As police pulled back from an offensive with protestors in Hong Kong yesterday, US markets were able to recover early losses and look set to continue the recovery this morning with a higher open ahead of September’s Chicago PMI and consumer confidence data.
Futures suggest the Dow 30 will open 49 points higher at 17,120 with the S&P 500 expected to open 7 points higher at 1,984 and the NASDAQ Composite 14 points higher at 4,061.
Having made new highs on September 19th, the day of the Scottish referendum and Alibaba (NYSE:BABA)’s IPO; the Dow 30 and S&P 500 have pulled back around 2.5%. Whether this correction continues rests on ADP, ISM and NFP data this week and its implication for the timing of the first US rate hike.
Strong economic data is a double edged-sword it improves the chance of the economy withstanding a rate-hike but also likely brings in the timing of when that rate hike takes place.
If the correction in main benchmarks does come to an end; whether it can translate into new all-time highs may need to wait until next week when third quarter earnings season kicks into gear.
Shares in Ford Motor Company (NYSE:F) dropped 7.5% yesterday after the company slashed its full year profit forecast by as much as $1.5bn. It’s a baptism of fire for new CEO Mark Fields who took over from Alan Mulally in July.
Ford, like GM and Toyota is taking a hit from the cost of recalls this year but investors have reason to be concerned over the example being set by Ford for multi-nationals going into Q3 earnings season. While the positives can be found from sales in Asia and North America, the economic lull in Europe is expected to cause a $1.2bn loss for the company in the region and sales are expected to drop by $300m in Russia.
In previous earnings seasons, international diversity of operations was considered a strong-point, next month, with a strong US Dollar and slowing overseas economies; the more US-focused the company may be for the better.
Fresh from its purchase of the UK’s Alliance Boots, Walgreen Co (NYSE:WAG) will report earnings today and is expected to earn 74c per share on revenue of $19.02bn.
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