Morning Markets

December S&P 500 futures (ESZ22) are trending down -0.61% this morning after three major US benchmark indices finished the week sharply lower as a surprise drop in U.S. unemployment suppressed any thought of a pivot on policy tightening. Three major U.S. stock indexes were weighted down primarily by losses in the Technology, Consumer Services, and Consumer Goods sectors.

The Labor Department's data showed that the unemployment rate fell to 3.5%, weaker than expectations of 3.7%. At the same time, nonfarm payrolls increased by 263,000 jobs, stronger than expectations of 250,000. The job gains, lower unemployment rate, and continued healthy wage growth quelled investors' hopes of a Fed pivot. 

"The data cemented another jumbo-sized, 75 basis-point rate hike in November as the labor market is still way too hot for the Fed's comfort zone. This was a classic case of good news is bad news," said Bill Sterling, a global strategist at GW&K Investment Management.

Meanwhile, U.S. rate futures have priced in a 22.4% chance of a 50 basis point rate increase and a 77.6% chance of a 75 basis point hike at November's monetary policy meeting.

Ahead in the week, investors will be closely monitoring corporate earnings, FOMC minutes, and highly anticipated U.S. consumer price index and producer price index data. Economists, on average, forecast the September CPI to stand at +0.2% m/m and +8.1% y/y, compared to the previous figures of +0.1% m/m and +8.3% y/y.

"The September CPI report should show moderation in goods prices that is a likely harbinger of a broader slowing in core inflation. But the Fed will not be responsive to a whisper of inflation moderation as long as labor markets shout tightness," said Bruce Kasman, a head of economic research at JPMorgan.

In addition, market participants are likely to focus on a batch of speeches from Fed policymakers Evans and Brainard as well as FOMC members Harker and Mester for further clues on the Fed's rate hike path. 

In the bond markets, United States 10-Year rates are at 3.888%, up +0.06%.

The Euro Stoxx 50 is down -0.24% this morning as intensifying concern over rising global interest rates and increasing Ukraine-Russia tensions weighed on sentiment. European stocks have received a negative handover from Wall Street and Asia after main indexes continued to slide as investors worried about the impact of rate hikes on economic growth and corporate profits.

Also, the French central bank trimmed the economic growth estimate, expecting growth of 0.25% in the third quarter, slightly downgrading a previous forecast of 0.3% amid poor industrial activity. 

In addition, geopolitical tensions intensified after Russia bombed cities across Ukraine this Monday morning after Kremlin declared an explosion that hit Russia's only bridge to Crimea to be a terrorist attack.

Eurozone Sentix Investor Confidence Index was released today.

Eurozone October Sentix Investor Confidence Index has been reported at -38.3, weaker than expectations of -34.7.

Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) resumed trade after a week-long holiday and closed down-1.66%, while the Japanese market was closed for the holidays. 

China’s Shanghai Composite today closed in the red following an unexpected contraction in service sector activity, while the yuan strengthened in anticipation of more supportive measures by the Chinese government. 

The Chinese Caixin Services Purchasing Managers Index stood at 49.3, weaker than expectations of 54.5, showing that China’s massive services sector unexpectedly contracted in September following continued disruptions from COVID-related restrictions. 

In addition, local semiconductor stocks were under pressure after the U.S. government on Friday published new rules cutting off China from semiconductor chips produced using U.S. equipment.  

"The U.S. restrictions could make the development of China's advanced chip technologies even more challenging," Citi analysts said in a note.

Pre-Market U.S. Stock Movers

Procter & Gamble Company (PG) dropped about -1% in pre-market trading after Goldman Sachs downgraded the stock to neutral from buy with a $143 price target.

Rivian Automotive Inc (RIVN) plunged about -7% in pre-market trading after the company announced the recalling of about 13,000 of its vehicles due to a possible issue of a loose fastener that could make a driver lose steering control.

Fortinet Inc (FTNT) rose more than +2% in pre-market trading after Morgan Stanley upgraded the stock to overweight from equal weight with a price target of $69, up from $66.

Zoom Video Communications Inc (ZM) dropped more than -1% in pre-market trading after JPMorgan downgraded the stock to neutral from overweight with a price target of $85, down from $295.

Kraft Heinz Co (KHC) lifted about +1% in pre-market trading after Goldman Sachs upgraded the stock to buy from neutral with a $43 price target.

Today’s U.S. Earnings Spotlight: Monday - October 10th

ASX ADR (ASXFY), GoldMining (GLDG), Tortoise PowerEnergy Infrast Closed (TPZ), QEP (QEPC), Trinity Place Holdings Inc (TPHS), TSR (TSRI), Schmitt (SMIT), Environmmtl Tectonic (ETCC), Mosaic Immunoengineering (CPMV), Peoples Educational (PEDH).

• Option Volatility And Earnings Report For October 10 - 14
• Gladstone Investment's 7.45% Dividend Yield That Is Paid Monthly Looks Secure
• Stock Market This Week: Five Themes to Watch
• Stocks Routed as Strong U.S Jobs Report Keeps Aggressive Fed in Play