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Two Potential Sources of Volatility Into Year-End

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What’s in Today’s Report:

  • Two Potential Sources of Volatility Into Year-End
  • Oil Update and EIA Analysis

Futures are bouncing from yesterday’s declines thanks to solid earnings and following an otherwise quiet night of news.

Widely held chipmaker Nvidia (NVDA) posted strong earnings after the close and that’s helping to ease some anxiety around chip supplies.

There were no notable economic reports overnight.

Today there are two notable economic reports, Jobless Claims (E: 261K) and the Philadelphia Fed Manufacturing Index (E: 21.4), and given every major economic report this week has been very strong, markets would like to see a solid number but nothing so strong that adds to the narrative that tapering may need to be accelerated.

Regarding the Fed, we have multiple speakers today including: Bostic (7:30 a.m. ET), Williams (9:30 a.m. ET), Evans (2:00 p.m. ET), and Daly (3:30 p.m. ET) although none of them should move markets.

Finally, as we explain in the issue, COVID and the Debt Ceiling are starting to become headwinds on stocks, and the headlines that imply further rising global case counts or lack of progress on the Debt Ceiling could be mild headwinds on stocks.

As Tech Goes, So Goes the SPY (And Tech Is Facing Headwinds)

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What’s in Today’s Report:

  • As Tech Goes, So Goes the SPY (And Tech Is Facing Headwinds)

Futures are enjoying a modest bounce following yesterdays’ declines after a generally quiet night of news.

Economic data was solid overnight as both EU (56.2 vs. (E) 56.1) and UK (54.9 vs. (E) 54.1) September Composite PMIs beat estimates, reflecting stability in the global economic recovery.

On inflation, Euro Zone PPI rose 1.1% vs. (E) 1.3%, implying inflation pressures could be starting to ease.

Today focus will be on economic data and specifically the ISM Services PMI (E: 60.0).  Markets will want to see stability in this number to further confirm the COVID spike in July/August didn’t have a lasting impact on the recovery.  We also get two Fed speakers today, Barkin (10:30 a.m. ET) and Quarles (1:15 p.m. ET), and markets will continue to be on the lookout for any signs of a compromise on the reconciliation/debt ceiling bill (although nothing material is expected today).