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Why Did Stocks Drop Last Week?

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Why Did Stocks Drop Last Week?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Did Stocks Drop Last Week?
  • Weekly Market Preview:  Focus on Treasury Secretary, NVDA earnings and economic growth (Thursday/Friday).
  • Weekly Economic Cheat Sheet:  Important Growth Data Late This Week

Futures are little changed following a quiet weekend of news as markets continue to digest last week’s rise in Treasury yields, and the return of political surprises (via Trump’s cabinet announcements).

There were no notable economic reports overnight.

Politically, the major remaining cabinet pick from Trump is Treasury Secretary and it should come early this week (and another unorthodox choice would further roil markets).

Today the calendar is quiet as there is just one economic report, Housing Market Index (E: 43), and one Fed speaker, Goolsbee (10:00 a.m. ET).  So, focus will be on Trump’s cabinet (again, the more traditional choice for Treasury, the better for markets) and on the 10-year yield.  If it keeps rising, that will be a continued headwind on stocks.

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Where Are We In the Bull Market Cycle? (One Year Later)

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Where Are We In the Bull Market Cycle?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Where Are We In the Bull Market Cycle? (One Year Later)

Futures are moderately lower as markets continue to digest the market implications of the Republican win while economic data was mixed.

The U.S. Dollar at near two-year highs along with the 10-year yield pushing 4.50%, combined with Trump’s recent unorthodox cabinet picks, is causing investors to re-assess the potential impacts of the incoming Republican government.

Focus today will be on economic data and given the less dovish rhetoric from Fed officials this week, markets will want to see in-line to slightly soft reports to keep rate cuts on track.  If the data is hotter than expected, look for yields to rise and stocks to extend the early losses.  The important reports today include Retail Sales (E: 0.3%), Empire Manufacturing (0.0) and Industrial Production (E: -0.3%) and we have one notable Fed speaker, Williams (1:15 p.m. ET).

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Market Multiple Table: How High Can This Market Go?

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Market Multiple Table: How High Can Stocks Go?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Market Multiple Table: How High Can This Market Go?

Stock futures are modestly lower with the dollar index at a multi-year high and the 10-Yr yield holding above 4.40%, a multi-month high, as traders look ahead to the CPI report.

Economically, Japanese PPI notably jumped from 2.8% to 3.4% y/y in October which raised inflation concerns in Asian markets.

Today, trader focus will almost exclusively be on the latest U.S. inflation data due out before the bell: CPI (E: 0.2% m/m, 2.6% y/y), Core CPI (E: 0.3% m/m, 3.3% y/y). A “hotter” than anticipated print will likely trigger hawkish money flows, pushing the dollar index and Treasury yields to new highs which would weigh on stocks while an as-expected or “cool” print would be well-received.

Additionally, there are several Fed speakers on the calendar who could move markets: Logan (9:45 a.m. ET),  Musalem (1:00 p.m. ET), and Schmid (1:30 p.m. ET).

Lastly, earnings season continues to slow down but a few notable companies reporting quarterly results today include: HUT (-$0.24), NU ($0.10), and CSCO ($0.87).

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Contrarian Opportunity in Chinese Tech (3 ETFs)

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What’s in Today’s Report:

  • Can Singles’ Day and Stimulus Offset Concerns in Chinese Stocks?

Futures are lower this morning as global equity markets take a breather and digest the sizeable post-election gains.

Economically, German CPI held steady at 2.0% last month while the ZEW Survey disappointed. In the U.S., the NFIB Small Business Optimism Index rose to 93.7 vs. (E) 91.7 but the solid release is having little impact on futures in pre-market trading.

There are no further economic reports today, but the Treasury will hold 3M and 6M Bill auctions at 11:30 a.m. ET that could move yields (Treasuries were closed for Veterans Day yesterday so how bonds trade this morning could move stocks).

Turning to the Fed, the speaker circuit is picking back up in the wake of last week’s FOMC meeting with several officials scheduled to speak today including: Waller (10:00 a.m. ET), Barkin (10:15 a.m. ET), Kashkari (2:00 p.m. ET), and Harker (5:00 p.m. ET).

Finally, a few notable companies reporting earnings today include: HD ($3.65), SHOP ($0.37), and OXY ($0.81). The former two could shed light on the health of the U.S. consumer and therefore have the potential to move the broader equity markets but a continued digestion, or potentially some profit taking, in the wake of the huge post-election advance before tomorrow’s CPI release is fairly likely today.

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Why the Bullish Thesis Got Stronger

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What’s in Today’s Report:

  • Why the Bullish Thesis Got Stronger
  • Weekly Market Preview: Does the S&P 500 Breakthrough 6,000?
  • Weekly Economic Cheat Sheet: CPI on Wednesday, Important Growth Data on Thursday

Futures are modestly higher on post-election momentum and following a very quiet weekend of news.

Parts of the Trump administration are starting to come into view, most notably that Scott Bessent is looking most likely to become Treasury Secretary and the market views that as bullish.

Economically, there were no notable reports overnight.

Today is Veteran’s Day so trading should be quiet as there are no economic reports or Fed speakers, while the bond market is closed.  However, there are important updates this week on inflation (CPI on Wednesday) and growth (numerous reports on Thursday/Friday) so the week will get busier.

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What Yesterday’s Rate Cut Means for Markets

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What Yesterday’s Rate Cut Means for Markets: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What Yesterday’s Rate Cut Means for Markets

Futures are slightly lower mostly on digestion of the week’s news and after Chinese stimulus only met expectations.

China announced a 1.4 trillion-yuan fiscal stimulus program (so government spending) although that only met expectations and is seeing a mild “sell the news” reaction.

Today the calendar is relatively quiet (especially considering what a busy week it’s been already) but there is still one notable economic release, the University of Michigan Consumer Sentiment (E: 70.8) and, contained in that report, the One-Year Inflation Expectations (E: 2.7%).  Markets will want to see both numbers hit expectations and not be “Too Hot” (especially for inflation expectations).

We also have two Fed speakers today, Bowman (11:00 a.m. ET) and Musalem (2:30 p.m. ET), but given the Fed decision yesterday they shouldn’t move markets.

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The biggest risk for the market would be if the data come in strong anyway

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The biggest risk for the market would be if the data come in strong anyway: Tom Essaye Quoted in Market Watch

The stakes for the October jobs report are high — here’s what to expect: Sevens Report

The stakes for the latest reading from the main U.S. employment barometer are high. Although not in the way many investors might think, according to Tom Essaye, founder and president of Sevens Report Research.

Fallout from hurricanes that hit Florida, Georgia and North Carolina, coupled with the ongoing Boeing strike, are expected to push up the unemployment rate. Because of this, investors are already expecting a weak report, Essaye said in commentary shared with MarketWatch on Thursday.

It also means that the biggest risk for the market would be if the data come in strong anyway. Signs of a still-resilient labor market could pressure the Federal Reserve to leave its policy interest-rate target on hold next week, Essaye added.

A too-hot number could push stocks lower and Treasury yields higher as traders account for a greater likelihood of a “no landing” scenario.

“A second straight monthly jobs report above 200k and the unemployment rate dropping back below 4% will bolster the no landing expectation and push back hard on another rate cut quickly following the cut in September,” Essaye said.

Also, click here to view the full MarketWatch article published on October 31st, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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Election Day Scenario Analysis (Good, Bad, Ugly)

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Election Day Scenario Analysis (Good, Bad, Ugly): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Good/Bad/Ugly Election Scenario Analysis
  • Chart – S&P 500 Violates Critical Uptrend off August Lows

Stock futures turned higher with Asian shares overnight thanks to better-than-expected Chinese economic data as trader focus shifts ahead to Election Day in the U.S.

Economically, China’s October Composite PMI rose to 51.9 vs. (E) 50.4, up from 50.3 in September which supported solid gains in Asian shares overnight with Chinese benchmarks rising more than 2%.

Today, the general elections in the U.S. will clearly dominate the headlines however there is one key economic report to watch shortly after the open: ISM Services PMI (E: 53.5).

There are no Fed officials scheduled to speak ahead of this week’s FOMC meeting however there is a 10-Yr Treasury Note auction at 1:00 p.m. ET that could roil markets if it is much stronger than anticipated (flight to safety) or much weaker than expected (fiscal concerns/higher yields).

Lastly, there are a few earnings to watch today as well with MPC ($0.97) reporting ahead of the open and key semiconductor company SMCI ($0.51) after the close along with tech-focused communications company, LUMN ($-0.20).

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Why Stocks Dropped (Two Main Reasons)

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Why Stocks Dropped (Two Main Reasons): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Stocks Dropped (Two Main Reasons)
  • Jobs Day (Abbreviated Jobs Report Preview)

Futures are modestly higher following “ok” earnings from major tech firms overnight and ahead of the jobs report.

AMZN and INTC posted solid earnings while AAPL results were only mildly disappointing and the cumulative reports are boosting futures this morning.

Economically, the UK manufacturing PMI dropped to 49.9 vs. (E) 50.3, keeping BOE rate cut expectations elevated.

Today focus will be on economic data, starting with the jobs report and expectations are as follows:  106K Job-Adds, 4.1% UE Rate, 4.0% y/y Wage Growth.  The jobs report isn’t the only important report today, however, as we also get the October ISM Manufacturing PMI (E: 47.6).

Bottom line, both numbers need to come in close to expectations to help stocks extend this morning’s early bounce.  Data this week has been a bit “hot” and it’s pushed Treasury yields higher and Fed rate cut expectations lower and that’s weighed on stocks.  In-line reports this morning would be Goldilocks and would reverse that trend (and further fuel this morning’s bounce).

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Jobs Report Preview (Will It Decide Rate Cuts?)

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Jobs Report Preview (Will It Decide Rate Cuts?): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Jobs Report Preview (Will It Decide Rate Cuts?)

Futures are moderately lower following disappointing earnings from MSFT and META overnight.

META and MSFT are both lower by around 3% following disappointing earnings results (META) and guidance (MSFT) and that’s weighing on futures.

Economically, EU inflation was a bit hotter than expected as EU HICP (their CPI) rose 2.7% y/y vs. (E) 2.6% y/y.

Today will be a busy day of economic data and earnings.  On the economy, the two key reports are Jobless Claims (E: 235K) and the Core PCE Price Index (E: 0.3% m/m, 2.6% y/y) and markets will want in-line readings on both to reinforce recent Goldilocks growth and inflation data.

On earnings, there are three major reports after the close:  AAPL ($1.49), AMZN ($1.14) and INTC ($-0.02).

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