The Pre-Game Report | Thursday, October 31, 2024

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Thursday, October 31, 2024

The market is poised for a volatile day, with a flurry of US economic data releases set to shake things up. The focus will be on the US Personal Income and Spending report, which will offer insights into consumer spending patterns and inflation pressures.  The core PCE price index, a key inflation indicator closely watched by the Fed, will also be released, providing further clues about the trajectory of monetary policy. 

 

On the geopolitical front, tensions remain high between the US and China, with the recent escalation of trade disputes and the ongoing military build-up in the South China Sea keeping investors on edge. This uncertainty could weigh on global markets, particularly in the technology sector, which is heavily exposed to Chinese demand.  

 

Furthermore, the upcoming US Presidential election, scheduled for November 2024, is already casting a long shadow on the market.  The political rhetoric and potential policy changes associated with the election cycle will likely influence investor sentiment and stock prices in the coming months.  


  • Continuing Jobless Claims (Oct/19): The release of Continuing Jobless Claims will provide insight into the duration of unemployment. A lower-than-expected number would suggest a strong labor market, potentially supporting further interest rate hikes by the Fed.
  • Core PCE Price Index MoM (Sep): This data point will offer a granular view of inflation pressures on a monthly basis. A higher-than-expected reading could further fuel concerns about inflation, potentially leading to more aggressive rate hikes.
  • Core PCE Price Index YoY (Sep): This figure provides a broader perspective on inflation trends, offering insights into the sustainability of price pressures. A persistent upward trend could lead to continued hawkish sentiment from the Fed.
  • Initial Jobless Claims (Oct/26): This report will provide a snapshot of the current state of the labor market. A higher-than-expected number could indicate a softening labor market, potentially leading to a pause in rate hikes by the Fed.
  • Personal Income MoM (Sep): This release will measure the growth of personal income on a monthly basis. A strong reading would suggest robust consumer spending, potentially supporting economic growth.
  • Personal Spending MoM (Sep): This data point measures the growth of consumer spending on a monthly basis. A higher-than-expected number would indicate strong consumer demand, potentially supporting economic growth.
  • Jobless Claims 4-week Average (Oct/26): This figure provides a smoothed view of jobless claims, filtering out potential volatility in weekly data. A sustained upward trend could indicate a weakening labor market, potentially leading to a pause in rate hikes by the Fed.


The COT data highlights a mixed sentiment across various asset classes.

  • Bullish: The US Dollar (DX), Gold (GC), Silver (SI), and Platinum (PA) are all showing an increasing bullish sentiment, indicating a potential shift towards these assets as safe havens amidst market uncertainty.
  • Bearish: Crude Oil (CL), Natural Gas (NG), 2-Year Treasury Note (ZB), S&P 500 (ES), Dow Jones Industrial Average (YM), Russell 2000 (QR), and Copper (HG) are showing an increasing bearish sentiment, suggesting a potential downturn in these markets.

This divergence in sentiment across asset classes underscores the current market volatility and highlights the need for a cautious approach to investment decisions.

The sector performance data suggests a mixed outlook for the market, with some sectors showing signs of strength while others are facing headwinds.

  • Energy (1.18%): The Energy sector is performing well, likely benefiting from rising oil prices driven by geopolitical tensions and robust global demand.
  • Financial Services (0.93%): The Financial Services sector is also showing strength, potentially driven by rising interest rates and increased lending activity.
  • Industrials (0.46%): The Industrials sector is experiencing modest gains, suggesting some optimism about economic growth and infrastructure investments.
  • Consumer Cyclical (0.42%): The Consumer Cyclical sector is also showing modest gains, indicating some confidence in consumer spending, despite rising inflation.
  • Real Estate (-0.26%): The Real Estate sector is facing some downward pressure, potentially due to concerns about rising interest rates and their impact on mortgage rates.
  • Technology (-0.72%): The Technology sector is experiencing losses, likely driven by geopolitical tensions and concerns about slowing growth in the tech sector.
  • Utilities (-1.27%): The Utilities sector is experiencing losses, potentially due to investor concerns about rising interest rates and their impact on utility stocks.
  • Communication Services (-1.78%): The Communication Services sector is facing significant losses, likely driven by concerns about slowing growth in the advertising market and competition from other tech companies.

The most active index stocks today include:


  • LDGYY: This stock is experiencing a significant increase in trading volume, suggesting a surge in investor interest.
  • CINT: This stock is also experiencing a surge in trading volume, indicating increased investor activity.
  • GOOGL: Google's stock is seeing considerable activity, potentially reflecting the ongoing focus on the tech sector and its implications for the broader market.
  • QUBT: This stock is seeing a significant increase in trading volume, likely driven by news or events related to the company.
  • HASI: This stock is seeing a notable increase in trading volume, indicating investor interest.
  • IRBT: This stock is seeing a significant increase in trading volume, suggesting a surge in investor interest.
  • SMTC: This stock is experiencing a significant decrease in trading volume, potentially indicating a decline in investor interest.
  • VST: This stock is experiencing a significant decrease in trading volume, potentially indicating a decline in investor interest.
  • NTAP: This stock is experiencing a significant decrease in trading volume, potentially indicating a decline in investor interest.
  • CXM: This stock is experiencing a significant decrease in trading volume, potentially indicating a decline in investor interest.
  • EPAM: This stock is experiencing a significant decrease in trading volume, potentially indicating a decline in investor interest.
  • Equinix: TD Cowen raised the price target to $984 from $865, indicating a bullish outlook for the company.
  • Meta Platforms: Cantor Fitzgerald, JMP Securities, Morgan Stanley, Citi, Barclays, and DA Davidson have all raised price targets for Meta Platforms, indicating a bullish outlook for the company.
  • NRG Energy: Citi raised the price target to $100 from $84, indicating a bullish outlook for the company.
  • Microsoft: DA Davidson lowered the price target to $425 from $450, indicating a more cautious outlook for the company.

The market is facing a confluence of challenges, with geopolitical tensions, potential for further rate hikes, and the upcoming US Presidential election creating significant uncertainty.


The upcoming economic data releases, particularly the Personal Income and Spending report and the Core PCE price index, will offer crucial insights into the state of the US economy and the Fed's future policy decisions.


While some sectors, such as Energy and Financial Services, are showing signs of strength, others, including Technology and Communication Services, are facing headwinds.


The overall market sentiment remains cautious, with investors likely to remain on the sidelines until they have a clearer picture of the economic and geopolitical landscape.


This report is for informational purposes only and should not be considered financial advice. The author is not a financial advisor and does not provide investment recommendations.

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