December S&P 500 E-Mini futures (ESZ26) are up +0.27%, and December Nasdaq 100 E-Mini futures (NQZ26) are up +0.29% this morning as lower oil prices and bond yields bolstered sentiment.
The price of WTI crude fell over -1% on Tuesday as immediate supply concerns eased amid rising exports from the Middle East and the release of G-7 emergency reserves.
Treasuries rebounded as lower oil prices helped ease inflation concerns. The 10-year T-note yield fell three basis points to 5.28% after climbing to 5.349% on Monday, its highest level since 2002.
Investors are now awaiting the Commerce Department’s report on the U.S. trade gap and remarks from Federal Reserve officials.
In yesterday’s trading session, Wall Street’s main stock indexes closed higher, buoyed by strength in tech giants and a drop in oil prices. Most members of the Magnificent Seven climbed, with Tesla (TSLA) and Nvidia (NVDA) rising over +2%. Also, PTC Inc. (PTC) soared over +33% and was the top percentage gainer in the S&P 500 after Schneider Electric agreed to acquire the company for $22.6 billion in an all-cash deal. In addition, Cerebras Systems (CBRS) surged more than +9% after OpenAI CEO Sam Altman said on X that the company is a “close partner” and that the two have a “deep engagement pushing on the frontiers of speed.” On the bearish side, C.H. Robinson Worldwide (CHRW) plunged over -10% and was the top percentage loser in the S&P 500 after the company agreed to acquire RXO Inc. for $5.8 billion in a stock-and-cash deal.
Economic data released on Monday showed that the U.S. services sector remained firmly in expansion territory in September. The U.S. ISM services index dipped to 54.9 in September, slightly below expectations of 55.1, but remained comfortably above the 50 level separating expansion from contraction. At the same time, the ISM services prices paid sub-index rose to a 4-year high of 74.0 in September, stronger than expectations of 73.3. Separately, the U.S. September S&P Global Services PMI was revised upward to 58.8 from the preliminary reading of 58.7.
“Markets have absorbed rising rates, higher energy costs and renewed inflation concerns, with stocks continuing to advance. Strong earnings, consumer spending and sustained artificial intelligence-related investment have all kept growth intact,” according to Principal Asset Management.
Today, investors will be watching the U.S. trade balance data, set to be released in a couple of hours. Economists anticipate that the trade deficit will widen to -$100.8 billion in August from -$88.6 billion in July.
Investors will also focus on an earnings report from beer, wine, and spirits maker Constellation Brands (STZ).
In addition, market participants will hear perspectives from Fed Vice Chair for Supervision Michelle Bowman, Kansas City Fed President Jeff Schmid, Dallas Fed President Lorie Logan, and New York Fed President John Williams throughout the day.
U.S. rate futures are currently pricing in a 78.4% chance of no rate change and a 21.6% chance of a 25-basis-point rate hike at the conclusion of the Fed’s October meeting.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 5.28%, down -0.62%.
The Euro Stoxx 50 Index is up +0.87% this morning, supported by strength in healthcare stocks, while lower oil prices and bond yields provided an additional boost. Healthcare stocks were among the biggest gainers on Tuesday, led by a more than +7% jump in Genmab (GMAB.C.DX) after the company and its partner AbbVie said their Epkinly treatment for newly diagnosed lymphoma reduced the risk of disease progression or death in a late-stage study. Media and bank stocks also climbed. Data from Eurostat released on Tuesday showed that the Eurozone’s monthly retail sales edged higher in August, despite a decline in automotive fuel sales as oil prices climbed again during the month. Separately, data showed that Germany’s monthly factory orders tanked in August, highlighting mounting pressure on industrial demand as the Middle East conflict continued to push up energy costs. In addition, data showed that France’s monthly industrial production unexpectedly fell in August. Meanwhile, Eurozone government bond yields fell on Tuesday as lower oil prices eased inflation concerns, while the spread between French and German 10-year yields narrowed further as investors weighed whether the recent jump in France’s risk premium had gone too far, too fast. European Central Bank Governing Council member Olli Rehn said on Tuesday that the Middle East energy shock has not so far spilled over into other prices or wages, and that the recent rise in bond yields is likely to ease price pressures by weighing on growth. In other corporate news, Technoprobe (TPRO.M.DX) rose over +3% after JPMorgan initiated coverage of the stock with an Overweight rating.
Germany’s Factory Orders, France’s Industrial Production, and Eurozone’s Retail Sales data were released today.
The German August Factory Orders tumbled -10.6% m/m, weaker than expectations of -0.9% m/m.
The French August Industrial Production unexpectedly fell -0.3% m/m, weaker than expectations of +0.2% m/m.
Eurozone’s August Retail Sales rose +0.1% m/m and +0.8% y/y, weaker than expectations of +0.2% m/m and +1.0% y/y.
Japan’s Nikkei 225 Stock Index ($NKY) closed up +1.05%, while mainland China’s financial markets were closed for a holiday.
Japan’s Nikkei 225 Stock Index closed higher today, tracking overnight gains on Wall Street. Financial and healthcare stocks led the advance on Tuesday. Semiconductor and other AI-related stocks also climbed. The Nikkei’s gains accelerated in the afternoon session after Japan’s 10-year government bond auction drew solid demand, easing concerns about the debt market. Japanese government bonds trimmed their losses following the auction. The auction results offered some reassurance that yields would not continue to climb and weigh on the stock market, according to Masahiro Ichikawa at Sumitomo Mitsui DS Asset Management. The benchmark index closed above the 70,000 mark for the first time since July 1st. Meanwhile, Bank of Japan Governor Kazuo Ueda said on Tuesday that anchoring underlying inflation around the central bank’s 2% target was becoming increasingly important. He added that close attention should be paid to risks stemming from the Middle East conflict, AI-related demand, and foreign exchange rates. “We intend to continue raising the policy interest rate and adjusting the degree of monetary accommodation in response to developments in economic activity, prices, and financial conditions,” Ueda said. Investor focus now shifts to the BOJ’s branch managers’ meeting later this week, where the central bank will release its quarterly regional economic report. Japan’s August wage data will also draw attention, with investors watching to see whether real wages rose for an eighth consecutive month. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +27.68% at 29.20.
China’s Shanghai Composite Index was closed today for the week-long National Day holiday. Mainland China’s financial markets will reopen on Thursday.
Pre-Market U.S. Stock Movers
The Magnificent Seven stocks edged higher in pre-market trading, extending yesterday’s gains. Nvidia (NVDA) and Meta Platforms (META) led the advance, each rising about +0.8%.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Tuesday - October 6th
Constellation Brands (STZ), RPM International (RPM), Lamb Weston Holdings (LW), Penguin Solutions (PENG), Neogen (NEOG), Worthington Steel (WS), ATS Corporation (ATS), Apogee Enterprises (APOG), Saratoga Investment (SAR).
On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.