Solid start for earnings season helping ease investor fears
A string of positive earnings reports from U.S. banks might be helping fuel a relief rally for stocks on Monday.
“Despite the incontrovertible fact that secular trend appears to be down when it comes to earnings … there have not been any real negative surprises in bank reporting. Now that we’re going to begin entering into negative reporting over the subsequent couple of weeks, that can tell us whether this rally might be sustained for awhile,” said Wayne Wicker, chief investment officer at MissionSquare retirement.
Bank of America and Bank of Recent York Mellon each reported stronger-than-expected quarters on Monday, as did brokerage firm Charles Schwab. Bank of America CEO Brian Moynihan even had optimistic things to say concerning the state of the economy.
“Given the incontrovertible fact that individuals are so pessimistic without delay, having corporations hit their numbers and never lower [guidance] dramatically might be all that is needed for markets to rally for awhile,” Wicker added.
Wicker said he could be watching consumer discretionary reports specifically to get a greater sense of the underlying economy.
— Jesse Pound
Barclays and UBS see more pain ahead for stocks
UBS and Barclays are still not calling the underside even after 2022’s steep losses and extreme volatility.
“Despite the increased risks to growth and the rise in volatility, equity markets have neither grow to be cheaper relative to bonds, nor yet priced in a cloth slowdown in growth and earnings,” UBS’ chief investment officer Mark Haefele said.
Barclays sees the market sell-off extend well into 2023 because it believes stock valuations, while much lower now, are still not reflecting the danger of a recession.
Barclays said its mostly likely scenario for the S&P 500 is to finish 2022 at 3,200, which is about 12% below where the benchmark traded on Monday. Within the case of a recession, the Wall Street firm sees the S&P 500 hitting 2,982 by the 12 months end, nearly 19% lower from here.
— Yun Li
Speculative tech stocks surge
Among the more speculative stocks in the marketplace are leading the Nasdaq 100 on Monday.
South American e-commerce stock Mercadolibre surged greater than 12%, while Chinese tech stock Pinduoduo jumped greater than 8%.
Amongst U.S. based corporations, software names Okta and Zscaler popped 8.4% and seven.5%, respectively.
Even the pandemic-era darlings are good days, with DocuSign and Zoom Video adding 7% each.
— Jesse Pound
Bitcoin edges higher but holds its sideways pattern
Cryptocurrencies were higher to begin the week after recovering from a pointy drop within the previous week that followed Thursday’s inflation data release. Bitcoin rose 1% to $19,481.00, based on Coin Metrics, while ether traded 2% higher at $1,326.70.
Crypto prices have struggled to interrupt meaningfully above the $20,000 level for a few month. The low volatility within the asset class has been somewhat of a relief for a lot of investors, particularly amid wild volatility within the equities market. Nevertheless, many are hoping a return to crypto’s famously large price swings will help push prices to higher levels.
— Tanaya Macheel
Roblox pops on September metrics data
Shares of Roblox shot up nearly 20% after the web gaming company reported September metrics that showed more engagement than last 12 months.
The corporate said Monday that the variety of day by day energetic users was at 57.8 million, a rise of 23% in comparison with the identical month last 12 months. Total hours of engagement were up 16% to 4 billion.
Estimated bookings got here between $212 million and $219 million, a rise of about 11% to fifteen% in comparison with last September.
September’s metrics in all categories show a slide from August, though some credit that no less than partially to school-aged children – considered one of the corporate’s essential demographics – returning to classrooms from summer break.
The stock, which was listed in March 2021 as a part of a wave of corporations that went public through the pandemic, is down about 60% this 12 months. Meaning the stock is performing worse than the tech-heavy Nasdaq, which is down nearly 32%.
— Alex Harring, Ashley Capoot
Bank stocks surge after earnings reports
Earnings season is giving a lift to the beaten-down bank sector.
The SPDR S&P Bank ETF (KBE) is up 2.9% for the day, led by Signature Bank, Bank of Recent York Mellon and Bank of America. All three are up greater than 6%.
The ETF is up 6.8% in October and on the right track for its first positive month in three.
— Jesse Pound, Gina Francolla
Stocks solidly higher in morning trading
Stocks opened sharply higher on Monday and built on those gains within the opening minutes of trading, with the Dow extending its gain to greater than 600 points and the Nasdaq Composite added greater than 3%.
Tech stocks were strong in early trading, with Match Group and Nvidia among the many top performers within the S&P 500. Bank stocks also rose sharply on the back of strong earnings, with Bank of Recent York Mellon gaining greater than 5%.
— Jesse Pound
Treasury yields dip
Stocks are set for a solid open on Monday, and the motion within the bond market might be helping investor sentiment.
Yields are easing across the board. The two-year Treasury yield has fallen nearly 10 basis points, while the 10-year Treasury yield is back below the 4% level.
Bond yields move opposite of price, and a basis point is the same as 0.01 percentage points.
— Jesse Pound
Stocks are 20% undervalued, Wharton’s Jeremy Siegel says
The Federal Reserve is in peril of overtightening fiscal policy and sending the U.S. right into a deeper recession than mandatory, Jeremy Siegel, professor emeritus of finance on the Wharton School of the University of Pennsylvania.
“I feel that the Fed has to rethink using current data, they usually’ll see that their policy has worked and inflation is down and people core statistics aren’t giving an accurate representation,” he said on CNBC’s “Squawk Box” on Monday.
He also added that the Fed tightening rates as much as 4% or 5% is “far too high,” and that doing so will risk a much stronger slowdown than is required. As a substitute of climbing one other 0.75 percentage point at the subsequent meeting and continuing hikes into next 12 months, he’d recommend stopping sooner, he said.
“I’d call for 50 every now and then a stop,” he said, referring to a 50 basis point rate hike.
Even with the market’s volatility, Siegel thinks that stocks are currently undervalued and poised to rally over the subsequent few years.
“I feel we’re 20% undervalued from where we must always be,” he said, adding that his view doesn’t suggest that a rally is imminent and he sees the possibly for further downside.
“My feeling is the long-term prospects look excellent,” he said. Markets have been relatively stable given all of the bad news, and earnings have held up, he added.
—Carmen Reinicke
Tesla’s stock in a precarious spot, Wolfe Research says
The struggling shares of Tesla might be on the verge of an excellent greater breakdown, based on Wolfe Research.
Technical analyst Rob Ginsberg identified in a note to clients over the weekend that the stock is trading near the underside of its trading range over the past two years. The following major level of support might be its 200-day moving average, but that’s roughly 50% below where the stock closed Friday.
“TSLA might be cut in half. Bulls need to supply some serious oversold momentum as support starts to wobble,” Ginsberg said.
— Jesse Pound, Michael Bloom
Oppenheimer cuts S&P 500 price goal but still sees fourth-quarter rebound
Oppenheimer strategist John Stoltzfus cut his goal for the S&P 500 again on Monday. The strategist now sees the main market index ending 2022 and 4,000, down from 4,800 previously.
Even that reduced outlook could seem a bit too bullish for investors who’ve experienced sharp declines in recent weeks. The brand new goal is sort of 12% above where the index closed on Friday.
Stoltzfus also kept his earnings projection for the S&P 500 the identical, saying that the reduced goal was as a consequence of a lower multiple.
“We consider US economic fundamentals remain remarkably resilient though challenged in a highly transitional environment by persistent high levels of inflation, increasingly restrictive monetary policy to deal with the inflation, and provide chain problems that remain as well,” Stoltzfus said.
—Jesse Pound, Michael Bloom
Bank of America earnings beat expectations, shares rise
Shares of Bank of America rose greater than 2% after the banking giant posted quarterly results that beat analyst expectations.
The corporate earned 81 cents per share on revenue of $24.61 billion. Analysts polled by Refinitiv expected a profit of 77 cents per share on revenue of $23.57 billion.
Bank of America’s strong quarter was boosted by strong bond trading revenue and better rates of interest.
Read more here.
— Hugh Son, Fred Imbert
Recent UK finance minister scraps most planned tax cuts
U.K. Finance Minister Jeremy Hunt on Monday announced that nearly all proposed tax cuts within the country could be scrapped.
“A central responsibility for any government is to do what’s mandatory for economic stability,” Hunt said in a press release.
“No government can control markets, but every government may give certainty concerning the sustainability of public funds. That’s considered one of the various aspects that influence how markets behave. For that reason, although the prime minister and I are each committed to cutting corporation tax, on Friday she listened to concerns concerning the mini budget.”
Hunt said a full statement with questions would are available parliament later Monday, but because the small print were market sensitive he wanted to offer a temporary summary in an effort to instil “confidence and stability.”
Previously proposed tax cuts sent rates in the UK soaring and the pound tumbling against the U.S. dollar.
— Jenni Reid
Watch these S&P 500 levels within the near term, BofA’s Suttmeier says
Bank of America technical strategist Stephen Suttmeier said he’s watching the 4,126 level on the S&P 500, noting that regaining that level is “critical for the SPX to take care of its secular bull market and avoid a shift into to a secular bear market.”
“The failure to reclaim the 40-week MA after correcting to or below the 200-week MA is a secular bear market pattern. The exception was the 1980-1982 cyclical bear market, which saw three rallies fail on the 40-week MA prior to a low that preceded a breakout for the SPX above each its 40-week and 200-week MAs in August 1982.”
The S&P 500 entered the week at 3,583.
— Fred Imbert, Michael Bloom
Credit Suisse downgrades Fox
Fox shares dipped barely after Credit Suisse downgraded the media giant to neutral from outperform, citing concern over the corporate’s potential merger with News Corp.
“The pivot seems a tacit admission of challenges for Fox,” Credit Suisse said in a note to clients. “Even when this merger doesn’t ultimately come to fruition, the investment backdrop for Fox has been altered.”
CNBC Pro subscribers can read more here.
— Alex Harring
British pound strengthens after policy reversals
Sterling rose on Monday morning in Asia following more policy reversals by the U.K. government late last week. The pound was last 0.56% higher at $1.1233.
CNBC Pro: As market volatility persists, Wall Street analysts say to sell these stocks
Stocks worldwide have taken a beating this 12 months, and major indexes remain deep in negative territory.
As investors weigh whether to sell or stay invested, CNBC Pro screened almost 1,500 large and mid-cap global stocks and located quite a lot of major corporations with sell or underweight rankings.
CNBC Pro subscribers can read more here.
— Ganesh Rao
CNBC Pro: Nearing retirement? Methods to allocate your portfolio without delay, based on the professionals
Despite the volatility in markets, asset managers say it is vital to stay invested in case you’re nearing retirement.
But how should one allocate funds, making an allowance for unsettled markets, a shorter investing horizon and the necessity for retirees to have some liquidity?
CNBC Pro asks the experts for his or her views.
Pro subscribers can read more here.
— Weizhen Tan
CNBC Pro: Morgan Stanley’s Mike Wilson flags a key risk to earnings — and names the stocks to avoid
Morgan Stanley’s U.S. equity team, led by Michelle Weaver and Mike Wilson, says there is a key risk to earnings on the horizon.
The investment bank named several stocks it believes will probably be most impacted in the subsequent 3-6 months, and which could see downside to their share prices in the identical period.
Pro subscribers can read more here.
— Zavier Ong
A relief rally might be close?
Last Thursday, the market pulled off a historic intraday reversal that saw the S&P 500 end the day up 2.6% after losing greater than 2% earlier. It marked the fifth largest intraday reversal from a low within the history of the S&P 500, and it was the fourth largest for the Nasdaq Composite, based on SentimenTrader.
The dramatic rebound gave some investors confidence that a more lasting comeback might be on the horizon.
“Markets have attempted a rally several times in recent weeks with no success, though the impressive reversal on Thursday is a sign that a relief rally could also be near given the surplus degree of pessimism priced into markets,” said Mark Hackett, Nationwide’s chief of investment research.
Hackett noted that institutional investors have remained on the sidelines, while retail investors continued to be in buy-the-dip mode, with positive fund flows in seven-consecutive weeks.
