US stock outlook | Futures of the three major stock indexes had mixed ups and downs, and bank stocks rose all together due to bright financial reports

1. Before the US stock market on October 15 (Tuesday), futures for the three major US stock indexes had mixed ups and downs. As of press release, Dow futures were up 0.15%, S&P 500 futures were up 0.03%, and NASDAQ futures were down 0.06%.

2. As of press release, the German DAX index rose 0.36%, the UK FTSE 100 index fell 0.51%, the French CAC40 index fell 0.80%, and the European Stoxx 50 index fell 0.35%.

3. As of press release, WTI crude oil fell 4.32% to $70.64 per barrel. Brent crude oil fell 4.03% to $74.34 per barrel.

Market news

Investors' optimism showed the biggest increase since June 2020, yet Bank of America once again sent a “sell” signal! A survey of fund managers released by Bank of America on Tuesday showed the biggest increase in global investors' optimism since June 2020 in October due to the Federal Reserve's interest rate cuts, China's stimulus policies, and expectations of a soft landing in the US economy. The survey was conducted from October 4 to October 10. A total of 231 fund managers participated, and their assets under management amounted to US$574 billion. According to the survey, cash allocation fell to 3.9% from 4.2% in September, stock allocation rose to 31%, and bond allocation fell to 15%, a record low. Bank of America said, “Our broadest (fund manager survey) confidence index based on cash levels, stock allocations, and economic growth expectations rose from 3.8 to 5.6, the biggest monthly increase since June '20.”

Deloitte: Retailers face new challenges as US consumers plan to cut their holiday gift budgets. American consumers said they will cut spending on holiday gifts this year, and retailers that have been struggling to cope with falling demand have once again been hit. According to a Deloitte survey of more than 4,000 respondents, consumers' willingness to buy gifts is 3% lower than a year ago. However, shoppers said total spending will increase by 8% between October and December, and spending on experience, decoration and entertainment will be the main driver of growth. This indicates that retailers need to offer more promotions and discounts to attract shoppers who are still expected to see higher prices this Christmas. The report is similar to recent data from PwC, which argues that high prices erode consumers' brand loyalty.

With China's record high+European recovery, global electric vehicle sales surged 30.5% in September. According to the latest data from market research firm Rho Motion, global sales of all-electric and plug-in hybrid vehicles increased 30.5% year-on-year in September. Among them, sales in the Chinese market reached a record high, and the European market also resumed growth. Despite global demand for electric vehicles cooling down and facing import tariffs of up to 45%, Chinese automakers are still seeking to expand sales in the EU market. Specifically, global sales of electric vehicles reached 1.69 million units in September; sales in the Chinese market increased by 47.9% to 1.12 million units, while sales in the US and Canada increased 4.3% to 150,000 units. In Europe, sales of electric vehicles increased 4.2% to 300,000 units, thanks to increased sales in the UK, Italy, Germany and Denmark.

The “oil talkers” collectively turned pessimistic! The IEA called for an “oversupply” of oil in 2025. The International Energy Agency (IEA) said on Tuesday that the global oil market will experience a fairly large-scale “oversupply” situation in the new year, that is, 2025, and promised that the agency is ready to take action to deal with disruptions in Iran's oil supply. The IEA's latest report means that one of the leading agencies in the energy sector has publicly responded to the “oversupply” view of oil put forward by Goldman Sachs and Morgan Stanley and other Wall Street banks — that is, it is expected that starting in 2025, supply will continue to exceed demand in the oil market. After the IEA's latest report came out, the price of Brent crude oil futures, which had been weak recently, plummeted by nearly 5% after hearing the news.

Individual stock news

Cooperation with AT&T showed results, and Ericsson (ERIC.US) Q3 earnings surpassed expectations. Swedish telecom equipment manufacturer Ericsson's third-quarter profit exceeded market expectations, mainly due to the company's cooperation with US operator AT&T (T.US) beginning to show results. Ericsson's adjusted profit before interest and tax for the third quarter was SEK 7.3 billion (US$699 million), far exceeding analysts' expectations of 5.6 billion SEK. The adjusted operating margin was 11.9% compared to market expectations of 8.5%. The telecom equipment market has experienced a difficult period over the past few quarters as operators cut back or delay network investments. Ericsson has taken aggressive cost reduction measures, including layoffs of thousands of employees, and signed a $14 billion contract with AT&T in December last year, winning the confidence of investors. As of Monday, Ericsson had a cumulative increase of 24% this year.

The bank's financial reports are beautiful, and the sector is rising. Bank of America (BAC.US)'s revenue after Q3 net interest expenses was US$25.3 billion, compared to US$25.2 billion in the same period last year; net profit was US$6.9 billion, compared to US$7.8 billion in the same period last year. Goldman Sachs (GS.US) net revenue for the third quarter was US$12.70 billion, estimated at US$11.77 billion; FICC sales and transaction revenue for the third quarter was US$2.96 billion, estimated at US$2.96 billion. Investment banking revenue for the third quarter was US$1.86 billion, estimated at US$1.68 billion, slightly higher than expected. Net interest income for the third quarter was $2.62 billion, estimated at $1.84 billion, higher than expected. The number of employees by the end of the third quarter increased by 5% compared to the end of the second quarter. Both Bank of America and Goldman Sachs rose more than 2% before the market, and other bank stocks also strengthened.

UnitedHealth (UNHUS)'s third-quarter earnings report exceeded expectations, and full-year guidance was fine-tuned. UnitedHealth announced third-quarter results that exceeded expectations, but since healthcare costs in the third quarter exceeded Wall Street's expectations, UnitedHealth lowered the highest value of its full-year results guidance. The company expects adjusted earnings per share for 2024 to be between $27.50 and $27.75, lower than the previous forecast of $27.50 to $28. UnitedHealth's Q3 revenue was $10.8 billion, up 9.1% year over year, higher than market expectations of $99.2 billion; adjusted earnings per share were $7.15, and analysts' average forecast was $6.99.

Johnson & Johnson (JNJ.US)'s third-quarter profit exceeded expectations, and the full-year forecast was lowered to consider medical equipment acquisitions. Johnson & Johnson announced its third-quarter earnings report on Tuesday. The report said that Q3 profits were higher than expected, driven by soaring sales of the cancer drug Darzalex, while lowering full-year expectations to include a medical device acquisition deal. The company's adjusted earnings per share were $2.42 per share, beating Wall Street's estimate of $2.19, according to a statement on Tuesday. Pharmaceutical sales increased by nearly 5%, exceeding analysts' expectations of more than $400 million, with sales of Darzalex, a myeloma treatment, surged more than 20%.

Boeing (BA.US) signed a $10 billion credit agreement and submitted a $25 billion financing plan. Boeing signed a $10 billion credit agreement to seek to support its balance sheet and was affected by a prolonged strike that had shut down its Seattle manufacturing center for a month. Boeing said in a statement on Tuesday that it will pay 0.5% of the total principal amount of each advance payment as a financing fee under the agreement. Boeing's registration statement also submitted to the US Securities and Exchange Commission shows that it will raise up to $25 billion by issuing various debt securities and stocks.

Key economic data and event forecasts

20:30 Beijing time: US New York Federal Reserve manufacturing index for October.

23:00 Beijing time: The US New York Federal Reserve's 1-year inflation forecast for September (%).

23:30 Beijing time: 2024 FOMC voting committee and San Francisco Federal Reserve Chairman Daly delivered a speech and attended a dialogue session at an event hosted by NYU Stern School of Business.

The next day at 01:00 a.m. Beijing time: Federal Reserve Governor Kugler delivered a speech.

The next day at 05:00 a.m. Beijing time: US Vice President Harris was interviewed.

Performance Forecast

Wednesday morning: Rio Tinto (RIO.US), Yingtou Securities (IBKR.US)

Wednesday pre-market: ASML.US (ASML.US), Abbott (ABT.US), Morgan Stanley (MS.US), United Airlines (UAL.US)