Stocks and Oil Bounce Back Amid Mixed Earnings Reports

Coming off a disappointing end to October that saw the S&P 500 lose 1.8% and the NASDAQ drop 2.8%, stock markets are attempting to mount a comeback this morning. US index futures are up 0.3%-0.5%, while in Europe, the Dax is up 0.6% and the FTSE is up 0.9%.

Capping off a big week for US employment numbers, nonfarm payrolls were surprisingly disappointing (12K vs street 115K, previous revised down to 223K from 254K), while average hourly earnings rose slightly (4.0% vs previous 3.9%).   This news contradicted the ADP payroll, Challenger layoffs and weekly jobless claims numbers from earlier in the week which had all been positive. The combined payroll and wage data also suggests a hint of stagflation heading toward next week’s Fed meeting but so far treasury yields have not moved much.

Manufacturing PMI reports have been rolling out from a number of countries overnight. Asia Pacific reports from Australia, Japan and China were better than expected, the UK was worse than expected and fell under 50 into contraction territory. Canada PMI is due at 9:30 am EDT (previous 50.4), followed by US ISM Manufacturing PMI (street 47.6) at 10:00 am, with both looking to shrug off yesterday’s disappointing Chicago PMI report (41.6 vs street 47.0). US Construction Spending is also due at 10:00 (street 0.0%).

Earnings reports continue to drive significant trading activity. Amazon ($1.43 vs street $1.14, up 7.1% premarket) beat the street last night, but Apple* ($0.97 vs street $1.60, down 1.8% premarket) and Intel (-$0.46 vs street -$0.02, announced layoffs, up 7.9% premarket) posted disappointing numbers. Big Oil has been posting positive numbers this morning headlined by Exxon Mobil ($1.92 vs street $1.88) and Chevron ($2.51 vs street $2.43). In Canada today, Air Canada ($2.57 vs street $1.62) did really well, but Magna International ($1.78 vs street $1.92) was disappointing. Enbridge beat by a penny.   

Metals and energy are bouncing back this morning with the US election coming next week and rumors conflict in the Middle East could potential escalate again. US Crude oil is up 2.6% and has regained $70.00/bbl, but Natural Gas is down 1.5% at the kickoff of home heating season amid a warm spell in consuming regions. Gold and Copper are both up about 0.7%.  

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

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