Mixed Earnings, Economic News May Lead To Choppy Trading

The major U.S. index futures are currently pointing to a roughly flat open on Wednesday, with stocks likely to show a lack of direction following the mixed performance seen in the previous session.

A mixed batch of corporate earnings and U.S. economic news may lead to choppy trading on Wall Street early in the session.

Shares of Alphabet (GOOGL) are surging by 6.7 percent in pre-market trading after the Google parent reported third quarter results that beat analyst estimates on both top and bottom lines.

Snapchat parent Snap (SNAP) is also spiking in pre-market trading after reporting better than expected third quarter results and announcing a $500 million stock repurchase program.

Meanwhile, shares of Advanced Micro Devices (AMD) are plunging by 7.8 percent in pre-market trading after the chipmaker reported third quarter revenues that beat expectations but provided disappointing fourth quarter revenue guidance.

Dow component Caterpillar (CAT) is also likely to come under pressure after the construction equipment maker reported weaker than expected third quarter earnings.

On the U.S. economic front, payroll processor ADP released a report showing private sector employment in the U.S. shot up by much more than anticipated in the month of October.

ADP said private sector employment surged by 233,000 jobs in October after jumping by an upwardly revised 159,000 jobs in September.

Economists had expected private sector employment to climb by 115,000 jobs compared to the addition of 143,000 jobs originally reported for the previous month.

However, a separate report released by the Commerce Department showed U.S. economic growth unexpectedly slowed in the third quarter.

The Commerce Department said gross domestic product shot up by 2.8 percent in the third quarter after surging by 3.0 percent in the second quarter. Economists had expected another 3.0 percent jump.

The unexpected slowdown in the pace of GDP growth primarily reflected a downturn in private inventory investment and a larger decrease in residential fixed investment.

The major U.S. stock indexes all moved higher during trading on Monday but returned to the mixed performance seen to close out the previous week on Tuesday.

While the tech-heavy Nasdaq showed a notable advance to reach a new record closing high, the Dow closed lower for the sixth time in the past seven sessions.

The Nasdaq climbed 145.56 points or 0.8 percent to 18,712.75, extending its winning streak to four days. The S&P 500 also rose 9.40 points or 0.2 percent to 5,832.92, but the Dow fell 154.52 points or 0.4 percent to 42,233.05.

The climb by the Nasdaq came ahead of the release of earnings news from big-name tech companies, with Alphabet and Advanced Micro Devices among the companies reporting their quarterly results after the close of trading.

Tech giants Meta Platforms (META), Microsoft (MSFT), Amazon (AMZN) and Apple (AAPL) are also due to release their quarterly results in the coming days.

Semiconductor stocks showed a particularly strong move to the upside, driving the Philadelphia Semiconductor Index up by 2.3 percent.

Significant strength was also visible among networking stocks, as reflected by the 1.7 percent gain posted by the NYSE Arca Networking Index.

Gold and software stocks also saw notable strength on the day, while airline stocks moved sharply lower, dragging the NYSE Arca Airline Index down by 3.6 percent.

Shares of JetBlue (JBLU) plummeted after the airline reported better than expected third quarter results but forecast a decrease in fourth quarter revenue.

Housing stocks also saw substantial weakness, with the Philadelphia Housing Sector Index plunging by 2.3 percent.

Homebuilder D.R. Horton (DHI) posted a steep loss after reporting fiscal fourth quarter results that missed estimates and providing disappointing guidance.

The decrease by the Dow came amid significant losses by Home Depot (HD), Coca-Cola (KO) and Travelers (TRV).

In U.S. economic news, the Conference Board released a report showing a substantial improvement by U.S. consumer confidence in the month of October.

The Conference Board said its consumer confidence index surged to 108.7 in October after tumbling to a revised 99.2 in September.

Economists had expected the consumer confidence index to inch up to 99.1 from the 98.7 originally reported for the previous month.

A separate report released by the Labor Department showed job openings in the U.S. fell to 7.44 million in September from a downwardly revised 7.86 million in August.

Economists had expected job openings to edge down to 7.99 million from the 8.04 million originally reported for the previous month.

Commodity, Currency Markets

Crude oil futures are jumping $1.35 to $68.56 a barrel after slipping $0.17 to $67.21 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $2,789.20, up $8.10 compared to the previous session’s close of $2,781.10. On Tuesday, gold surged $25.20.

On the currency front, the U.S. dollar is trading at 153.35 yen compared to the 153.36 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0814 compared to yesterday’s $1.0819.

Asia

Asian stocks ended broadly lower on Wednesday, as earnings from Google parent Alphabet and chipmaker AMD proved to be a mixed bag and the European Union announced the imposition of additional tariffs on electric vehicles imported from China, prompting an angry response from Beijing.

Caution ahead of key U.S. economic data due this week and next week’s presidential election also kept investors on the sidelines.

The dollar was little changed in Asian trading and gold hit a fresh record, while oil recovered some ground after two days of declines.

China’s Shanghai Composite Index dipped 0.6 percent to 3,266.24 as investors priced in higher odds of a Trump election win.

Investors also awaited the details of a fiscal package that could address issues in local government debt and the property market.

A meeting by China’s top legislative body to be held on November 4-8 may contain the details of the spending plans.

Hong Kong’s Hang Seng Index tumbled 1.6 percent to 20,380.64 amid concerns over the contentious U.S.-China trade relationship.

Japanese markets posted strong gains as investors braced for Thursday’s BoJ rate decision. The Nikkei 225 Index jumped 1.0 percent to 39,277.39, while the broader Topix Index closed 0.8 percent higher at 2,703.72.

Tech stocks surged, with SoftBank Group and Advantest rising around 3 percent each.

Seoul stocks fell, dragged down by auto and technology stocks. The Kospi closed down 0.9 percent at 2,593.79.

Australian markets ended lower after the inflation rate in the third quarter came in at 2.8 percent, the lowest level in more than three years. Core inflation remained more stubborn, dashing hopes of an early rate cut.

The benchmark S&P/ASX 200 Index slid 0.8 percent to 8,180.40, while the broader All Ordinaries Index settled 0.8 percent lower at 8,439.50.

Woolworths slumped 6.1 percent after the nation’s largest retailer surprised the market with a profit warning. Shares of Coles gave up 2.4 percent.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index declined 0.7 percent to close at 12,694.84.

Europe

European stocks have moved to the downside on Wednesday as investors assess a batch of mixed earnings as well as regional growth data and the U.K. government’s budget.

The French CAC 40 Index has tumbled by 1.5 percent, the German DAX Index is down by 1.2 percent and the U.K.’s FTSE 100 Index is down by 0.6 percent.

Eurozone economic growth accelerated in the third quarter, a preliminary flash estimate published by Eurostat showed.

Gross domestic product increased 0.4 percent on a quarterly basis. GDP was expected to log 0.2 percent growth, the same rate as seen in the second quarter.

Meanwhile, survey data from the European Commission showed Eurozone economic confidence weakened to an eight-month low in October.

The economic sentiment index fell to 95.6 from 96.3 in the previous month. This was the lowest score since last February and below estimates of 96.4.

GSK shares have tumbled in London. The pharmaceutical company swung into a loss in the third quarter and lowered its 2024 vaccine sales forecast.

Capgemini has also moved sharply lower as the IT consulting group cut its 2024 revenue target for the second time this year.

Luxury stocks LVMH, Kering and Hermes have also moved to the downside in Paris on concerns about demand growth in China.

On the other hand, UBS has jumped. The Swiss banking giant reported a significant uptick in its third-quarter performance, driven by cost-cutting and robust loan income.

Bearings maker SKF has also surged after selling its Hanover, Pennsylvania ring and seal operation, via subsidiary PCTI, to Carco PRP for 2.3 billion Swedish crowns ($215.98 million).

Standard Chartered has also rallied. The lender upgraded its 2024 income guidance after profits in the third quarter beat market estimates.

U.S. Economic News

Payroll processor ADP released a report on Wednesday showing private sector employment in the U.S. shot up by much more than anticipated in the month of October.

ADP said private sector employment surged by 233,000 jobs in October after jumping by an upwardly revised 159,000 jobs in September.

Economists had expected private sector employment to climb by 115,000 jobs compared to the addition of 143,000 jobs originally reported for the previous month.

A separate report released by the Commerce Department on Wednesday showed U.S. economic growth unexpectedly slowed in the third quarter.

The Commerce Department said gross domestic product shot up by 2.8 percent in the third quarter after surging by 3.0 percent in the second quarter. Economists had expected another 3.0 percent jump.

The unexpected slowdown in the pace of GDP growth primarily reflected a downturn in private inventory investment and a larger decrease in residential fixed investment.

Meanwhile, these movements were partly offset by accelerations in exports, consumer spending and federal government spending, the Commerce Department said.

At 10 am ET, the National Association of Realtors is scheduled to release its report on pending home sales in the month of September. Pending home sales are expected to jump by 1.1 percent in September after climbing by 0.6 percent in August.

The Energy Information Administration is scheduled to release its report on oil inventories in the week ended October 25th at 10:30 am ET.

Crude oil inventories to expected to rise by 2.3 million barrels after surging by 5.5 million barrels in the previous week.