh polling showing voters' concerns about his age and weak numbers in swing-state matchups against former President Donald Trump. But Biden's team and allies see no need for a course correction, pointing to the power of abortion politics and the value of having Trump as a foil.
Write to ina.kreutz@wsj.com
TODAY IN CANADA
Earnings:
Allied Gold 3Q
Altus 3Q
Anaergia 3Q
Aptose Biosciences 3Q
Aurora Cannabis 1Q
AutoCanada 3Q
Boralex 3Q
Bragg Gaming 3Q
Brookfield 3Q
Canadian Tire 3Q
Canopy Growth 2Q
Cascades 3Q
(MORE TO FOLLOW) Dow Jones Newswires
11-09-23 0624ET
