Traders Market Weekly: US Elections, Rates and Inflation

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    Final October Services PMI readings from Italy, Spain, and Germany improved, but remained in contractionary territory.
    European Central Bank President Lagarde repeated that inflation is too high, and that the ECB has a long way to go with its rate hikes.
    The Italian government is reportedly looking to spend more than EUR15 bln in its 2023 budget to offset high energy costs.
    Bank of England Chief Economist Pill said that a slowdown in the domestic economy is needed to contain inflation.


    Starbucks (SBUX 88.84 +4.16 +4.91%): beats by $0.09, beats on revs, global comps +7%; U.S. comps +11%; China comps -16%; guides FY23 EPS above consensus; FY23 revs in-line; reaffirms FY23 global comp guidance; expects solid margin expansion globally in FY23
    DoorDash (DASH 52.97 +5.36 +11.26%): reports Q3 results, beats on revs and beats on adjusted EBITDA
    Microchip (MCHP 65.05 +5.59 +9.40%): beats by $0.02, reports revs in-line; guides Q3 EPS, revs above consensus; increases dividend
    Block (SQ 60.50 +6.59 +12.22%): beats by $0.19, beats on revs
    Carvana (CVNA 12.86 -1.49 -10.38%): misses by $0.70, misses on revs
    PayPal (PYPL 71.74 -4.81 -6.28%): beats by $0.12, reports revs in-line; guides Q4 EPS in-line, revs below consensus
    Twilio (TWLO 48.40 -16.96 -25.95%): beats by $0.08, beats on revs; guides Q4 EPS below consensus, revs below consensus
    Atlassian (TEAM 127.90 -46.27 -26.57%): misses by $0.02, reports revs in-line; guides Q2 revs below consensus
    Rocket Companies (RKT 6.24 -0.27 -4.15%): misses by $0.05, beats on revs; approves renewal and extension of its $1.0 bln repurchase program
    Cardinal Health (CAH 75.33 -0.34 -0.45%): beats by $0.23, beats on revs; guides FY23 EPS in-line


    S&P futures vs fair value: +45.30. Nasdaq futures vs fair value: +159.30.

    The S&P 500 futures are up 45 points and are trading 1.2% above fair value. The Nasdaq 100 futures are up 155 points and are trading 1.5% above fair value. The Dow Jones Industrial Average futures are up 306 points and are trading 0.9% above fair value.

    The October employment report had some good in it and some not-so-good in it. Payroll growth was stronger than expected, which is good objectively speaking. Now, speaking in terms of what the market likes to hear at this juncture, the unemployment rate moved up and the year-over-year pace of average hourly earnings growth decelerated. That is not good, objectively speaking, but it is good for thinking that these key components are moving in a direction the Fed wants to see them move.

    Ultimately, though, the key takeaway is that the labor market isn’t showing enough weakness yet to convince the Fed that it can stop raising the target range for the fed funds rate.

    The Treasury market has been choppy following the employment report.

    The 10-yr note yield sat at 4.16% before the release, shot up to 4.20% in the immediate aftermath, and now sits at 4.14%.
    The 2-yr note yield sat at 4.75% before the release, hit 4.77% after the release, and now sits at 4.70%.


    Market opens to strength after jobs report

    Dow +346.58 at 32350.86, Nasdaq +106.71 at 10389.50, S&P +43.80 at 3763.76

    The stock market opened on an upbeat note as market participants digest the October employment report.

    Broad buying thus far has all 11 S&P 500 sectors trading up. Health care (+0.1%) shows a modest gain, sitting in last place, while materials (+2.5%) sits atop the leaderboard.

    Semiconductor stocks are racing ahead of the broader market. The PHLX Semiconductor Index is up 3.7% versus a 1.1% gain in the S&P 500.

    Growth stocks continue to underperform today as the Russell 3000 Growth Index (+0.3%) trails the Russell 3000 Value Index (+0.7%).

    The dollar is noticeably weaker today. The U.S. Dollar is down 1.1% to 111.66.


    Dow 32,403.22 401.97 1.26%
    S&P 500 3,770.55 50.66 1.36%
    Nasdaq 10,475.25 132.31 1.28%
    VIX 24.69 -0.61 -2.41%
    Gold 1,683.90 53.00 3.25%
    Oil 92.58 4.41 5.00%


    November 6-12, 2022 FEAR NOT Brave Investors Where have we been and where are we going? Join our weekly market thread on Traders Community… US Divided
    [See the full post at: Traders Market Weekly: US Elections, Rates and Inflation]

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