Stocks Start To Slide As Earnings Season Resumes

US index futures have started to pull back this morning with the three main contracts down 0.2%-0.3%, giving back some of yesterday’s US market gains of 0.6% to 1.1%. The US 10-year treasury note yield has dropped back toward 4.05% ahead of tomorrow’s Fed decision, while the 10-year German bund yield is holding steady near 2.25%. With German (-0.2%) and Eurozone (+0.1%) hovering near flat, European markets are trading flat (the Dax) to up moderately (0.5% gain for the FTSE).

Earnings season has resumed this morning. While results have been coming in above expectations, the market reaction has been decidedly mixed. Headliners include General Motors ($1.24 vs street $1.16, up 6.6% premarket), UPS ($2.47 vs street $2.46, down 6.7% premarket), Danaher ($2.09 vs street $1.91) and Pfizer ($0.10 vs street -$0.18). After the close this afternoon, results are due from Microsoft*, Alphabet, Advanced Micro Devices*, and Starbucks, followed by Boeing and Mastercard tomorrow morning.

China-sensitive markets have been selling off overnight and into today in the wake of the Evergrande liquidation. Hong Kong and Shanghai fell 2.3% and 1.8% respectively, while in commodity action, US Crude Oil is down 1.0% and Copper is down 0.2%. Gold is up 0.4% perhaps getting some support from defensive capital flows. China related markets may remain active over the next 24 hours with Chinese Manufacturing PMI and Non-Manufacturing PMI reports coming out tonight.

Economic news also starts to really pick up over the next few days. US house prices come out this morning, followed by US ADP payrolls, Chicago PMI and Canada monthly GDP tomorrow morning, before the stage clears for the Fed tomorrow afternoon.  

*Shares of Microsoft and Advanced Micro Devices are held in portfolios managed by SIA Wealth Management.

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