Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets in the day ahead. Today is Tuesday, Oct. 31. Happy Halloween! The Bottom Line segment of today’s podcast starts at (4:19) for listeners who want to skip ahead.
State of Play
Stocks rallied yesterday and the S&P 500 exited correction territory just one trading day after entering it. There was no apparent catalyst for this. Perhaps just oversold conditions. As of 0640 it looks like risk-on conditions could be set to continue:
Stock index futures are pointing to small gains, with the S&P 500 up 0.3% and Nasdaq up 0.1%;
Bonds are seeing some bids, with the yield on the 10-year down 6 basis points to 4.82% whilst the 2-year yield is down 2bps to 5.02% (yields move inversely to prices);
Commodities aren’t doing much with WTI crude oil up 0.8% to trade around $83/barrel and copper flat.
Known Events
It’s another busy day of earnings. Caterpillar (CAT 0.00%↑) just beat on top- and bottom-estimates. JetBlue (JBLU 0.00%↑) just missed on both.
Pfizer (PFE 0.00%↑) and Anheuser-Busch InBev (BUD 0.00%↑) also report before the open at 0930.
After the close at 1600 we’ll hear from Advanced Micro Devices (AMD 0.00%↑) and Caesar’s Entertainment (CZR 0.00%↑), among others.
Case-Shiller home prices are out at 0900. The 20-city index, the most widely watched gauge, is expected to increase by 1.6% year-over-year, a significant improvement over the 0.1% seen last month.
The Conference Board reports its consumer confidence figure at 1000. A reading of 100 is expected, which is below the 103 level seen last month. That would be the third month in a row of declines. For point of reference, this number peaked at 130 back in the summer of 2021.
The Bottom Line©️
Was that it for the correction? The S&P is already out of correction territory. The Nasdaq still has to get to ~13,000, so another 200 points from its current level. Numbers aside, it’s more important to figure out the mood of investors, the current fear vs. greed stand-off.
The fact that there was no apparent catalyst for yesterday’s rally tells us this could (could) be a sign of better days to come. Unless, of course, there is new information to upset the equation. Earnings could conceivably do that. Home prices aren’t often given much heed by the market. They’re worth watching for our purposes, but the stock market rarely reacts very much.
That leaves us with the Fed, which starts its two-day meeting today. Fed fund futures are pricing in a 98% chance the Fed leaves its key interest rate unchanged. That means the focus will once again be on the policy statement and Jay Powell’s press conference. Last time around his hawkish language led to this latest stage of the bond sell-off (and stocks with it). Is the market getting ahead of itself again with this Fed pivot hope-ium? Was that what triggered yesterday’s rally? (Maybe not, just because bond yields didn’t move as much. Or at all, even).
These are questions. We’ll get the Fed tomorrow. For today earnings should be the driver (unless something unexpected happens somewhere).
Housekeeping
Obviously this is not investment advice (duh). Do your own research, make your own decisions.
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Home Prices, Earnings