Colin Cieszynski
The Before the Bell report is compiled by editors of The Globe and Mail and is updated throughout the morning to reflect latest developments. Colin Cieszynski, Chartered Financial Analyst and Chartered Market Technician, is chief market strategist with CMC Markets.
It's now looking like yesterday's breakout attempt by the Nasdaq may have been the bulls' last hurrah for a while. By the end of the day the rally had failed and overnight markets have reversed course to the downside. Nasdaq futures are down 0.4 per cent compared with a 0.2 per cent decline for Dow futures. European markets are also under pressure this morning with the FTSE down 0.9 per cent and the Dax down 0.7 per cent.
Traders continue to view earnings reports as a chance to exit long positions rather than add to them. Positive reports haven't generated much excitement and overall reports so far this week have been more mixed.
Last night, Apple beat the Street by a penny on earnings but overall sales were below expectations. The iPhone 7 launch appears to have gone fairly well. IPhone sales beat expectations in the quarter while other products disappointed. Apple refused to disclose iWatch sales suggesting a failed product and making Apple look increasingly like a one trick pony.
Apple's sales guidance for the next quarter was above Street expectations but it remains to be seen if it can capitalize on Samsung's problems or if its market share has peaked. Google's results on Thursday may give a better idea about the market. Traders took Apple's results as neutral to slightly disappointing as its shares and the Nasdaq fell in aftermarket trading.
Crude oil has been selling off overnight with Brent and West Texas Intermediate dropping 1.6 per cent. American Petroleum Institute inventories rose 4.8 million barrels (mmbbls) reversing some of the recent declines. OPEC speculation lingers in the background with Russia apparently favouring a freeze rather than a cut. WTI may be active through the morning around U.S. Department of Energy inventories. Whichever direction it exits its current $49 to $50 (U.S.) range could set the trend for coming days.
Today brings more earnings reports headlined by Boeing in the morning and Tesla Motors in the afternoon. Twitter could also be active today with the potential for more takeover rumours and speculation ahead of Thursday's earnings report which it moved up to the morning from the usual afternoon time.
Now, here is a closer look at what's going on this morning and what is still to come.
MARKET DATA:
Futures (as of about 8:30 a.m. ET)
Dow -0.22 per cent; S&P 500 -0.29 per cent; Nasdaq: -0.38 per cent; TSX 60 -0.23 per cent
Equities
Japan's Nikkei +0.15 per cent
Shanghai composite index -0.46 per cent
Hong Kong's Hang Seng -1.02 per cent
Germany's DAX -0.65 per cent
London's FTSE -0.95 per cent
France's CAC 40 -0.43 per cent
Commodities
WTI crude oil (Nymex Dec.) -1.64 per cent at $49.14 (U.S.) a barrel
Gold (Comex Dec.) -0.16 per cent at $1,271.60 (U.S.) an ounce
Copper (Comex Dec.) -0.02 per cent at $2.14 (U.S.) a pound
Currencies
Canadian dollar -0.06 at 74.79 cents (U.S.)
U.S. dollar index -0.15 at 98.59
Bonds
Canada 10-year bond yield +1.44 at 1.15 per cent
KEY ECONOMIC RELEASES
Germany consumer confidence
(8:30 a.m. ET) U.S. wholesale inventories for September. Estimate is an increase of 0.1 per cent from August.
(8:30 a.m. ET) U.S. goods trade deficit for September. Consensus is $60.5-billion, up from $59.2-billion in August.
(9:45 a.m. ET) U.S. Markit Services/Composite PMI for October.
(10 a.m. ET) U.S. new home sales for September. Consensus is an annualized rate decline of 1.0 per cent.
(10:30 a.m. ET) EIA petroleum status report.
KEY STOCKS TO WATCH
The drop in the value of the Canadian dollar has forced Fiat Chrysler Automobiles NV to raise prices in Canada, costing it sales and market share, chief executive officer Sergio Marchionne says. Mr. Marchionne made his comments as the auto maker reported record third-quarter financial results and raised its guidance for full-year profit. But Canada has been a drain, as part of a shortfall in profit margins in North America, which is a critical market for Fiat Chrysler.
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Shares of Apple, the world's most valuable public company, were off 3.4 percent in heavy premarket trading after the company said sales of its flagship iPhones fell for the third quarter in a row.
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Comcast, which is both the largest U.S. cable operator and the No. 1 U.S. high-speed internet provider, said total revenue rose 14.2 percent to $21.32 billion in the third quarter ended Sept. 30. Analysts on average had forecast revenue of $21.16 billion, according to Thomson Reuters I/B/E/S. Net income attributable to Comcast grew 12.1 percent to $2.24 billion from a year ago. Excluding certain adjustments, profit was 92 cents per share, beating the average analyst estimate by a penny. Its shares were up 0.7 per cent in premarket trading.
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Swedish mobile networks company Ericsson has named longtime board member Borje Ekholm as its new CEO, in a bid to turn around the company amid a decline in the industry. Its shares were down 1.4 per cent in premarket trading.
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Southwest Airlines came in five cents a share above Street estimates, with adjusted quarterly profit of 93 cents per share. Revenue was slightly shy of estimates, however. Southwest benefited from lower fuel prices and record traffic, but its shares were down 9 per cent in premarket trading because of lower-than-expected growth in the key metric of revenue per available seat mile.
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Garmin, which makes wearable fitness devices, came in 21 cents a share above estimates, with adjusted earnings of 75 cents per share. Revenue was also well above estimates on strong growth in its fitness, outdoor, marine, and aviation categories. Its shares were up 6 per cent in premarket trading.
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Panera Bread beat estimates by three cents a share, with adjusted quarterly profit of $1.37 per share. The restaurant chain's revenue also exceeded forecasts. Panera also raised its profit forecast. Its shares were up 5 per cent in premarket trading.
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Juniper Networks reported adjusted quarterly profit of 58 cents per share, six cents a share above estimates. The networking equipment maker's revenue came in slightly above projections. The company also issued a current-quarter outlook that was slightly higher than Street forecasts. Its shares were up 7.5 per cent in premarket trading.
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Akamai came in seven cents a share above estimates, with adjusted quarterly profit of 68 cents per share. Revenue also beat forecasts. The web services company gave strong current-quarter guidance on increasing demand for its cloud security products. Its shares were up 8 per cent in premarket trading.
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Norfolk Southern reported net income of $460 million, or $1.55 per share, up 1.7 percent from $452 million, or $1.49 per share a year earlier. Analysts, on average, expected earnings per share of $1.45. Revenue fell to $2.52 billion from $2.71 billion. Analysts expected revenue of $2.53 billion.
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Shares of Edwards Lifesciences fell nearly 10 percent to $102.38 premarket after the medical device maker reported third-quarter sales that missed expectations.
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Weapons maker Northrop Grumman rose 2 percent to $223.96 after the company reported a 16.7 percent jump in quarterly profit.
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Chipotle Mexican Grill dropped 3.9 percent to $390 in light trading after the restaurant chain operator reported a bigger-than-expected drop in quarterly sales at established restaurants.
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Biogen rose 2.8 percent to $294 after the drugmaker reported a 7 percent rise in profit.
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Coca-Cola Co. on Wednesday reported third-quarter profit of $1.05 billion. On a per-share basis, the Atlanta-based company said it had profit of 24 cents. Earnings, adjusted for non-recurring costs, were 49 cents per share. The results exceeded Wall Street expectations. The average estimate of nine analysts surveyed by Zacks Investment Research was for earnings of 48 cents per share. The world's largest beverage maker posted revenue of $10.63 billion in the period, also exceeding Street forecasts. Five analysts surveyed by Zacks expected $10.54 billion. Its shares were up 1.8 per cent in premarket trading.
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Boeing Co. on Wednesday reported third-quarter earnings of $2.28 billion. On a per-share basis, the Chicago-based company said it had profit of $3.60. Earnings, adjusted for non-recurring gains, were $3.51 per share. The results exceeded Wall Street expectations. The average estimate of 10 analysts surveyed by Zacks Investment Research was for earnings of $2.62 per share. The airplane builder posted revenue of $23.9 billion in the period, also topping Street forecasts. Four analysts surveyed by Zacks expected $23.46 billion. Boeing expects full-year earnings in the range of $6.80 to $7 per share, with revenue in the range of $93.5 billion to $95.5 billion. Its shares were up 1.6 per cent in premarket trading.
See Also: Wednesday's small-cap stocks to watch
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Earnings include: A. O. Smith Corp.; Acadian Timber Corp.; Agnico Eagle Mines Ltd.; Alacer Gold Corp.; Ally Financial Inc.; Antero Midstream Partners LP; Antero Resources Corp.; Barrick Gold Corp.; Bayer AG; Biogen Inc.; Boeing Co.; Canadian Utilities Ltd.; Canfor Corp.; Canfor Pulp Products Inc.; Coca-Cola Co.; Coeur Mining Inc.; Comcast Corp.; Constellation Software Inc.; DTE Energy Co.; Duke Realty Corp.; Epsilon Energy Ltd.; Equifax Inc.; F5 Networks Inc.; FirstService Corp.; GlaxoSmithKline PLC; Goldcorp Inc.; Golden Star Resources Ltd.; Hilton Worldwide Holdings Inc.; Hyundai Motor Co.; Ingersoll-Rand PLC; Lear Corp.; Mondelez International Inc.; Newmont Mining Corp.; Northrop Grumman Corp.; Novadaq Technologies Inc.; Owens Corning; Raymond James Financial Inc.; Southwest Airlines Co.; State Street Corp.; Suncor Energy Inc.; Tesla Motors Inc.; Texas Instruments Inc.; Uni Select Inc.; Waste Connections Inc.; Waste Management Inc.; WEC Energy Group Inc.; Westshore Terminals Investment Corp.; Wyndham Worldwide Corp.
With files from wire services