Overnight Markets And News

Dec E-mini S&Ps (ESZ18 -0.37%) this morning are down -0.36% and European stocks are down -0.47% as a surge in T-note yields undercuts global stock prices. The 10-year T-note yield jumped to an 8-1/3 year high of 3.23% as stronger-than-expected economic data and hawkish comments from Fed Chair Powell on Wednesday bolstered the case for a faster pace of Fed rate hikes. The U.S. Sep ISM non-manufacturing PMI rose to a 21-year year high and Fed Chair Powell said the Fed could eventually raise the Fed funds rate past the neutral level. The increase in T-note yields has also boosted other global government bond yields as the UK 10-year gilt yield climbed to a 1-1/2 year high of 1.668% and the German 10-year bund yield rose to a 1-week high of 0.549%. Asian stocks settled mostly lower: Japan -0.56%, Hong Kong -1.73%, China closed for holiday, Taiwan -1.33%, Australia +0.49%, Singapore -1.10%, South Korea -1/60%. India -2.24%. Japanese stocks were under pressure from the increase in government bond yields after the Japan 10-year bond yield jumped to a 2-1/2 year high of 0.165%.

The dollar index (DXY00 +0.08%) is up +0.12% at a 6-week high as the jump in T-note yields boosts the dollar's interest rate differentials. EUR/USD (^EURUSD +0.22%) is up +0.17%. USD/JPY (^USDJPY -0.20%) is down -0.20%.

Dec 10-year T-note prices (ZNZ18 -0-125) are down -12 ticks to a fresh contract and 8-1/3 year nearest-futures low.

The German Markit Sep construction PMI fell -1.3 to 50.2.

UK Sep new car registrations fell -20.5% y/y to 338,834, the biggest decline in nearly 8 years. Year-to-date new car registrations ore down -7.5% to 1,910,820.

U.S. Stock Preview

Key U.S. news today includes: (1) Sep Challenger job cuts (Aug +13.7% y/y), (2) weekly initial unemployment claims (expected +1,000 to 215,000, previous +12,000 to 214,000) and continuing claims (expected +4,000 to 1.665 million, previous +16,000 to 1.661 million), (3) Aug factory orders (expected +2.1%, Jul -0.8% and +0.2% ex transportation).

Notable Russell 2000 earnings reports today include: Costco Wholesale (consensus $2.36), Constellation Brands (2.60).

U.S. IPO's scheduled to price today: ARYA Sciences Acquisition Crop (ARYAU), Elastic NV (ESTC).

Equity conferences during the remainder of this week: Wolfe Research Utilities & Energy Conference on Tue-Thu, European Association for the Study of Diabetes Meeting on Thu.

Market Comments

Dec S&P 500 E-minis (ESZ18 -0.37%) this morning are down -10.50 points (-0.36%). Wednesday's closes: S&P 500 +0.07%, Dow Jones +0.20%, Nasdaq 100 +0.12%. The S&P 500 on Wednesday climbed to a 1-1/2 week high and closed higher on the +230,000 increase in the U.S. Sep ADP employment change (stronger than expectations of +184,000 and the largest increase in 7 months) and the unexpected +3.1 point increase in the U.S. Sep ISM non-manufacturing index to a 21-year high of 61.6. Stocks were undercut by interest rate concerns after the 10-year T-note yield rose to a 7-year high.

Dec 10-year T-notes (ZNZ18 -0-125) this morning are down -12 ticks to a contract and 8-1/3 year nearest-futures low. Wednesday's closes: TYZ8 -22.00, FVZ8 -11.75. Dec 10-year T-notes on Wednesday slumped to a contract and 7-1/2 year nearest-futures low and closed lower. T-note prices were undercut by the stronger-than-expected U.S. economic data on Sep ADP employment and the Sep ISM non-manufacturing index, which bolstered the case for tighter Fed policy. T-note prices were also hurt by technical selling with the new contract low and by hawkish comments from Chicago Fed President Evans who said he is "quite comfortable" with a December Fed rate hike.

The dollar index (DXY00 +0.08%) this morning is up +0.111 (+0.12%) at a fresh 6-week high, EUR/USD (^EURUSD+0.22%) is up +0.0020 (+0.17%), and USD/JPY (^USDJPY -0.20%) is down -0.23 (-0.20%). Wednesday's closes: Dollar Index +0.255 (+0.27%), EUR/USD -0.0070 (-0.61%), USD/JPY +0.88 (+0.77%). The dollar index on Wednesday rallied to a 6-week high and closed higher on the stronger-than-expected U.S. ADP and Sep ISM non-manufacturing reports. The dollar was also boosted by the surge in the 10-year T-note yield to a 7-year high, which improved the dollar's interest rate differentials.

Metals prices this morning are weaker with Dec gold (GCZ18 +0.04%) -0.4 (-0.03%), Dec silver (SIZ18 +0.14%) -0.020 (-0.14%) and Dec copper (HGZ18 -0.14%) -0.011 (-0.39%). Wednesday's closes: Dec gold -4.1 (-0.34%), Dec silver -0.023 (-0.16%), Dec copper +2.75 (+0.98%). Metals on Wednesday settled mixed. Metals prices were undercut by a stronger dollar and by the surge in the U.S. Sep ISM non-manufacturing index to a 21-year high, which bolsters the case for additional Fed rate hikes. Copper prices were supported by tighter copper supplies after LME copper inventories fell -2,425 MT to a 9-1/2 month low of 194,175 MT.

Nov WTI crude oil prices (CLX18 -0.21%) this morning are down -6 cents (-0.08%) and Nov gasoline (RBX18 -0.66%) is -0.54 (-0.22%). Wednesday's closes: Nov crude oil +1.18 (+1.57%), Nov gasoline +1.09 (+0.51%). Nov crude oil and gasoline on Wednesday closed higher with Nov crude at a 3-3/4 year high. Crude oil and gasoline prices were boosted by the unexpected decline in EIA gasoline inventories by -459,000 bbl (vs expectations of +1.25 million bbl) and by global supply fears with the collapse of Venezuela's oil industry and concern about the extent to which Iranian crude exports will fall due to U.S. sanctions in November. Crude oil prices were undercut by a stronger dollar and by the +7.98 million bbl surge in EIA crude inventories, well above expectations of +1.5 million bbl.

Overnight U.S. Stock Movers

International Business Machines (IBM -0.34%) was rated a new 'Sell' at MoffetNathanson with a price target of $150.

AMC Networks (AMCX +1.36%) was downgraded to 'Sell' from 'Neutral' at Goldman Sachs with a price target of $61.

Chipotle Mexican Grill (CMG +0.02%) was rated a new 'Overweight' at KeyBanc Capital Markets with a price target of $500.

McDonald's (MCD -0.31%) was rated a new 'Overweight' at KeyBanc Capital Markets with a price target of $185.

SYNNEX (SNX +1.32%) fell more than 4% in after-hours trading after it forecast Q4 adjusted EPS of $2.90 to $3.10, the midpoint below consensus of $3.07.

Innovative Industrial Properties (IIPR -6.68%) dropped almost 7% in after-hours trading after it announced that it had commenced a public offering of 2 million shares of its common stock.

Starbucks (SBUX -0.22%) was rated a new 'Overweight' at KeyBanc Capital Markets with a price target of $65.

Rudolph Technologies (RTEC -0.58%) tumbled nearly 12% in after-hours trading after it lowered its Q3 adjusted EPS outlook to 22 cents to 25 cents from a view on August 2 of 30 cents to 40 cents.

AtriCure (ATRC +0.09%) slid more than 3% in after-hours trading after it announced that it had commenced a public offering of 2.5 million shares of its common stock.

Monmouth Real Estate Investment (MNR -0.86%) fell over 6% in after-hours trading after it announced that it had commenced a public offering of 8 million shares of its common stock.

Resources Connection (RECN -0.73%) jumped nearly 20% in after-hours trading after it reported Q1 revenue of $178.6 million, well above consensus of $173.5 million.

Cloudera (CLDR +1.07%) rallied 13% and Hortonworks (HDP +1.77%) gained 12% in after-hours trading after the companies said they plan to merge with Cloudera holders to own about 60% of equity and Hortonworks holders to own about 40%.

Barnes & Noble (BKS -1.62%) surged over 24% in after-hours trading after it said it received expressions of interest from multiple parties in making as offer to acquire the company.

Pier 1 Imports (PIR +2.67%) lost more than 4% in after-hours trading after it reported a Q2 adjusted loss per share of -63 cents, wider than consensus of -59 cents.