Morning Minutes 10/1/2020

Morning Minutes

Positive Economic and Earnings News Propel Stocks Upward

October 1, 2020

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Market Commentary By:
Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

Building on Wednesday’s gains of 0.75% to 1.25% for US indices, US index futures are climbing again this morning with Dow futures up 0.8% and NASDAQ futures up 1.3%. Major European indices are also showing green across the board, led by gains of 0.9% for Paris and Milan, 0.5% for London and 0.1% for Frankfurt. Several Asia Pacific markets were closed for a holiday today including Hong Kong, Shanghai and Seoul. Tokyo was forced to close early due to technical problems. Sydney, which was open through the day, gained 1.0%.

Commodities continue to struggle with WTI and Brent crude oil sliding 1.7% and copper falling 0.7%. Precious metals are on the rebound with gold rising 0.4% and regaining $1,900/oz while silver is up 1.5%.

Investors continue to respond favorably to yesterday’s significantly stronger than expected US ADP Private Sector Payrolls (749K vs street 650K) and US Chicago PMI (62.4 vs street 52.0) reports. This morning, manufacturing PMI reports for the largest European countries have fluctuated around expectations but have consistently arrived in expansion territory above 50.0 between 50.8 for Spain and 56.4 for Germany.  Weekly US jobless claims also came in better than expected, both initial (837K vs street 850K) and continuing (11.76M vs street 12.22M)

A number of economic reports are scheduled for North America today, starting with Canada Manufacturing PMI (street 54.1) at 9:30 am EDT.  US ISM Manufacturing PMI is due at 10:00 am EDT today (street 56.3), and the v New Orders component may also attract attention (54.5 vs previous 67.6). US construction spending for August is also out at 10:00 am EDT (street 0.8% vs previous 0.1%), followed by US vehicle sales for September later in the day. Tomorrow morning brings the US nonfarm payrolls report (street 850K vs previous 1371K).

There are also a couple of notable earnings reports today. Bed Bath and Beyond is up 16.5% after the household goods retailer released a strong earnings report for its August. Propelled by a 6% quarterly gain in same store sales (its first since late 2016) and an 80% quarterly increase in online sales, plus the addition of two million new customers, the company earned $0.50 per share, much better than the $0.23 per share loss the street had been expecting. Management indicated that positive sales trends continued into September. Pepsico also beat the street on earnings ($1.66 vs street $1.49) and sales ($18.0B vs street $17.2B) today.

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