FX.co ★ Upbeat Amazon, Intel Earnings May Spark Rebound On Wall Street

The major U.S. index futures are indicating a higher opening for the market today, suggesting a potential rebound from yesterday's sell-off. Investors appear poised to take advantage of positive earnings reports from prominent companies such as Amazon and Intel.

Amazon's stock shows an impressive pre-market increase of 6.9%, driven by the company's third-quarter performance surpassing analyst expectations in both revenue and earnings. Intel is also experiencing a substantial pre-market rise of 7.4%, thanks to better-than-anticipated third-quarter results and robust future guidance.

Exxon Mobil may see a positive movement as well, following a report of third-quarter earnings that topped expectations. However, Apple is facing slight pre-market decline, despite reporting stronger-than-expected fiscal fourth-quarter earnings.

The favorable movement in futures is further supported by a Labor Department report which revealed a significant slowdown in job growth for October, with non-farm payroll employment inching up by just 12,000. This is notably below the anticipated increase of 113,000 and the previously revised upward 223,000 gain in September. The unemployment rate held steady at 4.1%, aligning with forecasts.

While this data might raise questions about economic strength, it also sparks renewed optimism regarding future interest rate trends.

Yesterday, the market witnessed a continuation of its early downturn, particularly impacting technology stocks, with the Nasdaq experiencing a pronounced slump. By the close, the Nasdaq had plummeted 512.78 points, or 2.8%, to 18,095.15; the S&P 500 had fallen 108.22 points, or 1.9%, to 5,705.45; and the Dow had decreased by 378.08 points, or 0.9%, to 41,763.46.

The dip was largely triggered by disappointing earnings-related reactions from tech leaders Microsoft and Meta Platforms. Microsoft shares tumbled 6.0% due to unsatisfactory revenue guidance, despite exceeding fiscal first-quarter expectations. Meta experienced a 4.1% decline, grappling with weaker-than-expected user growth despite surpassing earnings forecasts and estimating increased capital expenditure due to AI investments.

Additionally, market sentiment was influenced by consumer price index data aligning with predictions. The Commerce Department noted a 0.2% increase in the Personal Consumption Expenditures (PCE) index for September, maintaining the annual growth rate at 2.1%. However, the core PCE index—which excludes food and energy—remained unchanged at an annual growth of 2.7%, slightly over the anticipated 2.6%. This has fueled concerns that the Federal Reserve might progress more cautiously in reducing interest rates.

Quincy Krosby, Chief Global Strategist at LPL Financial, commented, "The year-over-year core PCE print suggested a 2.7% increase, indicating the Fed is navigating a challenging path to curb inflation decisively." She noted the expectation of a 25-basis point rate cut in the upcoming Fed meeting but stressed the necessity of a gradual approach in light of resilient consumer spending, wage hikes from successful labor strikes, and a robust labor market.

Additionally, a Labor Department report revealed that initial jobless claims unexpectedly fell to a five-month low last week, adding to the anticipation of a more measured approach to rate reductions.

Microsoft's impact contributed significantly to the software sector's decline, with the Dow Jones U.S. Software Index falling 4.3%. Semiconductor stocks also displayed notable weakness, evidenced by the Philadelphia Semiconductor Index's 4.0% drop to its lowest close in over a month.Gold stocks experienced a significant decline, mirroring the drop in the precious metal's price, with the NYSE Arca Gold Bugs Index retreating by 3.2%. Similarly, sectors including computer hardware, commercial real estate, and brokerage witnessed considerable weakness, although utilities and energy stocks managed to defy the downward trend.

**Commodity and Currency Markets**

Crude oil futures are surging, up by $1.67 to reach $70.93 per barrel, following a prior rise of $0.65, ending Thursday at $69.26 per barrel. Meanwhile, after a steep drop of $51.50, gold futures are recovering, gaining $16.90 to settle at $2,766.20 an ounce. In the currency markets, the U.S. dollar is experiencing minor movement against the yen, trading at 151.97 yen compared to 152.03 yen during Thursday's New York close. Conversely, the dollar has slightly appreciated against the euro, now valued at $1.0898, up from $1.0884 the day before.

**Asia-Pacific Markets**

Asian markets mostly closed in the red on Friday, despite a modest uptick in Hong Kong markets buoyed by favorable indicators from Chinese manufacturing and home sales. Across Asia, a cautious sentiment prevailed amid mixed U.S. tech earnings, persistent Middle East tensions, and looming uncertainties associated with next week’s U.S. presidential election. Apple’s sales fell short of expectations in China, whereas Amazon and Intel delivered optimistic outlooks. Attention also turned to forthcoming U.S. employment figures, anticipated to provide further insight into the Federal Reserve's interest rate path.

The dollar stabilized against other major currencies, while gold began to recover toward a modest weekly increase after declining from previous highs. Oil prices extended earlier gains after intelligence from Israel indicated potential Iranian aggression from Iraq.

China's Shanghai Composite Index displayed volatility, eventually closing 0.2% lower at 3,272.01 as the nation prepared for a significant legislative assembly from November 4-8. Meanwhile, Hong Kong's Hang Seng Index climbed 0.9% to 20,506.43, fueled by a report suggesting small manufacturers in China returned to expanding in October. Additionally, major Chinese homebuilders reported improved new home sales, marking a year-over-year increase for the first time this year, following comprehensive policy measures by authorities.

Japanese markets plummeted, as the yen surged nearly 1% against the dollar after Bank of Japan Governor Kazuo Ueda noted currency markets’ substantial economic impact, hinting at potential near-term interest rate hikes. Investors also responded to data indicating Japanese industrial activity contracted at its fastest rate in three months during October. The Nikkei 225 Index fell 2.6% to 38,053.67, and the broader Topix Index decreased by 1.9% to 2,644.26. Lasertec dropped by 16.4% following its underwhelming earnings report, with Advantest, Tokyo Electron, and SoftBank Group also posting significant losses.

In South Korea, the Kospi declined 0.5% to 2,542.36, marking a third consecutive day of losses mainly driven by the tech sector. Key players like Samsung Electronics and SK Hynix fell by 1.5% and 2.2%, respectively.

Australian stocks suffered for a third straight day, influenced by grim forecasts from Microsoft and Meta Platforms. The S&P/ASX 200 Index decreased by 0.5% to its lowest in seven weeks at 8,118.80, mirrored by a similar 0.5% drop in the All Ordinaries Index to 8,379.70. Financial stocks faced substantial pressure, notably Macquarie Group, which plunged 3.6% after reporting profits below analyst expectations. Across the Tasman Sea, New Zealand's S&P/NZX-50 Index fell by 0.6% to 12,559.28.

**European Markets**

European markets advanced on Friday as investors evaluated the pivotal U.S. jobs data and looked forward to the upcoming U.S. presidential election. The U.K.'s FTSE 100 Index rose by 0.8%, France's CAC 40 Index climbed by 0.7%, and Germany's DAX Index increased by 0.6%. Eurozone bonds were largely stable amid indications of rising inflation, which fueled speculation that the European Central Bank might adopt a cautious stance regarding future rate cuts. The British pound showed little movement after an address by Chancellor of the Exchequer Rachel Reeves, who assured a stable trajectory for the U.K.'s public finances. Earlier data also revealed a slowdown in U.K. house price inflation for the first time in six months during October. Technology stocks such as SAP and ASML Holding registered modest gains, buoyed by the positive outlook from Amazon and Intel.Shares of Solid State, a specialist in value-added component supply, surged in London following the announcement of its acquisition of Q-Par Antennas USA LLC, for an amount up to $2.0 million. Similarly, Reckitt Benckiser, a leading consumer goods conglomerate, experienced a rise after being exonerated from liability in a trial concerning its baby formula.

In the luxury market tied to China, companies like LVMH and Hermès saw modest gains following a private survey indicating a rebound in China's manufacturing sector for October, recovering from the previous month's contraction.

Siemens enjoyed an uptick in shares amidst reports suggesting the German conglomerate is pursuing additional acquisitions following its $10.6 billion purchase of the U.S. industrial software company, Altair.

**U.S. Economic Update**

In October, the U.S. witnessed a slight increase in employment, with the Labor Department attributing this to gains in healthcare and government jobs being partially offset by declines in temporary and manufacturing positions. The report revealed a marginal rise in non-farm payrolls by 12,000 jobs, a notable decrease from the previously adjusted 223,000 increase in September. Economists had anticipated a rise of 113,000 jobs, significantly lower than the initially reported surge of 254,000 for the prior month.

The unemployment rate remained steady at 4.1 percent, mirroring September's rate and aligning with economists' projections.

At 9:45 am ET, Dallas Federal Reserve President Lorie Logan is poised to deliver the opening address at the Women in Central Banking Workshop.

The Institute for Supply Management is expected to release its October report on manufacturing activity at 10 am ET. The manufacturing PMI is forecasted to slightly increase to 47.6 from September's 47.2, though a figure below 50 would still denote contraction.

Furthermore, at 10 am ET, the Commerce Department will publish its report on September's construction spending. Analysts anticipate that construction spending will remain flat for September, following a slight decline of 0.1 percent in August.