Dow futures are sharply below fair value
Dow Jones Industrial Average (DJI) futures are trading below fair value this morning, pointing to a more than 100-point drop for the index, as U.S. stocks look to extend their weak start to the fourth quarter. The Dow and S&P 500 Index (SPX) experienced sharp losses on Tuesday due to bleak manufacturing data, and economic data is in focus again today, with the ADP employment report showing private payrolls rose by 135,000 in September, better than the 125,000 expected -- though the pace of hiring has slowed.
Continue reading for more on today's market, including:
5 Things You Need to Know Today
- The Cboe Options Exchange (CBOE) saw 850,323 call contracts traded on Tuesday, compared to 616,939 put contracts. The single-session equity put/call ratio jumped to 0.73, while the 21-day moving average remained at 0.65.
- Lennar Corporation (NYSE:LEN) reported an earnings beat this morning thanks to strong home sales for the third quarter, sending the stock up more than 3% before the open and proving Raymond James' correct for now with its bullish call on the housing sector. LEN shares were already strong coming into today, hitting a 52-week high of $56.19 just yesterday.
- Online brokerage stocks are getting hit hard again this morning, a day after Charles Schwab Corporation (NYSE:SCHW) put pressure on the entire sector by dropping its stock trading commissions to zero. In response, Barclays double-downgraded SCHW and peer TD Ameritrade Holding Corp. (NASDAQ:AMTD) to "underweight," with the latter company already following Schwab's lead and cutting its commissions to zero.
- Reuters is reporting this morning that Tesla Inc (NASDAQ:TSLA) is looking to start production in China this month, with the goal of producing more than 1,000 Model 3s a week. While TSLA call options have been popular the major exchanges, the shares are struggling to take out resistance at the $250 level.
- Motor vehicle sales are due out today. In addition, MBA mortgage applications and weekly crude inventories are on deck. New York Fed President John Williams and Philadelphia Fed President Patrick Harker will also give remarks. Quarterly earnings from Acuity Brands (AYI), Bed Bath & Beyond (BBBY), and Paychex (PAYX) are due out.
U.S. Data Pressures International Markets
Asian markets took their bearish cues from Wall Street, closing firmly in the red on disappointing U.S. manufacturing data. South Korea's Kospi suffered the worst drop, shedding 2% after North Korea launched a ballistic missile into the sea between the Korean Peninsula and Japan. Elsewhere in the region, Japan's Nikkei fell 0.5% and Hong Kong's Hang Seng slipped 0.2%, after a pro-democracy protester was shot by a police officer during a clash on Tuesday. Chinese markets remained closed for holiday.
European stocks are swimming in red ink at midday, with banking stocks tumbling as protests in Hong Kong continue. Downwardly revised global growth forecasts from several German economics research institutes, including Ifo, are also weighing on investor sentiment. At last check, London's FTSE 100 is off 2.2%, after the IHS Markit/CIPS constructing purchasing managers index for the U.K. arrived at it second-worst reading in 10 years -- with the data released ahead of Prime Minister Boris Johnson's "final offer" for a Brexit plan, expected later today. Meanwhile, the French CAC 40 is down 1.8%, and the German DAX is 1.4% lower.