Here are five things you must know for Thursday, October 13:
1. — Stocks Futures Leap Despite Inflation Surge
U.S. equity futures powered higher Thursday, while the dollar eased and Treasury yields fell, as investors appeared to shrug-off accelerating inflation signals, as well as a hawkish Federal Reserve, ahead of a busy slate of bank and bluechip earnings.
A record high reading for factory gate inflation in China September, which followed surprisingly solid export data the previous day, suggests price pressure will ripple through the global supply chain over the coming months.
Alongside yesterday’s faster-than-expected reading for September inflation in the United States, which returned to a 13-year high, and minutes detailing the Fed’s aim of tapering the pace of its $120 billion in monthly bond purchases later this year, and investors now how a much-clearer picture of both the macroeconomic backdrop and the central bank’s likely reaction.
Still, with a series of big ticket earnings expected before the start of trading Thursday — including Dow components UnitedHealth Group (UNH) – Get UnitedHealth Group Incorporated Report and Walgreens Boots (WBA) – Get Walgreens Boots Alliance Inc Report, as well as Citigroup (C) – Get Citigroup Inc. Report, Morgan Stanley (MS) – Get Morgan Stanley (MS) Report and Wells Fargo WFC — and a key reading of September retail sales slated for tomorrow, stocks are looking at a solid start to the Thursday session.
Futures contracts tied to the Dow Jones Industrial Average are indicating a 190 point opening bell gain ahead while the broader S&P 500 is priced for a 28 point move to the upside. Nasdaq Composite futures, meanwhile, are set for a 185 point gain as benchmark 10-year note yields eased to 1.533% in overnight trading and Apple (AAPL) – Get Apple Inc. (AAPL) Report posts a 0.8% rebound in pre-market trading.
2. — IEA Cautions Power Crisis Will Boost Crude Demand
Global oil prices moved back towards the highest levels in seven years Thursday, adding to inflationary pressures in major economies around the world, as the International Energy Agency warned that power crises in Europe and Asia would boost crude demand through the end of the year.
“Record coal and gas prices as well as rolling blackouts are prompting the power sector and energy-intensive industries to turn to oil to keep the lights on and operations humming,” the Paris-based group said in its monthly energy market report.
“Higher energy prices are also adding to inflationary pressures that, along with power outages, could lead to lower industrial activity and a slowdown in the economic recovery.” the report added.
WTI futures for November delivery $1.03 higher from last night’s close to start the session at $81.47 per barrel ahead of Energy Department stockpile data at 10:30 am Eastern time, while Brent contracts for December, the global pricing benchmark, were up $1.09 at $84.27 per barrel.
3. — NIH Study Gives Nod to ‘Mix and Match’ COVID Booster Shots
The National Institutes of Health published a study late Wednesday that showed patients who first received COVID vaccine shot from Johnson & Johnson (JNJ) – Get Johnson & Johnson (JNJ) Report had a better immune response from boosters made by Pfizer (PFE) – Get Pfizer Inc. Report or Moderna (MRNA) – Get Moderna, Inc. Report
The preliminary study comes as the Food & Drug Administration looks to alter Emergency Use Authorization approvals for Moderna and Johnson & Johnson vaccines to allow for booster shots over the coming months. The FDA noted, however, that Johnson & Johnson’s data submission included small sample sizes and non-validated test results.
If the FDA concludes that mixing vaccine doses is both safe and more-effective in generating immune responses, it could opt to approve Moderna’s request while seeking more information from Johnson & Johnson.
Johnson & Johnson shares were marked 0.56% higher in pre-market trading Thursday to indicate an opening bell price of $160.09. Moderna shares, meanwhile, jumped 2.4% to $329.30 each.
4. — Banks Lead Busy Earnings Slate
JPMorgan (JPM) – Get JPMorgan Chase & Co. (JPM) Report set the tone for the banking sector yesterday with a stronger-than-expected third quarter earnings report built on a surge in deal-making fees, while Delta Air Lines disappointed with a warning that rising fuel costs will trim current-quarter profits.
Wells Fargo (WFC) – Get Wells Fargo & Company Report, Morgan Stanley (MS) – Get Morgan Stanley (MS) Report and US Bancorp (USB) – Get U.S. Bancorp Report are also expected to report before the opening bell
Collective S&P 500 profits are expected to rise 29.6% from last year to around $413.8 billion, according to forecasts from Refinitiv,. The energy sector is expected to lead gains over Q3, with profits rising by nearly 1500% from last year to around $20.5 billion.
Rising input costs, a tight labor market and weakening consumer demand are likely to hit profit forecasts across all sectors, however, leading to a weaker-than-expected series of outlooks from bluechip comapnies over the coming weeks, with the overall earnings growth rate slowing to around 22.2% over the fourth quarter
5. — Netflix Says Squid Game Has Best-Ever Debut
Netflix (NFLX) – Get Netflix, Inc. (NFLX) Report said late Wednesday that ‘Squid Game’, a hyper-violent dystopian survival drama made by producers in Korea, has had the streaming group’s most successful debut.
‘Squid Game’ has drawn 111 million viewers over its first month, Netflix said, passing the previous record of 82 million set by the U.K.-made Regency era drama Bridgerton.
“The strong second half content slate – highlighted by Squid Game – has reinvigorated the stock and near-term subscriber optimism,” said BMO Capital Markets analyst Daniel Salmon ahead of next week’s third quarter earnings. “We think risk/reward tilts to the upside still, but we are moving the stock a notch down our pecking order (of FAANG stocks) owing to stock price performance.”
Netflix shares were marked 0.7% higher in pre-market trading Thursday to indicate an opening bell price of $634.06 each.