Nasdaq, S&P 500 Futures Drop As Apple Guidance Disappoints: Analyst Says 'Seasonal Rally' Right On Queue

The market mood has turned cautious after the strong gains seen since the start of the week, with traders likely using Apple, Inc.’s AAPL disappointing guidance as a reason to take profits. On the other hand, most other earnings reports have come in better than expected. A further pullback in bond yields could cushion the slide but the non-farm payrolls data will likely determine the direction of yields in Friday’s session.

Cues From Thursday's Trading:

The extended slide in bond yields, which began moving lower since Fed Chair Jerome Powell‘s dovish comments in the presser that followed the Fed meeting, kept the rally going on Thursday. A bigger-than-expected increase in jobless claims an unexpected annualized quarterly decline in unit labor costs and a slew of positive earnings reports also served as upside catalysts.

The major averages opened higher and advanced steadily throughout the session before ending solidly higher at two-week highs. The broader S&P 500 Index rose by the most since April.

The buying was broad-based, with all the S&P sectors ending in the green. Energy, real estate, industrial, financial, and consumer discretionary stocks gained the most.

US Index Performance On Thursday

Analyst Color:

While earnings season wasn’t as good as it could have been, with lots of cuts in Q423 estimates, the soft landing narrative is fully in charge, said fund manager Louis Navellier.  “The seasonal rally is arriving right on queue, and the market is once again demonstrating its ability to shrug off what appears to be daunting geopolitical risks,” he added.

Futures Today

Futures Performance On Friday

In premarket trading on Friday, the SPDR S&P 500 ETF Trust SPY slipped 0.16% to $430.05 and the Invesco QQQ ETF QQQ fell 0.40% to $361.98, according to Benzinga Pro data.

Upcoming Economic Data:

The Bureau of Labor Statistics non-farm payrolls report is due at 8:30 a.m. EDT. The report is expected to show that non-farm payrolls came in at 180,000 in October, down sharply from 336,000 in September. The unemployment rate is likely to have remained unchanged at 3.8%. The annual rate of average hourly earnings, an inflation measure, may have increased by 4%, a slower rate of increase than the 4.2% rate seen in September.

Richmond Fed President Thomas Barkin will make a TV appearance at 9 a.m. EDT.

S& Global’s final services purchasing managers’ index, due at 9:45 a.m. EDT, is expected to come in at 51 for September.

The results of the Institute of Supply Management’s non-manufacturing survey are due to be released at 10 a.m. EDT. The non-manufacturing index may have increased from 50.1 in September to 50.9 in October.

Fed Vice Chair Michael Barr is scheduled to make a public appearance at 3:30 p.m. EDT.

See also: Futures Vs. Options

Stocks In Focus:

Apple shares fell over 3% in premarket trading following the company’s first-quarter guidance for flat revenue performance.

Other companies moving earnings news include Block, Inc. SQ (up about 15.5%) DraftKings Inc. DKNG (up over 7%), Expedia Group, Inc. EXPE (up nearly 11%), Fortinet, Inc. FTNT (down over 23%) and Live Nation Entertainment, Inc. LYV (up over 3%).

Cardinal Health, Inc. CAH and Dominion Energy, Inc. D are among the key companies reporting before the market opens.

Commodities, Bonds, Other Global Equity Markets:

Crude oil futures rose 0.29% to $82.70 in early European session on Friday following Thursday's 2.51% rally.

The benchmark 10-year Treasury note fell 0.009 percentage points to 4.66% on Friday.

Among the global equity markets, the Asian markets rallied across the board, as the strong rally on Wall Street proved contagious. European stocks showed tentativeness in late-morning trading on Friday following Thursday’s solid gains. Traders remained apprehensive ahead of the U.S. jobs data.

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