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Positive Bias Amid Information Overload



Chief Market Analyst

During an earnings-reporting period, you can always count on at least one day to be filled with information overload. Today is one of those days.

There have been a ton of earnings reports since yesterday’s close, so be sure to check out our Earnings Results calendar page for the full rundown.

The latest ECB policy decision has been rendered and there were no surprises there, with the corridor of key rates being left unchanged and the ECB confirming it will begin its asset purchases (again) at a monthly pace of €20 billion as of November 1.

Bloomberg is reporting that China is willing to buy $20 billion of U.S. agricultural products in the first year, assuming a Phase One trade deal is signed, and that purchases could scale up to $40-50 billion in the second year if all tariffs are removed. On a related note, U.S. Vice President Pence is giving a speech on China at 11:00 a.m. ET.

South Korea reported a weakening 0.4% qtr/qtr GDP growth rate for the third quarter and the preliminary manufacturing PMI reading for October for the eurozone was an anemic 45.7, which falls below the 50.0 expansion/contraction line.

The weekly initial claims report was good (again), with claims declining by 6,000 to 212,000 ( consensus 217,000), but the advance report for durable goods orders in September wasn’t so good. Total orders declined 1.1% ( consensus -1.0%) while orders, excluding transportation, declined 0.3% ( consensus -0.3%) and nondefense capital goods orders excluding aircraft — a proxy for business investment — declined 0.5% on top of a 0.6% decline in August.

We apologize for the choppy read, but that is by design to demonstrate that there is notable news on a number of notable headline fronts.

The most relevant news for readers, though, may be the news that the stock market is expected to open higher. That is the indication anyway that is being thrown off by the futures market.

Currently, the S&P futures are up six points and are trading 0.3% above fair value. The Nasdaq 100 futures are up 44 points and are trading 0.6% above fair value. The Dow Jones Industrial Average futures are up 44 points and are trading 0.2% above fair value.

That’s predominately an earnings-driven bias. 

Microsoft (MSFT)Lam Research (LRCX), Comcast (CMCSA)Raytheon (RTN)Southwest Airlines (LUV)O’Reilly Automotive (ORLY), and Dow, Inc. (DOW) are some of the luminaries that reported and exceeded expectations. Those stocks are all indicated higher.

Tesla (TSLA), however, is stealing the show from everyone. It is trading 18% higher after blowing past estimates and providing some relatively upbeat guidance.

It isn’t all roses and kittens on the reporting front. Twitter (TWTR) is down 18% after missing expectations and issuing disappointing guidance. 3M (MMM)Ford (F)Nokia (NOK)eBay (EBAY)Danaher (DHR), and Stanley Black & Decker (SWK) all disappointed in one form or another and are indicated to open lower.

Overall, then, there will be some more story-stock trading action today with an overlay of some macro considerations in the mix. What that means in the end is hard to say, yet the meaning of any advance won’t carry much meaning until the S&P 500 is able to break out above its prior all-time high (3027.98), which is within striking distance.

Originally Posted on October 24, 2019 – Positive Bias Amid Information Overload

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