December S&P 500 futures (ESZ23)are down -0.38%, and December Nasdaq 100 E-Mini futures (NQZ23) are down -0.50% this morning as market participants looked ahead to the release of fresh labor market data while the hawkish rhetoric from Fed officials kept Treasury yields elevated.

In Monday’s trading session, the tech-heavy Nasdaq 100 outperformed major benchmarks, underpinned by an about +3% gain in NVIDIA Corporation (NVDA) after Goldman Sachs upgraded the stock to Conviction Buy from Buy. Mega-cap technology stocks also gained ground, with Meta Platforms Inc (META) and Alphabet Inc (GOOGL) rising more than +2%. In addition, Insulet Corporation (PODD) climbed over +3% after Jefferies upgraded the stock to Buy from Hold. On the bearish side, Kellogg Company (K) plunged about -6% and was among the top percentage losers on the benchmark S&P 500 after the company completed the separation of its North American cereal business into a new company called WK Kellogg and renamed itself Kellanova. In addition, Target Corporation (TGT) slid over -3% after Bank of America Global Research lowered its price target on the stock to $120 from $135. 

Economic data on Monday showed that the U.S. ISM manufacturing index came in at 49.0 in September, stronger than expectations of 47.7. Also, the U.S. September S&P Global manufacturing PMI stood at 49.8, stronger than expectations of 48.9. In addition, U.S. construction spending rose +0.5% m/m in August, in line with expectations.

“Overall, U.S. manufacturing appears to be over the worst, but the outlook remains muted - particularly given the softness of global conditions,” Paul Ashworth, chief North America economist at Capital Economics, said in a note.

Fed Governor Michelle Bowman said Monday that it would likely be appropriate for rates to be raised further to bring inflation down to the central bank’s target even after data for August showed some of the slowest price increases since 2020. “I continue to expect that further rate increases will likely be needed to return inflation to 2% in a timely way,” Bowman said. Also, Vice Chair for Supervision Michael Barr stated that the central bankers’ biggest question was the duration for which interest rates should remain at elevated levels. In addition, Cleveland Fed President Loretta Mester said the U.S. central bank will likely need to implement one more rate increase this year.

Meanwhile, U.S. rate futures have priced in a 25.7% chance of a 25 basis point rate increase at November’s monetary policy meeting and a 38.2% probability of a 25 basis point rate hike at the December FOMC meeting.

Today, all eyes are focused on U.S. JOLTs Job Openings data in a couple of hours. Economists, on average, forecast that August JOLTs Job Openings will stand at 8.800M, compared to the previous value of 8.827M.

Also, investors will likely focus on a speech from Atlanta Fed President Raphael Bostic for more clues on the Fed’s interest-rate path.

In the bond markets, United States 10-year rates are at 4.703%, up +0.34%.

The Euro Stoxx 50 futures are up +0.05% this morning after touching a 6-month low earlier in the session. Bank and insurance stocks gained ground on Tuesday, while rate-sensitive utilities stocks underperformed amid the prospect of higher rates. In corporate news, Boohoo Group Plc (BOO.LN) plunged over -8% after the U.K. fast-fashion retailer cut its annual earnings and revenue forecasts. Also, Zalando Se (ZAL.D.DX) fell about -2% after Deutsche Bank cut its forecast for adjusted earnings before interest and taxes.

“The fight against inflation has raised the cost of capital to levels that have triggered open cracks in the global economy,” said Peter Garnry, head of equity strategy at Saxo Bank.

The European economic data slate is mainly empty on Tuesday.

Japan’s Nikkei 225 Stock Index (NIK) closed down -1.64%, while the Chinese market was closed for a holiday.

Japan’s Nikkei 225 Stock Index closed sharply lower today, hitting a 4-month low as worries over higher U.S. interest rates for a longer period weighed on sentiment. Energy stocks were the biggest drag on the market after the price of WTI crude dropped more than -2% on Monday. Meanwhile, the yield on Japan’s 10-year government bonds declined on Tuesday after investors witnessed a better-than-expected auction outcome for the bonds with the same maturity. At the same time, the rise in long-term U.S. yields led to the yen reaching its lowest point in a year, yet this did not result in a boost for export-oriented stocks. As a result, Toyota Motor Corp slid more than -3%, and Mazda Motor Corp plunged about -6%. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +7.52% to 20.30. 

“Normally, yen weakness would be a reason for stocks to rise, particularly the exporters, because it boosts overseas profits. But because the background for the move is a rise in long-term yields, it's a weight on the Nikkei,” said Nomura Securities strategist Maki Sawada.

Pre-Market U.S. Stock Movers

Alx Oncology Holdings (ALXO) soared over +18% in pre-market trading after announcing the hosting of an investor call and webcast on Tuesday to share interim Phase 2 ASPEN-06 clinical trial results of evorpacept for the treatment of advanced HER2-positive gastric cancer.

Oddity Tech Ltd (ODD) climbed more than +16% in pre-market trading after indicating it plans to surpass its previously provided Q3 guidance.

Delta Apparel Inc (DLA) gained about +17% in pre-market trading after the company said it had received an unsolicited offer to purchase its Salt Life business.

Airbnb Inc (ABNB) fell more than -1% in pre-market trading after KeyBanc downgraded the stock to Sector Weight from Overweight.

Fiverr International Ltd (FVRR) rose over +2% in pre-market trading after Roth MKM upgraded the stock to Buy from Neutral. 

Dow Inc (DOW) gained more than +1% in pre-market trading after KeyBanc upgraded the stock to Sector Weight from Underweight.

You can see more pre-market stock movershere

Today’s U.S. Earnings Spotlight: Tuesday - October 3rd

McCormick & Company Incorporated (MKC), Cal-Maine (CALM), Novagold (NG), Lifecore Biomedical (LFCR).

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