Morning in New York: the index of business activity in manufacturing will set the trading vector

Daily review and forecast of events on the U.S. stock market from Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

The focus of investors' attention today will be the statistics of business activity in the manufacturing sector for October. The final assessment of PMI for this month will be presented by S&P Global. A similar index will be published by ISM Manufacturing (consensus: 49.6 points, previous value: 49.1). A value below 50 points will indicate a continued decline in activity, but the market will take a positive view if the index approaches the threshold. Due to the ongoing shutdown, the publication of Construction Spending data will not take place.

The U.S.-China trade agreement unveiled over the weekend involves Beijing suspending export controls on rare earth metals and delaying the imposition of a number of duties by the White House. Reaching these agreements would significantly ease foreign policy tensions as a major risk to the global economy.

By early November, more than 60% of companies in the S&P 500 index had reported quarterly results. According to FactSet data, the third quarter earnings growth forecast for its constituent issuers increased from 9% YoY to 10.4% over the last week.

Cipher Mining (CIFR), ON Semiconductor (ON), Ares Management (ARES), IDEXX Laboratories (IDXX), Public Service Enterprise Group (PEG), and Bruker Corporation (BRKR) will report financial results before the main session opens on November 3. Palantir (PLTR), Hims & Hers Health (HIMS), Navitas Semiconductor Corporation (NVTS), Vertex Pharmaceuticals Incorporated (VRTX), The Williams Companies (WMB) and Realty Income (O) will report after the close of trading.

Futures on US indices show neutral dynamics. We assess the balance of risks as neutral with average volatility. We focus on S&P 500 fluctuations in the range of 6800-6880 points (from -0.6% to +0.6% to the previous session's closing level).

- Berkshire Hathaway 's (BRK.B) third-quarter operating profit rose 34% YoY to $13.485 billion, driven largely by a 200% increase in insurance underwriting revenue. The company declined to continue share repurchases, building cash reserves to a new record of $381.6 billion. BRK.B shares are moderately positive on the premarket.

- ExxonMobil (XOM) CEO Darren Woods has warned that new EU sustainability laws could force the company to cease operations in Europe.

- Nexperia said it has sufficient inventory and has laid out a plan of action amid its Dutch parent company's halting of shipments to Chinese factories.

- OPEC+ will increase oil production quotas in December by 137,000 barrels per day amid stable prospects for the global economy. It is also noted that the new US sanctions against Russian oil companies will have a positive impact on global oil prices.

Trading on October 31 on American stock exchanges ended in the plus. S&P 500 added 0.26%, Nasdaq 100 rose by 0.48%, Dow Jones rose by 0.09%, and Russell 2000 - by 0.54%.

The main positive driver was corporate reports. Amazon's (AMZN: +9.58%) strong results allowed it to emerge as a growth leader in the "Magnificent Seven" along with Tesla (TSLA: +3.74%). The other top five bigtechs traded in the negative.

In the broad market, the most pronounced positive dynamics was demonstrated by the consumer staples sector (XLY: +2.64%), which was due to the mentioned rally in Amazon shares. The utilities sector (XLU: -0.69%) was the outsider.

The Chicago PMI for October rose to 43.8 points from the consensus of 42.5. Nevertheless, the index remains below 50 points, signaling a continued decline in activity in the region's manufacturing sector.

The comments of the representatives of the Fed's leadership were mostly "hawkish" in nature, which restrained buyers on the stock markets. Thus, the head of FRB Dallas Lori Logan said that she sees no need to reduce the rate at the December meeting, and the president of FRB Kansas City Jeffrey Schmid explained the disagreement with the previous decision on the parameters of the DCP by the stability of the economy and inflationary pressure.

- Illumina (ILMN: +24.9%) shares soared after posting strong third quarter results. The company beat sales and earnings expectations and raised its full-year guidance for revenue growth and profitability.

- Rocket Cos. (RKT: +4.5%) revenue guidance for the fourth quarter significantly exceeded average market expectations. Against this backdrop, investors ignored the company's mixed third-quarter results, in which revenue fell short of consensus.

- Coinbase 's (COIN: +4.7%) revenue, EBITDA and profit for the last reporting period exceeded forecasts. Additional support for its quotes was provided by an increase in the buyback program from $1 billion to $2 billion.

- Shares of Hims & Hers Health (HIMS: +3.2%) rose on news that JPMorgan has acquired an 8.1% stake in the company.

- MicroStrategy (MSTR: +5.9%) reiterated a strategy focused on bitcoin purchases and announced the launch of new credit instruments.

- AbbVie (ABBV: -4.5%) beat consensus on revenue and earnings for the quarter, but investors were concerned about the continued decline in sales of blockbuster Humira and weak results in its aesthetic medicine segment.

This article was AI-translated and verified by a human editor