Investors are navigating a period of uncertainty, with markets showing little movement ahead of major events, including earnings reports from tech giants and central bank meetings. As of 8:00 AM ET on October 24, 2023, S&P 500 futures remained flat, while Nasdaq futures edged up by 0.1%. The Magnificent Seven, a group of influential tech stocks, mostly traded flat or slightly higher in premarket activity.
The broader market sentiment has been affected by a decline in commodity-related equities, with cyclical stocks underperforming. In Europe, the Stoxx 600 fell by 0.3%, led down by disappointing earnings from major firms such as BNP Paribas and Novartis, along with weakness in the real estate and construction sectors.
Positive corporate developments emerged from the Trump Administration, which announced a significant $80 billion deal with Westinghouse to construct nuclear reactors in collaboration with Brookfield and Cameco. Additionally, Google has partnered with NextEra to restart a nuclear plant to support its AI operations.
In the bond market, Treasuries edged higher, while the Bloomberg Dollar Spot Index decreased. The Japanese yen saw strength following supportive comments made during the Trump-Takaichi summit, which focused on enhancing the US-Japan alliance.
The commodities market faced pressure, with both energy and precious metals down by approximately 1.7% to 2%. Oil prices dipped, with West Texas Intermediate (WTI) testing $60 per barrel and Brent crude falling below $65. Gold prices continued to slide, dropping below $4,000 per ounce. After reaching a low of $3,900, gold rebounded slightly but remains under pressure.
Despite the ongoing government shutdown, regional Federal Reserve activity indicators may still be released, although they have not significantly impacted market movements in the past. Housing prices are also a focal point, particularly given recent weakness in the Consumer Price Index’s Owners’ Equivalent Rent (OER) metric.
In premarket trading, stocks within the Magnificent Seven displayed mixed results: Amazon increased by 0.8%, Tesla by 0.7%, and Alphabet by 0.4%. In contrast, Apple showed a slight decline of 0.2%.
Several companies reported notable earnings updates. Amkor Technology (AMKR) fell by 4% despite beating third-quarter expectations, as its outlook did not meet investor forecasts. Conversely, Cameco (CCJ) surged by 13% following its strategic partnership with the US government for new nuclear reactor construction.
Software firm Confluent (CFLT) rose by 10% after exceeding third-quarter expectations and raising its full-year earnings forecast. PayPal Holdings (PYPL) gained 15% following an announcement to embed its digital wallet into ChatGPT, marking a significant collaboration with OpenAI.
The earnings season is showing promise, with nearly 70% of S&P 500 companies reporting better-than-expected sales, the highest proportion of positive surprises in about four years. Additionally, 85% of companies have exceeded earnings expectations, while just 14% have reported misses.
Market analysts express cautious optimism as investors anticipate insights from the upcoming Federal Reserve meeting, which may provide guidance on future rate cuts. “My central scenario is that the upward trend holds: there’s lots of liquidity out there, the earnings season is good and a Fed rate cut is expected and priced in,” stated Stephane Deo, a senior portfolio manager at Eleva Capital in Paris. However, he cautioned that there could be risks in the tech sector if analysts continue to project aggressive growth rates for major stocks.
In international news, President Trump continued his trade tour in Asia, praising Japan’s new Prime Minister, Sanae Takaichi. The two leaders pledged to strengthen their nations’ defense and economic cooperation.
As markets await crucial reports and earnings from major technology firms like Meta Platforms Inc. and Microsoft Corp., investors remain vigilant for potential shifts in market sentiment amid evolving economic conditions. The coming days will be pivotal as traders assess the implications of central bank policies and corporate earnings on market dynamics.
