Market Primer: Tuesday, October 22: Nonfarm Payrolls Likely To Show US Was On A Roll Ahead Of The Shutdown

Nonfarm payrolls data for September is due out on Tuesday, almost two months late due to the US government shutdown.

The data is expected to show that US job growth increased in September before the political squabbling halted some of the nation’s momentum. Analysts are expecting that employers added 180,000 jobs and that the unemployment rate will remain at 7.3 percent.

The report would make a good case for the Federal Reserve to begin tapering its $85 billion per month bond buying plan, however the recent government shutdown likely dragged on the US economy. The bank will have to wait for October’s data for a clearer picture of the damage done by the shutdown.

Top News

In other news around the markets:

• The relationship between the US and Saudi Arabia has slowly been eroded over the past few months as disputes over Syria, Iran and Egypt policy put the two sides at odds. On Friday, Saudi Arabia elected not to take a seat on the UN Security Council, saying the UN had “double standards”. Over the weekend, Saudi Arabia’s intelligence chief claimed he is planning to cut back on his cooperation with the US to arm and train Syrian rebels.
• On Tuesday Australia’s freshly elected conservative government announced plans to raise the debt limit by A$500 billion. The increase was widely expected and had a minimal impact on Australian markets.
• JP Morgan is nearing a settlement with the Justice Department in which it won’t be penalized for problems from Washington Mutual or Bear Stearns Co, both of which the bank bought during the financial crisis. The deal will force JP Morgan to pay $13 billion and could be finalized this week.
• As part of a global probe into currency market manipulation, the Commodity Futures Trading Commission has asked big banks to look through their records for evidence of foul play and hand their findings over to the CFTC. Several large banks, including Deutsche Bank, are spending millions scanning traders’ emails and chats looking for keywords and phrases that could implicate them.

Asian Markets

Asian markets were mixed on Tuesday, the Japanese NIKKEI gained 0.13 percent, but the Shanghai composite was down 0.89 percent and the Shenzhen composite lost 1.03 percent. The Hang Seng Index was also down 0.49 percent, but New Zealand’s NZ 50 was up 0.61 percent.

European Markets

Europe’s markets were quiet on Tuesday, the UK’s FTSE was up 0.10 percent and the eurozone’s STOXX 600 lost 0.05 percent. The Spanish IBEX was down 0.39 percent and the German DAX was down 0.09 percent.

Commodities

Energy futures were mixed, Brent futures were up 0.11 percent and WTI futures were down 0.23 percent. Gold gained 0.08 percent and silver was down 0.46 percent. Industrial metals were mostly higher with zinc up 0.31 percent and tin up 0.44 percent.

Currencies

The dollar was steady against the euro on Tuesday morning, but the pound gained 0.14 percent against the American currency. The yen lost 0.07 percent against the dollar and the Australian dollar gained 0.11 percent against the greenback.

Earnings Reported Yesterday

Notable earnings released on Monday included:

• Netflix, Inc. NFLX reported third quarter EPS of $0.52 on revenue of $1.11 billion, compared to last year’s EPS of $0.13 on revenue of $905.09 million.
• McDonald’s Corporation MCD reported third quarter EPS of $1.52 on revenue of $7.32 billion, compared to last year’s EPS of $1.43 on revenue of $7.15 billion.
• Halliburton Company HAL reported third quarter EPS of $0.83 on revenue of $7.50 billion, compared expected EPS of $0.82 on revenue of $7.50 billion.
• Texas Instruments Incorporated TXN reported third quarter EPS of $0.56 on revenue of $3.24 billion, compared to last year’s EPS of $0.52 on revenue of $3.39 billion.

Pre-Market Movers

Stocks moving in the pre-market included:

• Yahoo! Inc. YHOO gained 1.29 percent in premarket trade after rising 1.64 percent on Monday
• First Solar Inc. FSLR rose 0.41 percent in premarket trade after gaining 21.46 percent over the past week
• International Business Machines Inc. IBM gained 0.39 percent in premarket trade after dropping 7.55 percent over the past five days.

Earnings

Earnings reports expected on Tuesday include:

• The Travelers Company Inc. TRV is expected to report third quarter EPS of $1.69 on revenue of $5.83 billion, compared to last year’s EPS of $2.22 on revenue of $5.70 billion.
• Delta Airlines Inc. DAL is expected to report third quarter EPS of $1.36 on revenue of $10.47 billion, compared to last year’s EPS of $0.90 on revenue of 9.92 billion.
• United Technologies Corporation UTX is expected to report third quarter EPS of $1.53 on revenue of $16.18 billion, compared to last year’s EPS of $1.37 on revenue of $15.04 billion.
• Lockheed Martin Corporation LMT is expected to report third quarter EPS of $2.26 on revenue of $11.15 billion, compared to last year’s EPS of $2.21 on revenue of $11.87 billion.

Economics

Delayed US nonfarm payrolls data will be the most anticipated economic release on Tuesday. Other notable releases include Australian CPI, US unemployment rate and Canadian retail sales.

For a recap of Monday’s market action, click here.

Tune into Benzinga’s pre-market info show with Dennis Dick and Joel Elconin here.

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