Stock Market Futures Edge Lower As Energy Prices Climb
Stock market futures ticked lower on Monday morning, while prices for crude oil extended their gains. Apart from that, the market also seems to be digesting the disappointing jobs report. This comes as investors prepare for the release of third-quarter earnings starting this week. Recall that the September jobs report saw the addition of only 194,000 nonfarm jobs during the month. That’s far below the Dow Jones estimate for 500,000.
“Friday’s U.S. employment report was sufficiently mixed to revive the debate over whether the Fed will really go ahead with the planned tapering next month. Despite the headline miss, the underlying numbers should just about meet Chair Powell’s requirement of ‘decent’ and ensure that the existing schedule remains intact,” said Ian Williams, strategist at U.K. broker Peel Hunt.
Meanwhile, AstraZeneca’s (NASDAQ: AZN) experimental COVID-19 drug showed promise in cutting the risk of severe disease or death in late-stage study. The drug, known as AZD 7442, can give a significant reduction in progression to severe disease, with continued protection for more than six months. As of 8:13 a.m. ET, the Dow, S&P 500, and Nasdaq futures are trading lower by 0.29%, 0.63%, and 1.25% respectively.
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China Tech Stocks Continue To Rebound On Relief Over Meituan
If Hong Kong’s stock market performance is of any indication, Chinese tech stocks could extend their winning streaks today. There’s no question that the tech space has been in Beijing’s crosshairs for almost a year. And many tech companies are now trying to bend their business models to fit the country’s “common prosperity” campaign. Today, investors appear to be cheering on the smaller-than-expected fine on Meituan (OTCMKTS: MPNGF).
“Meituan’s better-than-feared antitrust penalty may be leading investors to rethink the severity of punishments that may follow from China’s tech crackdown … However, uncertainty remains and may continue to keep sector valuations depressed for several more months until there’s greater clarity on the situation.”- Matthew Kanterman, Analyst at Bloomberg Intelligence.
Among other Chinese tech stocks expected to make big advances in the stock market today include JD.com (NASDAQ: JD) and Alibaba (NYSE: BABA). Alibaba stock got an extra boost last week after a report stated that Charlie Munger’s Daily Journal Corp. had increased its stake by 83% last quarter. The general sentiment for Chinese stocks also improved last week when the U.S. and China agreed to hold a virtual summit before the end of the year.
Xpeng’s EV Production Reaches The 100,000 Electric Vehicles Mark
China’s electric vehicle maker Xpeng (NYSE: XPEV) said Monday it has produced 100,000 electric vehicles, six years after inception. Meanwhile, its homegrown rival Nio (NYSE: NIO) said in April it reached that 100,000 mark in a similar timeframe. Perhaps you think this is something easily attainable today. But note that Elon Musk’s Tesla (NASDAQ: TSLA) took 12 years to produce the same number of vehicles.
The Chinese rivals may be growing at a faster pace in comparison with Tesla. But that’s not a fair comparison in my humble opinion. For all practical purposes, Tesla created the electric vehicle industry. After all, Musk was probably the first to make electric vehicles compelling. Starting from scratch, Tesla has been instrumental in building the EV ecosystem. What’s more, it has become the most valuable automaker in just two decades. This is testament to the company’s hard work and dedication.
For investors looking to find the next Tesla, Xpeng and Nio are names that often come to mind. Both XPEV stock and NIO stock are down by double digit percentages this year. And that makes them even more appealing for prospective investors to initiate a position. All in all, Chinese EV stocks look promising as they continue to grow quickly. Even so, investors should consider the risks involved before rushing to make any investment decision.
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Honeywell Raises Outlook For Jet Deliveries As Demand Rebounds
Honeywell International (NASDAQ: HON) on Sunday raised its outlook for business jet deliveries. This came as the aviation sector began shaking off the effects of the COVID-19 pandemic. The company’s 30th annual Global Business Aviation Outlook forecasts up to 7,400 new business jet deliveries worth $238 billion from 2022 to 2031. This represents a 1% increase in deliveries from the same 10-year forecast a year ago.
“The increased demand for used jets is estimated at more than 6,500 units over the next five years, putting pressure on an already record low inventory and driving additional demand for new jets,” said Heath Patrick, President of Americas aftermarket for Honeywell Aerospace.
The valuation of Honeywell stock has become more reasonable after its recent dip. And that might be enough to tempt investors to initiate a position. The company also invests in smart technologies that could positively transform earnings and margin growth potential. For instance, the company has been active in the quantum computing space through its collaboration with Cambridge Quantum Computing. With ongoing initiatives and brighter outlook, would you agree that Honeywell stocks are in the position for long-term growth?
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Southwest Airlines Canceled 28% Of Flights Over The Weekend
Southwest Airlines (NYSE: LUV) canceled more than 1,800 flights over the weekend, citing poor weather and air-traffic conditions in Florida. According to Flightware, Sunday’s cancellation over 1,000 flights represents 28% of its schedule. Meanwhile American Airlines (NASDAQ: AAL) and Spirit Airlines (NYSE: SAVE), which both have significant operations in Miami, canceled 2% and 4% of their schedule respectively.
“Although we’ve made schedule adjustments leading into the fall, our route system has not fully recovered — that will take time … The airline has fewer frequencies between major airports to reroute or rebook travelers. Southwest doesn’t have so-called interline agreements that large airlines like Delta and American have to book travelers on other carriers.”- Alan Kasher, Executive Vice President Daily Operations at Southwest Airlines
The disparity between Southwest’s operations and other airlines fueled speculation that there were some forms of strike internally. This has led to the speculation that the cancelations were due to mass walkouts by pilots who oppose the company’s vaccine mandate. But according to the company, that was not the cause. Nevertheless, investors may start to worry if there are other reasons for its disparity. However, investors should also note that Southwest is strategically and financially better off than its industry peers. Considering all this, would investors be willing to buckle up for some turbulence and take the opportunity to scoop up LUV stock at a discount in the stock market today?
