Stock futures edge down ahead of earnings

Stock futures pulled back Tuesday as investors readied for key corporate earnings releases, including reports from notable tech names. Futures tied to the 30-stock Dow fell 173 points, or 0.7%. S&P 500 futures fell 0.2%, while Nasdaq-100 futures traded near the flatline.

NASDAQ ended Friday’s session down from its July 2024 record high after briefly hit a new all-time high (on an intraday basis) but marked a seventh consecutive week of gains
[Past performance is no guarantee of future results] pic.twitter.com/7bjvdsu5HB

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European stocks hit by ‘Trump effect’ as odds tilt towards Republican win. A basket of 22 European stocks exposed to US tariffs compiled by Goldman Sachs has tumbled 5% since late Sep as the former president’s odds of an election victory shorten. The basket, which includes… pic.twitter.com/kczmYtFA3j

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Shares of Ford slid about 6% after the automaker provided full-year guidance that was lower than its previously set range. McDonald’s shed more than 2% after a greater-than-expected fall in global same-store sales. These moves come after a mixed session on Wall Street for the three major indexes.

#MarketAlert | Nifty advances for 2nd session; BEL, SBI lead

Here's how the markets panned out today!👇 #StockMarket #Nifty pic.twitter.com/QmV8mhzIe5

— ET NOW (@ETNOWlive) October 29, 2024

The blue-chip Dow broke a five-day losing streak, while the tech-heavy Nasdaq notched its eighth positive session of the last nine. Stock investors appeared to welcome limited geopolitical escalation, which came after weekend airstrikes from Israel toward Iran didn’t hit energy facilities as some expected. However, equity gains were capped as Treasury yields rose to their highest level since July.

#MarketAlert | Nifty Midcap at day's low; falls over 750 points off day's high#Midcap #StockMarket #Nifty pic.twitter.com/XTheHcUMuQ

— ET NOW (@ETNOWlive) October 29, 2024

Traders will keep an eye on earnings reports from major companies due on Tuesday as the busiest week of this earnings season continues. Alphabet, Microsoft, and Visa are all scheduled to post their quarterly results after the market closes. Tech juggernauts including Meta Platforms are slated to report on Wednesday, while Amazon will release results on Thursday. Shares of VF Corp soared nearly 20% following better-than-expected quarterly results from the North Face and JanSport parent. For the fiscal second quarter, the company posted adjusted earnings of 60 cents per share on $2.76 billion in revenue. Analysts surveyed by LSEG were looking for 37 cents per share on $2.71 billion in revenue. VF Corporation also declared a quarterly dividend of 9 cents per share. Shares of Ford slid 7% following news that the automaker revised its full-year earnings guidance lower, despite slightly exceeding analysts’ third-quarter expectations. Ford now expects its adjusted EBIT to be about $10 billion. The company has been dealing with softening demand, rising inventory, and concerns about achieving cost cuts this year. The stock of Cadence Design Systems jumped more than 5% after the electronic design company’s third-quarter earnings beat Wall Street estimates. Cadence Design earned $1.64 per share, excluding items, on revenue of $1.22 billion, above the consensus estimate of $1.44 per share and $1.18 billion in revenue. The company also raised the midpoint of its non-GAAP earnings per share outlook for 2024. McDonald’s reported third-quarter earnings and revenue that beat analyst expectations. The company earned an adjusted $3.23 per share on revenue of $6.87 billion, compared to estimates of $3.20 per share on $6.82 billion in revenue. Despite the strong results, shares were down more than 1% premarket. Analysts at Mizuho are anticipating a strong quarterly report from Robinhood when it announces results this week. Mizuho lifted its price target to $29 from $24 a share, citing the company’s “excellent execution” on growth, profitability, and business diversification. Shares have rallied nearly 119% this year. Analyst Mark Mahaney from Evercore ISI expects Meta to post a modest beat this quarter and signal a strong setup for Internet advertising. Meanwhile, Amazon is anticipated to face risk to its fourth-quarter operating income estimate but remains a top long pick for the firm given its retail segment gains and an ongoing AWS recovery. European markets opened higher Tuesday as traders in the region digested the latest slew of earnings reports. The pan-European Stoxx 600 was up 0.38% in opening trade, with all major bourses and most sectors in the green. Banks added 0.77% while mining stocks dipped 0.4%. Europe’s largest lender HSBC reported stronger-than-expected third-quarter earnings, boosted by strong revenue growth, as it continues a major restructuring to balance its operations in China and the West. Pre-tax profit rose 10% to $7.7 billion compared to the same period last year. The company’s quarterly revenue grew 5% to $17 billion from $16.2 billion. The Indian stock market experienced a significant selloff, with the Sensex and the Nifty 50 falling by nearly 1%. Nifty Auto, Metal, PSU Bank, Consumer Durables, and Oil & Gas sectors fell over 2% each. The Nifty Bank index fell 1.3%. On October 25, the benchmarks—Sensex and Nifty 50—declined almost a percent each, while the mid-and small-cap segments dropped 2%. The Sensex fell 663 points, or 0.83%, to close at 79,402.29, while the Nifty 50 declined 219 points, or 0.90%, to end at 24,180.80. The BSE Midcap and Smallcap indices fell 1.48% and 2.44%, respectively. The overall market capitalization of firms listed on the BSE plunged to nearly ₹438 lakh crore from nearly ₹444 lakh crore in the previous session, making investors poorer by about ₹6 lakh crore in a single day. The volatility index jumped nearly 5% to 14.63, indicating nervousness among market participants. This was the fifth consecutive session of losses for the Sensex and the Nifty 50. Both indices are now down about 8% from their all-time highs, which they hit on September 27. Experts see aggressive selling by foreign portfolio investors as the primary reason behind the market crash. FPIs sold Indian equities worth over ₹98,000 crore in October. The cheaper valuation of Chinese markets has led FPIs to redirect funds into Chinese stocks after Beijing announced measures to stabilize its struggling economy.

Stock futures dip amid earnings anticipation

India Inc.’s September quarter earnings have been weak, exacerbating concerns about the market’s stretched valuations. Corporate results for the second quarter indicated that the revenue and profit growth rates of Indian companies have slowed. The uncertainty surrounding the US election is weighing on market sentiment. With a close fight between Kamala Harris and Donald Trump, the outcome could affect global trade policies and economic stability. Evolving situations in the Middle East have also been influencing market sentiment. Reports of military actions and potential diplomatic talks have added to the market’s nervousness. The market is still not at justified valuations, contributing to the selloff. Current price-to-earnings ratios of indices like Nifty 50 are above their historical averages, indicating overvaluation despite recent corrections. Periodic market declines are normal, influenced by growth potential and corporate earnings in the long term. Ongoing market selloffs can present opportunities for long-term investors to accumulate fundamentally strong businesses. The right investment strategy is to allocate funds phase-wise, though short-term volatility will remain. Stocks slumped on Wednesday as doubts about rate cuts weighed on investors dealing with a busy day of earnings highlighted by Boeing and Tesla. The Dow Jones Industrial Average fell more than 400 points, or nearly 1%. The tech-heavy Nasdaq Composite slid about 1.6%, leading the way down, while the benchmark S&P 500 was off more than 0.9%. The rally in stocks has stalled as investors debate how quickly the Federal Reserve will cut interest rates over the next year. Gloom about the prospect of rates staying higher for longer has dragged on bond prices in recent days, sending the 10-year Treasury yield up to 4.24%. Several big tech names lagged ahead of Tesla’s earnings report expected after the bell on Wednesday, with Meta falling more than 3%. Amazon and Nvidia both slid more than 2.5%. However, Tesla’s results after the bell showed a positive outcome. The electric-vehicle maker reported adjusted earnings per share of $0.72, well above Wall Street’s estimate of $0.60. The stock climbed by nearly 8% in after-hours trading. Meanwhile, in its quarterly report before the bell, Boeing shared its earnings, coinciding with the day it awaited the results of a vote by striking factory workers on a new pay deal. Boeing’s stock fell more than 6% in after-hours trade as the company’s third-quarter results fell short of Wall Street’s estimates, reporting revenue of $14.97 billion, below analyst estimates of $15.05 billion. Interest rate volatility remains high as investors debate whether recent economic data will prompt the Fed to hold rates higher for longer than initially anticipated. The 10-year Treasury yield added nearly four basis points on Wednesday to hit 4.24%. The 10-year has now added about 50 basis points since the Fed cut interest rates by half a percentage point on Sept 18. The MOVE Index, which measures rate volatility, has spiked too, now sitting at a reading of 129.26, its highest level since December 2023. In corporate news, McDonald’s shares fell more than 5% on Wednesday after the CDC highlighted an E. coli outbreak at the fast-food chain. With 49 known cases, including one death, McDonald’s has provided more details on how it’s trying to limit contamination. As a result of the outbreak, about one-fifth of McDonald’s US restaurants are not offering quarter pounders or onions. The company quickly removed the affected ingredients from those restaurants when the reported cases were lower. The Federal Reserve’s October Beige Book, released Wednesday, showed further signs of low worker turnover. “Many Districts reported low worker turnover, and layoffs reportedly remained limited,” the report said. Demand for workers eased somewhat, with hiring focused primarily on replacement rather than growth.” This fits with recent data from the Job Openings and Labor Turnover Survey, which showed a slight decrease in the hiring rate and the quits rate. Lastly, oil prices dropped more than 1% on Wednesday as traders looked for signs of easing tensions in the Middle East and new data showed that US stockpiles surged. West Texas Intermediate dropped to trade above $70 per barrel, while Brent, the international benchmark price, hovered near $75. The latest government data showed crude inventories increased by 5.5 million barrels last week, versus analysts’ expectations for an increase of 1 million barrels. The lack of recent headlines over Israel’s retaliatory plans against Iran following an October 1 missile attack has also weighed on prices. IBM shares fell after the company’s third-quarter results disappoint. The stock fell more than 6% in after-hours trade as the company’s revenue of $14.97 billion missed Wall Street’s estimate of $15.05 billion. Tesla’s stock rose as much as 6% after hours on Wednesday following an earnings beat. Tesla reported adjusted earnings per share of $0.72, above Wall Street’s estimate of $0.60. However, Tesla’s quarterly revenue of $25.18 billion came in below expectations of $25.43 billion. New projections from JPMorgan Asset Management suggest the US stock market will continue to dominate globally over the next decade, driven by advances in artificial intelligence. The firm’s 2025 Long-Term Capital Market Assumptions project that the US share of the total global equity market will fall slightly from 64% currently to 60% in 2037, with China expected to have the second-largest share. Oil prices dropped as US inventories grew and traders watched for developments in the Middle East conflict. West Texas Intermediate traded above $70 per barrel, while Brent hovered near $75. The latest data showed crude inventories increased by 5.5 million barrels last week, significantly higher than the expected 1 million barrel increase.