1. On October 28th (Monday), before the U.S. stock market opened, the three major U.S. stock index futures all rose. As of press time, Dow futures were up 0.46%, S&P 500 index futures were up 0.53%, and Nasdaq futures were up 0.67%.
2. As of press time, the German DAX index fell by 0.11%, the UK's FTSE 100 index fell by 0.31%, the French CAC 40 index rose by 0.17%, and the Euro Stoxx 50 index fell by 0.03%.
3. As of press time, WTI crude oil fell by 5.71%, reporting at $67.68 per barrel. Brent crude oil fell by 5.34%, reporting at $71.59 per barrel.
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This week, PCE and Non-Farm Payrolls join forces to "blow up the scene" as earnings reports from major tech giants are concentrated to "come out." The U.S. stock market is approaching historical highs, entering one of the busiest weeks of the year. This week, the latest data on the Fed's favored inflation indicator, PCE, the October Non-Farm Employment Report, and earnings reports from tech giants Alphabet (GOOGL.US), Apple (AAPL.US), Amazon (AMZN.US), Microsoft (MSFT.US), and Meta (META.US) will determine the direction of the U.S. stock market at the beginning of November. This week, data on U.S. economic growth in the third quarter, job vacancies, service and manufacturing activities, and consumer confidence will also be released, in addition to a busy corporate earnings season, with 169 companies in the S&P 500 index expected to announce their quarterly performance. Companies such as Ford (F.US), AMD (AMD.US), McDonald's (MCD.US), Eli Lilly (LLY.US), and ExxonMobil (XOM.US) will all be closely watched.
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The U.S. stock market's rally has expanded to non-tech stocks, but will the earnings season provide different answers? The seemingly unstoppable U.S. stock market continues to rise, with gains spreading to sectors such as real estate that have struggled in the first half of this year. However, corporate profits are not the same. This raises the question of how long the breadth of this rally can be maintained. Matt Maley, Chief Market Strategist at Miller Tabak + Co., said, "In terms of the stock market's trajectory, the rebound may expand, but the rebound will not expand based on overall earnings." Earnings for S&P 500 index companies are expected to grow by 4.3% compared to the same period last year. However, according to data, excluding the so-called seven tech giants—Alphabet (GOOGL.US), Amazon (AMZN.US), Apple (AAPL.US), Meta (META.US), Microsoft (MSFT.US), Nvidia (NVDA.US), and Tesla (TSLA.US)—profit expectations are for zero growth.
Goldman Sachs predicts that the U.S. stock market's return rate over the next decade will be as low as 3%, which has been refuted by many Wall Street figures. Last week, Goldman Sachs stated that as investors turn to other assets, including bonds, for better returns, the U.S. stock market is unlikely to maintain the above-average performance of the past decade. Goldman Sachs strategists, including David Kostin, analyzed that the annualized nominal total return rate of the S&P 500 index over the next decade is expected to be slightly above 3%, compared to 13% in the past decade and a long-term average of 11%. However, this prediction by Goldman Sachs has attracted a lot of skepticism from Wall Street figures. Analysts at JPMorgan Chase expect that although price-to-earnings ratios may decline, U.S. large-cap stocks will continue to be the backbone of investors' portfolios, with an expected annualized return rate of 6.7% over the next 10-15 years.
Profit growth is expected to slow down, and the halo of U.S. tech giants is no longer there. As U.S. tech giants prepare to announce their earnings this week, slowing profit growth is removing some of their invincible halos. Whether this trend can be reversed will largely determine whether the stock market's rally can continue. Data shows that the five companies with the highest market value in the S&P 500 index—Apple (AAPL.US), Nvidia (NVDA.US), Microsoft (MSFT.US), Alphabet (GOOGL.US), and Amazon (AMZN.US)—expect an average profit growth of 19% in the third quarter. Although this will easily exceed the expected profit growth rate of the S&P 500 index at 4.3%, it will also be the slowest overall profit growth rate for these five companies in six quarters. In addition, it is expected that by 2025, the gap in profit growth between large tech companies and other companies will continue to narrow.
JPMorgan: AI ignites the growth engine, helping the U.S. stock market to continue leading the global market over the next decade. In terms of scale, U.S. companies have already dominated the global stock market. A new chart from JPMorgan Asset Management shows that this situation is expected to continue, and this prosperity will be attributed to artificial intelligence technology. In JPMorgan's "2025 Long-Term Capital Market Assumptions" released on Monday, the team expects that by 2037, the share of U.S. companies in the global stock market will drop from the current 64% to 60%. Nevertheless, the U.S. will still maintain a significant lead over the world's second-largest stock market. Monica Isral, Global Head of Multi-Asset and Portfolio Solutions at JPMorgan Asset Management, said in a media roundtable meeting on Monday that as artificial intelligence expands from assisting a few large tech companies that have dominated the market's rise over the past year to various industries, the U.S. will continue to lead the global market in terms of market share.
Israel's strike on Iran, avoiding oil facilities, alleviates supply concerns, and international oil prices plummet nearly 6%. As Israel's retaliatory strike on Iran over the weekend bypassed oil and nuclear facilities, alleviating concerns about energy supply disruptions, oil prices plummeted nearly 6% on Monday. Data shows that both Brent and WTI crude oil futures hit their lowest levels since October 1st. As of press time, Brent crude oil has fallen by more than $4, with a drop of more than 5%, and WTI crude oil has fallen by more than $4, with a drop of nearly 6%. Last week, due to market digestion of the uncertainty brought by the expected extent of Israel's reaction to Iran's missile attack on October 1st, the benchmark Brent crude oil rose by 4% in turmoil. Due to Israel's retaliatory strike on Iran over the weekend bypassing oil and nuclear facilities, alleviating concerns about energy supply disruptions, oil prices plummeted nearly 6% on Monday.Individual Stock News
Philips (PHG.US) Q3 Profit Growth, Significantly Lowers Full-Year Sales Growth Forecast. Royal Philips has significantly lowered its sales growth forecast for this year due to weak demand in China, expecting a comparable sales growth of only 0.5% to 1.5% for 2024, far below the previous expectation of 3% to 5%. Third-quarter order volume decreased by 2%, with comparable sales remaining flat at €4.4 billion, below analyst forecasts. Although the adjusted EBITA margin reached 11.8%, meeting the expected upper limit, the uncertainty in the Chinese market is expected to continue into the next few quarters. In addition, Philips is still dealing with U.S. claims related to sleep apnea device failures and an investigation by the U.S. Department of Justice, but the potential impact of these legal proceedings is not included in the outlook.
Borrowing to Repurchase Stocks! Oil Giants Cash Flow Alarm, End of the "Platinum Age" of the Refining Industry Amid Low Oil Prices? As crude oil prices and refining margins decline, four out of the five supermajor oil companies may need to borrow money to fund the $15 billion stock repurchase in the most recent quarter, raising market concerns about the long-term sustainability of these companies' dividends. Analysts expect a 12% decline in earnings for ExxonMobil (XOM.US), Chevron (CVX.US), Shell (SHEL.US), Total (TTE.US), and BP (BP.US) compared to the previous quarter, totaling $24.4 billion. Except for Shell, these companies' free cash flow is expected to decrease by 30% compared to a year ago, preventing them from using free cash flow to pay dividends and repurchase stocks.
Apple (AAPL.US) Fails to Fulfill Investment Commitment, Indonesia Bans Sale of iPhone 16 Series. The Indonesian government recently announced a ban on the sale of the iPhone 16 series in the country, stating that Apple has not fulfilled its investment commitments in Indonesia. The Indonesian Ministry of Industry earlier stated that Apple committed to invest 1.7 trillion Indonesian rupiah (approximately $109 million) in Indonesian infrastructure and local procurement, but the actual amount delivered was only 1.48 trillion rupiah. The Indonesian Ministry of Industry announced in a statement that the iPhone 16, launched in September, cannot be sold in Indonesia, as the local subsidiary PT Apple Indonesia did not meet the country's requirement for 40% local content in smartphones. This poses an obstacle for Apple, as the company's flagship product has been selling well in other Asian markets such as China.
Volkswagen Plans to Close Three German Plants to Cut Costs. Volkswagen plans to close at least three plants in Germany and may implement a 10% across-the-board pay cut as well as reduce the scale of all remaining plants to cut costs and enhance competitiveness. Volkswagen's union chair, Daniela Cavallo, revealed in Wolfsburg that these measures will lead to significant reductions in product lines, output, shifts, and assembly lines, affecting far beyond the current level. CEO Oliver Blume mentioned that the Volkswagen brand is facing difficulties due to high costs, weakening market demand, and increased competition in the Chinese market. Union members believe that workers should not pay for the board of directors' wrong decisions, including the failure of the electric vehicle transition and improper pricing policies. Previously, Volkswagen was facing a protest initiated by German workers, who plan to suspend production on Monday to oppose the company's plant closure plan in Germany.
McDonald's (MCD.US) Rules Out Beef Patty as Source of E. Coli Outbreak. McDonald's stated that all restaurants will reintroduce the Quarter Pounders burger this week, after the company ruled out the beef patty as the source of the E. Coli outbreak that occurred in multiple U.S. states. The outbreak has resulted in dozens of illnesses and one death. The fast-food chain said it combined supply chain traceability data with information from government agencies, including an analysis by the Colorado Department of Agriculture, which showed no E. Coli in dozens of samples taken from multiple batches of fresh and frozen beef patties from the restaurant. McDonald's urgently removed the Quarter Pounder from the menus of restaurants in a dozen U.S. states last week to control the damage caused by the E. Coli outbreak associated with the burger.
AI Wave Drives "Nuclear Power Renaissance", Sam Altman-Backed Oklo (OKLO.US) Soars. As investors view nuclear energy as the next artificial intelligence trade opportunity, the nuclear power company Oklo, backed by OpenAI CEO Sam Altman, has performed explosively in the past month. The company is focusing on designing small modular reactors (SMRs), and due to the growing interest of major technology giants in nuclear power, the company's stock price has soared by nearly 140% in the past month. Small modular reactors aim to produce energy that is cheaper, faster, and more environmentally friendly than traditional nuclear facilities.
Boeing (BA.US) to Issue 90 Million Shares and $5 Billion in Depositary Shares. Boeing intends to use the net proceeds for general corporate purposes, which may include repaying debt, increasing working capital, capital expenditures, and financing and investing in the company's subsidiaries.