Morning Minutes

Stocks Slide as Investors Prepare For Apple Earnings and Nonfarm Payrolls

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World markets are in the red for a second straight day following Fitch Ratings’ downgrade of its US credit rating, but the declines have been smaller. Overnight, the Nikkei fell 1.7% while the Hang Seng slid 0.5%. This morning in Europe, the FTSE is down 0.6% and the Dax is down 0.7%. US index futures are down 0.2%-0.4%, adding to yesterday’s US index losses of 1.0%-2.1%.

The US treasury note yield continues to climb, moving up above 4.10% this morning. Currency and commodity trading is relatively quiet for the most part except for a 0.5% selloff in the British Pound despite the Bank of England announcing a 0.25% increase to its benchmark interest rate to 5.25% as expected. WTI Crude Oil is down 0.2% and trading back under $80.00/bbl, while Natural Gas is up 0.9%.

The heart of earnings season for US mega cap companies wraps up later today with Apple and reporting after the close, while Canadian big cap earnings season continues for another week. Overnight results have been mostly positive, headlined by beats from Shopify* ($0.14 vs street $0.06), Bombardier ($0.96 vs street $0.39), Gildan ($0.84 vs street $0.81), and Qualcomm ($1.87 vs street $1.81, down 9.5% premarket). Nutrien ($3.38 vs street $3.66, down 4.1% premarket) was the most notable earnings disappointment.  

US weekly jobless claims of 227K were in line with expectations while US ADP payrolls crushed expectations yesterday. This sets the stage for tomorrow’s US nonfarm payrolls (street 200K) and Canada jobs numbers (street 21K). In addition to the headline numbers, wage inflation figures for the US (street 4.2% vs previous 4.4%) and Canada (previous 3.9%) may also attract attention from investors.

Service PMI from China beat expectations, while Service PMI numbers out of Europe have been very mixed this morning. US ISM Service PMI (street 53.0) is due at 10:00 am EDT.

*Shares of Shopify are held in some portfolios managed by SIA Wealth Management.

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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