S&P Futures Drop as Busy Earnings Week Kicks Off: Markets Wrap

(Bloomberg) — US stock futures fell as investors looked ahead to a flurry of company earnings for signs the longest run of weekly gains this year can continue. Oil climbed and gold touched a record on mounting tensions in the Middle East.

Contracts pointed to a 0.4% drop for the S&P 500 at the Wall Street open, while futures for the tech-heavy Nasdaq 100 fell 0.6%.

Financial markets are being shaped by investors’ shifting views on the health of major economies on the one hand, and the impact of hostilities in the Middle East and geopolitics on the other. More than a fifth of S&P 500 companies are due to report this week, according to data compiled by Bloomberg, with Tesla Inc., Boeing Co., General Motors Co. and Coca-Cola Co. in the lineup. 

“Stocks have been performing strongly since the start of October, supported by better economic data and policy easing bias from most global central banks,” said Marija Veitmane, senior multi-asset strategist at State Street Global Markets. “It’s not too surprising that investors are talking profits or lightening their positions ahead of a busy earnings week.”

The dollar rose and US Treasuries fell, with the 10-year yield adding five basis points. Traders have started to pare back wagers on Federal Reserve interest rate cuts after strong economic data. A raft of Fed policy makers are set to speak later Monday. 

In Europe, the Stoxx 600 index dropped 0.6%. European companies have so far delivered fewer positive earnings surprises than usual, Barclays strategists said at the end of last week.

“Optimism about a soft-landing abounds, but that narrative is much more relevant for the US,” said Daniel Murray, chief executive officer of EFG Asset Management in Switzerland. “The European macro backdrop is much more vulnerable, and that is weighing on investor sentiment towards European stocks.” 

Still, US stocks are unlikely to sustain their above-average performance of the past decade as investors turn to other assets including bonds for better returns, Goldman Sachs Group Inc. strategists said. This year’s 23% bounce has been concentrated in a handful of the biggest technology stocks.

Corporate Highlights: 

• Boeing shares rose 4.5% in premarket trading on Monday after union workers hammered out a tentative agreement with the planemaker that raises pay by 35% over four years.
• Kenvue, the maker of Band-Aids and Tylenol, jumped 5% in premarket trading. The Wall Street Journal reported that activist investor Starboard Value has built a stake in the company and is agitating for change to boost the stock price.
• US insurer MetLife Inc. is in advanced talks to buy PineBridge Investments’ assets outside of China, people familiar with the matter said, in a deal that could be valued at $1 billion to $1.5 billion.
• Sanofi entered a fresh round of exclusive negotiations to sell control of its consumer health unit to Clayton Dubilier & Rice after the French government secured social commitments and agreed to take a minority stake.
• DNB Bank ASA will acquire all the shares of rival Swedish firm Carnegie Holding AB for about 12 billion kronor ($1.1 billion) in what is the latest step of banking consolidation in the Nordic market.
• JAB agreed to buy Mondelez’s 86 million shares in JDE Peet’s for €25.10 per share, according to a statement.

Gold climbed to an all-time high and Brent crude traded above $74 per barrel. In the Middle East, Israel is discussing its attack on Iran after a Hezbollah drone exploded near Prime Minister Benjamin Netanyahu’s private home at the weekend. Investors are also boosting gold holdings ahead of what’s expected to be a tight US presidential election. 

 

Here are some highlights of the coming week: 

• IMF, World Bank annual meetings in Washington Monday through Oct. 26
• BRICS summit in Russia, hosted by Russian President Vladimir Putin. Among those attending are the leaders of Brazil, India and China, Oct. 22 through Oct. 24.
• Canada rate decision, Boeing, Tesla, Deutsche Bank earnings Oct. 23
• Eurozone, UK, US PMIs
• German IFO data, Tokyo CPI

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.3% as of 8:16 a.m. New York time
• Nasdaq 100 futures fell 0.5%
• Futures on the Dow Jones Industrial Average fell 0.2%
• The Stoxx Europe 600 fell 0.5%
• The MSCI World Index fell 0.1%

Currencies

• The Bloomberg Dollar Spot Index rose 0.1%
• The euro fell 0.1% to $1.0853
• The British pound fell 0.2% to $1.3025
• The Japanese yen fell 0.3% to 149.99 per dollar

Cryptocurrencies

• Bitcoin fell 0.8% to $68,229.34
• Ether fell 0.2% to $2,706.7

Bonds

• The yield on 10-year Treasuries advanced five basis points to 4.13%
• Germany’s 10-year yield advanced eight basis points to 2.26%
• Britain’s 10-year yield advanced six basis points to 4.12%

Commodities

• West Texas Intermediate crude rose 2.1% to $70.65 a barrel
• Spot gold rose 0.5% to $2,736.15 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Sunil Jagtiani, Catherine Bosley and Henry Ren.

©2024 Bloomberg L.P.