Daily Markets: Investors continue to digest inflation and earnings reports


The big picture today

Asia-Pacific equity indices ended today’s session up across the board as these markets tracked yesterday’s US market reaction to the CPI’s slight drop. China’s Shanghai Composite gained 1.69%, India’s Sensex rose 1.95%, Australia’s ASX All Ordinaries rose 2.86%, Japan’s Nikkei jumped 2.98% and South KOSPI The Korean and Taiwanese TAIEX closed up 3.37% and 3.73% respectively. Hong Kong’s Hang Seng had another very strong day, up 7.74% on a broad market rally on covid reopening speculation, led by technology services and financials. While Hong Kong had a solid week, up 12.95% since last Friday, it sits 0.63% ahead for the prior month and down around 12% for the 3 and 6 months.

At midday, major European equity indices are up across the board and US futures are pointing to a positive open although at least at the time of writing, VIX futures are also higher. The US bond market is closed to observe Veterans Day.

After yesterday’s market surge that followed a weaker-than-expected October Consumer Price Index report and revived hopes that the Federal Reserve would slow the pace of interest rate hikes, we see little new economic data and even less earnings reports today. Looking inside this report, consumers are still facing double-digit increases in food and energy prices, while the costs of clothing and used cars fell in October. What we also saw softening yesterday was traders’ rejection of crypto as Bitcoin and Ether saw strong rallies (see more below) as they realized the issues with FTX had more to do with corporate governance than with the integrity of blockchain technology.

The word of the day is likely ‘digestion’ as investors continue to reflect on October’s CPI report and also prepare for the next phase of corporate earnings which is focused on retailers. It starts next week, and the aggregate results will likely test expectations for the 2022 holiday shopping season. October’s weaker-than-expected conclusion to the Consumer Price Index report will also be tested. while the investment community will choose the producer price index for October.

Also early next week, US President Biden and Chinese President Xi Jinping are expected to meet ahead of the G20 summit in Indonesia, the first face-to-face meeting between the two leaders since Biden took office. Likely topics include tensions over Taiwan, the ongoing Russian-Ukrainian war, ongoing US tariffs on China, and more recent chip and chip equipment restrictions on exports to China.

As we inch closer to the Thanksgiving holiday in the United States, Wall Street will be looking for a definitive outcome in the 2022 midterm elections and what that likely means for the Biden administration. Georgia may once again hold the key to Senate control given the runoff scheduled for Dec. 6.

Data download

International economy

China has relaxed some of its strict COVID rules, including shortening quarantines from two to five days for close contacts with infected people and for incoming travelers. The requirement for three additional days of home isolation after central quarantine remains. China also scrapped a penalty for airlines for bringing in too many cases.

Producer prices in Japan jumped 9.1% year-on-year in October, slowing from the upwardly revised 10.2% gain recorded in September, but beating expectations for a steeper decline to 8 .8% as high commodity prices and a weak yen continue to inflate business input costs. .

Preliminary estimates showed the UK economy grew by 2.4% year-on-year in the third quarter of 2022, the lowest figure since the contraction in the first quarter of 2021, but slightly above the consensus forecast of 2.1 %. Industrial production in the UK contracted by 3.1% in September, compared to a drop of 4.3% the previous month. Manufacturing output in September fell 5.8% year-on-year, better than the expected contraction of 6.6%.

Domestical economy

At 11:00 a.m. ET, the preliminary reading of the Michigan Consumer Confidence Index for November will be released. At 59.5, the headline figure is thought to be little changed from 59.9 in October, but given the focus on inflation and the Fed, we expect the expectations component to inflation gets a lot more attention. The component recorded 5% in October.

Markets

Yesterday’s improvement in the consumer price index was enough for investors to see light at the end of the tunnel of the Fed’s rate hike as they bid on just about everything they wanted. could get their hands on. The Dow rose 3.70%, the S&P 500 gained 5.54%, the Russell 2000 jumped 6.11% and the Nasdaq Composite had a stunning day of 7.35%. The sectors were all positive, led by technology up over 8%, followed by real estate and consumer discretionary up over 7%. Relative laggards included energy, consumer staples and healthcare, all up less than 3%.

Even crypto had a good day, with Bitcoin and Ether rebounding 10.66% and 18.26% respectively. It is not yet clear if this light is actually the end of the tunnel or just an oncoming train. Here’s how the major market indicators stack up since the start of the year:

  • Dow Jones Industrial Average: -7.22%
  • S&P 500: -16.99%
  • Nasdaq compound: -28.96%
  • Russell 2000: -16.81%
  • Bitcoin (USD-BTC): -62.22%
  • Ether (ETH-USD): -64.81%

Stocks to Watch

Ahead of the start of trading for U.S.-listed stocks, no corporate earnings are expected, a nice break ahead of the wave of earnings from retailers, including those of Walmart (WMT), Kohl’s (KSS), Target (TGT), and others, comes next week.

Shares of Duolingo (DUOL) fell in aftermarket trading last night after the company posted a surprise lower loss for the September quarter despite revenue up more than 50% from consensus best estimates. Total bookings for the quarter increased 41% year-over-year to $102.7 million, and subscription bookings jumped 42% year-over-year to $78.9 million. Paid subscribers totaled 3.7 million at the September release, up 68% year-over-year. For 2022, Duolingo sees revenue of $364-367 million versus consensus of $365.35 million with total bookings between $414-417 million.

Shares of the digital platform Doximity (DOCS) surged in aftermarket trading last night after better-than-expected quarterly results in September and revenue forecasts that confirmed expectations.

While the results for the September quarter to Beazer Houses (BZH) easily exceeded consensus expectations, the homebuilder also reported that its net new orders for the quarter fell 34.1% year-on-year. Beazer also shared that its cancellation rate for the quarter was 32.8%, down from 11.7% a year earlier, reflecting weaker housing demand due to the sharp rise in mortgage rates. At the end of the quarter, the dollar value of homes in its backlog was $1.1 billion, or 2,091 homes, compared to $1.3 billion, or 2,786 homes in the same period last year. .

Valmont (VMI) announced that the FAA had granted him a nationwide waiver beyond visual line of sight. This waiver gives Valmont the ability to fly its hours-capable unmanned drones for commercial inspections of utility lines across the country at any time, eliminating the need to wait for FAA geographic approval.

The China National Medical Products Administration has accepted AstraZeneca (AZN) Application for expanded approval of Soliris for the treatment of adults with refractory generalized myasthenia gravis in patients who are anti-acetylcholine receptor antibody positive.

King County Superior Court Judge Ken Schubert in Washington on Thursday, Nov. 17, scheduled a preliminary injunction hearing on Albertson (AIT) plans to pay a $4 billion dividend in connection with its planned sale to Kroger (KR).

IPOs

Readers who want to dig deeper into the schedule of upcoming IPOs should visit Nasdaq’s Latest and Upcoming IPOs page.

After today’s market close

It’s Friday again and that means no company is expected to report quarterly results after the stock trading halts today. Those interested in learning more about which companies release their reports when head to the Nasdaq earnings calendar.

on the horizon

monday november 14

  • Euro zone: Industrial production – September

tuesday november 15

  • Japan: GDP 3Q 2022
  • China: industrial production, retail sales – October
  • United Kingdom: unemployment rate – September
  • Euro zone: 3Q 2022 GDP
  • Eurozone: ZEW Economic Sentiment – November
  • WE; Empire State Manufacturing Index – November
  • United States: producer price index – October

Wednesday November 16

  • Japan: Basic machine orders – September
  • United Kingdom: consumer price index, producer price index – October
  • US: Weekly MBA Mortgage Applications
  • United States: retail sales – October
  • US: Import/Export Prices – 8:30 am October
  • WE; Industrial production and capacity utilization – October
  • United States: Business inventories – September
  • WE; NAHB Housing Market Index – November
  • United States: EIA Weekly Crude Oil Inventories

Thursday, November 17

  • United Kingdom: car registrations – October
  • Germany: car registrations – October
  • Euro zone: Consumer price index – October
  • United States: Initial and Continuing Weekly Unemployment Claims
  • United States: housing starts and building permits – October
  • United States: Philadelphia Fed Index – November
  • United States: EIA Weekly Natural Gas Inventories

friday november 18

  • United Kingdom: Retail sales – October
  • United States: Sales of existing homes – October

Thought of the day

“The illusion that times which were better than those which are, has probably permeated all ages.” ~ Horace Greley

Disclosures

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


nasdaq

Not all news on the site expresses the point of view of the site, but we transmit this news automatically and translate it through programmatic technology on the site and not from a human editor.
Back to top button