Five things you need to know before the market opens on Thursday, October 27:
1. — Stocks Futures Higher With Earnings, Rates, GDP Data In Sight
U.S. equity futures traded mixed Thursday, helped in part by fading Treasury bond yields and a steady dollar, as investors looked to a key interest rate decision in Europe prior to the start of trading and Apple’s closely-watched earnings after the closing bell.
The European Central Bank is expected to raise its key refinancing rate by 75 basis points later this morning in Frankfurt, taking it to 2%, as officials grapple with double-digit inflation pressures and a burgeoning energy crisis in the world’s largest economic bloc.
Projections for its next move, however, are mixed, following a surprisingly smaller-than-expected 50 basis point increase from the Bank of Canada yesterday that suggests policy officials around the world are starting to asses the impact of their inflation fight on growth and employment prospects.
That has traders betting on smaller hikes from the Federal Reserve, as well, and although a 75 basis point move is locked-in for November, bets on a follow-on move of the same size in December have eased some 35 basis points from last week to around 42.5%.
Benchmark 10-year notes were holding at around 4.05% while the U.S. dollar index, which tracks the greenback against a basket of six global currencies, edged 0.15% higher to 109.853, but remains trading near the lowest levels in at least a month.
The boost from falling yields and a weaker dollar that would normally provide to stocks has been evident, with the S&P 500 rising for two of the past three sessions, but a series of weaker-than-expected Tech earnings — particularly Google (GOOGL) and Microsoft (MSFT) — has kept broader gains in check.
That puts a great deal of focus on tonight’s after-the-bell updates from Apple and Amazon (AMZN) , with investors keying on the former’s holiday quarter sales outlook and the latter’s indication of any weakness in its benchmark Web Services division.
Heading into the start of the trading day on Wall Street, with third quarter GDP data and weekly jobless figures due at 8:30 am Eastern time, futures contracts tied to the S&P 500 are priced for a 5 point gain while those linked to the Dow Jones Industrial Average are priced for a 110 point advance. The tech-focused Nasdaq is priced for a 30 point decline on the back of a massive pre-market decline for Meta Platforms.
In overseas markets, the region-wide Stoxx 600 was down 0.3% in early Frankfurt trading ahead of the ECB rate decision at 7:15 am Eastern time, while the FTSE 100 gained 0.33% in London.
Overnight in Asia, stocks rebounded from their lowest levels in more than two years with the region-wide MSCI ex-Japan index marked 0.8% higher heading into the close of trading. Japan’s Nikkei 225 fell 0.32%.
Meta Platforms (META) shares plunged lower in pre-market trading, potentially wiping nearly $70 billion from the social media group’s value, following a dismal third quarter earnings update that forecast deeper losses ahead for its struggling metaverse project.
The Facebook parent missed Street earnings forecast, posting a bottom line of $1.64 per share, with revenues down 4% to $27.7 billion.
Looking into the final three months of the year, Meta said it sees revenues in the region of $30.0 billion to $32.5 billion, a range that fall under the Street forecast of $32.3 billion.
Reality Labs, the division that will house the company’s metaverse plans and has lost more than $16 billion over the past 18 months, will see “significantly” more red ink in the coming year, Meta said.
Meta shares were marked 19.6% lower in pre-market trading to indicate an opening bell price of $104.38 each, a move that would extend the stock’s year-to-date decline to around 69%.
3. — Ford Slides On Narrowed Profit Guidance, Charge to Exit Self-Driving Business
Ford (F) shares slumped lower in pre-market trading after the carmaker narrowed its full-year profit guidance and booked a $2.7 billion charge linked to the wind-down of its self-driving business.
The moves clouded an otherwise solid third quarter earnings update, which saw Ford post an adjusted bottom line of 30 cents per share on revenues of $39.4 billion.
Ford also clipped its guidance for full-year profits, which it sees at around $11.5 billion, down from a prior estimate of between $11.5 billion to $12.5 billion.
The $2.7 billion charge marks the end of Ford’s joint venture with Volkswagen, known as Argo AI, with CEO Jim Farley noting that “profitable, fully autonomous vehicles at scale are a long way off and we won’t necessarily have to create that technology ourselves.”
Ford shares were marked 2.5% lower in pre-market trading to indicate an opening bell price of $12.50 each.
4. — Apple Slips Ahead of Q4 Earnings With Outlook In Focus
Apple (AAPL) shares edged lower in pre-market trading ahead of the consumer tech giant’s highly-anticipated fourth quarter earnings after the closing bell.
Apple is expected to post solid gains in iPhone sales, possibly at the highest pace of the year, that will help revenues rise 6.6% to $88.9 billion, with a bottom line of $1.27 per share.
Key to tonight’s report, however, will be Apple’s projections for the three months ending in December, its first in fiscal terms but the most important in terms of sales. Holiday quarter revenues could rise to as much as $128.4 billion, analysts suggest, thanks to solid demand for its new iPhone 14 series and improving sales in China.
CEO Tim Cook’s commentary on inflation, supply chains and the depth of consumer demand will also be closely tracked when he speaks with investors at around 5:00 pm Eastern time.
Apple shares, which have fallen nearly 18% so far this year, were marked 0.3% lower in pre-market trading to indicate an opening bell price of $148.90 each.
5. — Twitter Shares To Be Suspended As Musk Takeover Looms
Twitter (TWTR) moved higher in pre-market trading as officials at the New York Stock Exchange prepared to suspend the shares from trading tomorrow ahead of the Delaware court’s deadline for Elon Musk to complete his $44 billion takeover of the social media group.
Musk visited the company’s San Francisco headquarters yesterday, sharing photos of himself with his 110.2 million Twitter followers, and appears ready to consummate the months-long merger agreement by tomorrow’s deadline.
The $54.20 per share price he’s been ordered to pay, however, looks wildly over-valued given the warnings on advertising spending articulated by companies such as Snap (SNAP) , Google (GOOGL) and Meta, as well as the fact that the Nasdaq has fallen nearly 20% since the takeover was first initiated on April 14.
Twitter shares were marked 1.2% higher in pre-market trading to indicate an opening bell price of $53.98 each.