The Thursday Market Minute

  • Global stocks were a sea of red overnight, with the broadest Asia benchmark falling more than 2% to within touching distance of bear market territory and the Nikkei 225 slumping to a six-month low after last night's Wall Street meltdown.
  • European stocks open with heavy selling, but a busy earnings slate provides some support ahead of today's European Central Bank meeting in Frankfurt.
  • Wall Street braced for another active earnings session, with Bristol Myers, Comcast, ConocoPhillips, Mattel and Merck reporting before the bell while tech giants Amazon, Alphabet and Intel set to update after the close of trading.
  • U.S. equity futures point to modest opening bell rebounds for the three major benchmarks after yesterday's declines erase year-to-date gains for the Dow and the S&P 500 and pull the Nasdaq into correction territory. 

Market Snapshot

Global stocks were awash with red in overnight trading Thursday, loping billions in value from equity markets around Asia following last night's late-trading collapse on Wall Street which has erased year-to-date gains for benchmarks around the world amid concerns over weakening U.S. earnings growth, rising geo-political tensions and the unknown outcome of trade disputes between Washington and its major economic partners.

Markets in Asia traded sharply lower across the board Thursday, pulling the MSCI ex-Japan benchmark more than 2% lower on the session and with touching distance of bear market territory -- a condition which describes a 20% fall from a recent peak -- following last night's Wall Street rout, which saw the biggest single-day decline for U.S. tech stocks in at least nine years. Japan's Nikkei 225 was also hit hard, falling more than 3.72% to a six month low amid an overnight battering for tech stocks and a stronger yen, which surged to 111.95 against the U.S. dollar as investors in the region went running for cover in the global equity market meltdown.

If the year ended today, it would be the worst year for global diversified portfolios since 2008. This is where advisors earn their money. Job #1: help investors stay invested w/ education and historical perspective. pic.twitter.com/xd3BbO7N4E

— Charlie Bilello (@charliebilello) October 24, 2018

European stocks opened lower, but the Stoxx 600 rebounded to a 0.25% gain by late morning in Frankfurt amid a raft of regional corporate earnings and a European Central Bank meeting is providing some early support for benchmarks, which are starting to turn green in Germany, France and Italy.

Early indications from U.S. equity futures suggest traders are also hopeful that this morning's earnings slate, the busiest of the season with numbers from from Bristol Myers (BMY , Comcast (CMCSA , Merck (MRK , Mattel (MAT and ConocoPhillips (COP , Twitter (TWTR and Dunkin (DNKN will give stocks a pre-market boost.

Today's biggest names, however, report after the close of trading today, with earnings expected from Amazon (AMZN and Alphabet (GOOGL that could set tone for a beaten-down tech sector going forward and an update from Intel (INTC that will go a long way towards defining the state of the global chip sector after grim outlooks from industry peers Texas Instruments (TXN and STMicroelectronics (STM .

Contracts tied to the Dow Jones Industrial Average indicated a 150 point opening bell gain for the benchmark, which shed more than 600 points last night to erase all of its gains for the year and come within 50 points of its 2018 low.

S&P 500 futures were guiding to an 21-point gain for the broadest benchmark of U.S. stocks, which fell more than 3% yesterday, while those linked to the Nasdaq Composite suggested an 100 point gain for the tech-focused index, which had slipped into correction territory after last night's 4.43% decline. 

Microsoft (MSFT shares were indicated sharply higher in pre-market trading Thursday after it posted stronger-than-expected first quarter profits and continued growth its key cloud computing division that could set the tone for a series of tech-focused earnings in the days ahead.

Microsoft shares were marked 3% higher in pre-market trading Thursday, indicating an opening bell price of $105.43 each, a move that would extend the stock's year-to-date advance past 23% and value the Redmond, Wash.-based group at more than $805 billion.

Comcast posted stronger-than-expected third quarter earnings Thursday as the biggest U.S. cable company prepares to take on Disney (DIS and Netflix (NFLX in the global streaming market following its $40 billion takeover of Britain's Sky plc Plc (SKYAY .

Comcast shares were marked 4% higher following the earnings release, indicating an opening bell price of $35.50 each a move that would still leave the Philadelphia-based group with a 13% year-to-date decline.

Dunkin Brands posted stronger-than-expected third quarter earnings of 79 cents a share, but said same-store sales in the U.S., its biggest revenue drive, rose 1.3%, missing the Street's 1.5% consensus forecast, even as overall sales jumped 6% to $350 million.

Twitter shares were marked 11.5% in pre-market trading Thursday, indicating an opening bell price of $30.70 each, after it posted stronger-than-expected third earnings Thursday but said monthly active users fell a bit more than anticipated, suggesting moves by the micro-blogging website to limit hate speech and cull fake accounts are having an impact.

Earnings will continue to dictate the direction of near-term trading, particularly now that forward-looking statements from S&P 500 companies reporting so far have suggested that growth in fourth quarter profits will slow to 19.5%, the first sub-20% reading of the year, and to less than 8% in the first quarter of 2019, according to Refinitiv data.

Markets were also spooked by disappointing new homes sales data yesterday, which showed a September decline of 5.5%, and findings from the Federal Reserve's October Beige Book survey of domestic manufacturers, which showed increasing concern for rising raw materials costs and uncertainty over global trade prospects.

That, as well as the renewed criticism of Fed Chairman Jerome Powell by President Donald Trump, has trimmed rate hike expectations for December, which are now sitting at 67.7% according to the CMEGroup's FedWatch tool, and for March, where futures point to only a 40% chance of a rate move in the first quarter of next year.

U.S. Treasury bond yields have retreated as a result, with benchmark 10-year notes trading at 3.13% -- some 15 basis points lower from the start of the month -- while 2-year notes were quoted at 2.889%.

Global oil prices slumped in overnight trading as well, with investors citing concerns over global demand and a buildup in U.S. crude inventories, which rose for a fifth consecutive week to 422 million barrels, and looming sanctions set to limit exports from Iran next month. Prices turned higher, however, after the U.S. dollar index weakened 0.2% to 96.24.

Brent crude contracts for December delivery, the global benchmark, were seen 60  cents higher from their Wednesday close in New York and changing hands at $76.77 per barrel, extending a month-to-date decline past 9%. 
 
WTI contracts for the same month, which are more tightly liked to U.S gas prices and have fallen more than 10% over the month of October, were seen 44 cents higher at $67.26 per barrel.