US Stocks Poised To Lose Steam As Traders Digest Early Midterm Results And Eye Thursday's Inflation Data — Tesla, Disney, AMC In Focus Today

Zinger Key Points
  • Traders are digesting earnings news from Tuesday after-hours, mostly bordering on the negative.
  • Traders may prefer to stay on the sidelines and see-off Thursday's inflation data before making any major moves.

U.S. stocks look headed for a lower start on Wednesday, going by the trading in the index futures. Earnings disappointments and apprehension ahead of Thursday’s consumer price inflation report could serve to keep sentiment subdued.

On Tuesday, the major averages opened higher and advanced steadily through the morning trading, as traders digested corporate earnings and focused on the outcome of the U.S. midterm polls. Selling emerged in the afternoon, dragging the averages lower. After bottoming in the late afternoon, the indices cut their losses, ending moderately to notably higher.

Tuesday’s advance marked the third straight session of gains for the market that helped the Dow climb to the highest level since late August.

Among sectors — IT, communications, industrial and material stocks gained ground, while consumer discretionary stocks came under modest selling pressure.

U.S. Indices' Performance On Tuesday
Index Performance (+/-)   Value
Nasdaq Composite +0.49%   10,616.20
S&P 500 Index +0.56%   3,828.11
Dow Industrials +1.02%   33,160.83

Midterm election results have shown that there hasn’t been a red wave, as was predicted ahead of the elections; but it is still early to call the final tally.

From a long-term perspective, it is important to look past any potential signals taken from election results, as the U.S. market returns have been positive and strong, on average, irrespective of whether a Republican or Democratic administration presides, Daniel Berkowitz, senior investment officer for Prudent Management Associates said.

“Moreover, what we think ultimately matters most in the short term is the future direction of inflation, and the Fed will continue on its mission to drive inflation back to target regardless of what happens in this upcoming election cycle,” the market analyst said.

“With that said, a more defensive posture continues to remain appropriate, particularly regarding fixed income allocations.”

Here’s a peek into index futures trading:

U.S. Futures' Performance On Wednesday During Premarket Session
Index Performance (+/-)  
Nasdaq 100 Futures -0.41%  
S&P 500 Futures -0.37%  
Dow Futures -0.41%  
R2K Futures -0.84%  

In premarket trading on Wednesday, the SPDR S&P 500 ETF Trust SPY fell 0.40% to $380.49 and the Invesco QQQ Trust QQQ receded 0.35% to $268.60, according to Benzinga Pro data.

On the economic front, Federal Open Market Committee member and New York Fed President John Williams gave the keynote remarks before the Swiss National Bank-FRB-BIS high-level conference on global risk, uncertainty and volatility.

The Mortgage Bankers Association is scheduled to release its mortgage applications volume data, for the week ended Nov. 4, at 7 a.m. EST.

At 10 a.m. EST, the Commerce Department will release the wholesale sales and inventory report for September.

The Energy Information Administration’s customary weekly oil inventories report for the week ended Nov. 4 is due at 10:30 a.m. EST.

Richmond Fed President Thomas Barkin, also an FOMC member, will speak on the economic outlook before the "Top of Virginia Economic Summit 2022," at 11 a.m. EST.

The Treasury is set to auction 10-year notes at 1 p.m. EST.

See also: Midterm Results: No Red Wave In Sight As Democrats, Republicans Fight Out Tight Contests

Stocks In Focus:

  • Tesla, Inc. TSLA clocked minor gains in early premarket trading after CEO Elon Musk disclosed in regulatory filings that he sold about $4 billion worth of shares over Friday, Monday and Tuesday.
  • Theater chain AMC Entertainment Holdings, Inc. AMC lost about 4% despite reporting a narrower third-quarter loss and better-than-expected revenue.
  • Walt Disney Company DIS fell following a fourth-quarter miss and weak guidance for the fiscal year 2023.
  • Upstart Holdings, Inc. UPST slumped over 25% after the financial services company reported a third-quarter loss and revenue that trailed expectations.
  • Lucid Group, Inc. LCID declined close to 8% after the luxury electric vehicle maker reported below-consensus bottom-line results and also a dip in reservations.
  • Performance Food Group Company PFGC, SeaWorld Entertainment, Inc. SEAS, Roblox Corp. RBLX and Wendy’s Company WEN are among the noteworthy companies reporting ahead of the market open.
  • Key companies due to report after the close include Beyond Meat, Inc. BYND, Rivian Automotive, Inc. RIVN and Wynn Resorts Limited WYNN.

Commodities, Other Global Equity Markets:

Crude oil futures were down for a third straight session and traded around $88.30-a-barrel on Wednesday.

The markets in the Asia-Pacific region ended Wednesday’s session on a mixed note, with the Japanese, Hong Kong and Chinese markets retreating. On the other hand, the South Korean, Taiwanese, Singaporean and Australian markets gained ground.

Data released out of China showed that both wholesale and consumer price inflation came in less than expected, reinforcing the view that the domestic economy slowed in response to the COVID-19 curbs.

European stocks opened Wednesday’s session lower and have pulled back further in early trading, as traders pause after a three-session rally.

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Posted In: EarningsGovernmentNewsGuidanceFuturesPreviewsPoliticsSmall CapTop StoriesEconomicsPre-Market OutlookMarketsTrading IdeasGeneralmidtermsNasdaq futuresS&P 500 futures
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