A look at the day ahead in U.S. and global markets from Mike Dolan
With next week’s U.S. election now dominating thinking, the last two megacap earnings reports of the week appear to have calmed the stock market somewhat and a potentially noisy October payrolls report is up next.
Amazon and Apple got different market receptions to their updates overnight – the remaining two of five “Magnificent Seven” firms reporting this week.
Amazon stock jumped 6% on forecast-beating profit and sales, with the company indicating healthy results in the holiday quarter thanks to its faster shipping times and a move to stock lower-cost items.
It was a relief to markets that saw fresh doubts this week about the speed with which the hefty spend on artificial intelligence was translating into returns for Big Tech giants.
Apple underwhelmed with its beat and the stock is off about 1% before Friday’s bell. Its AI-enhanced iPhone made a strong start, pushing quarterly sales ahead of expectations. But a modest revenue forecast raised questions about the holiday season and a decline in China sales bothered some analysts.
Ailing chipmaker Intel perked up, however, with a 7% rally overnight on optimism about a turnaround in its PC and server businesses.
The market-wide upshot today is that index futures look set to regain some of Thursday’s heavy losses.
And more than 60% through the current earnings season, the blended annual profit growth estimate for the S&P500 has actually picked up pace to as much as 7.5% – well up on pre-season forecasts of just over 5%.
With sovereign bonds markets focusing more attention agitated by post-budget British gilts, U.S. Treasuries remained relatively calm as the October employment report is due later on Friday, the dead heat election race enters its final weekend, and a second Federal Reserve interest rate cut of the year is expected next week.
Although a month of storms may distort the numbers, a Reuters survey showed nonfarm payrolls probably increased by 113,000 jobs last month after rising by 254,000 in September and jobless rate is forecast to remain unchanged at 4.1%.
This week’s private sector payrolls update for October and weekly jobless data came in hotter than many had bet on, but inflation readings were calm enough to keep futures confident the Fed will deliver a quarter-point post-election rate cut next Thursday.
The personal consumption expenditures (PCE) price index rose 0.2% in September, driven mainly by services but with goods prices actually falling outright for a second consecutive month.