Stock Market Futures Pointing To A Positive Start For November
Stock market futures edged higher in early Monday morning as investors awaited fresh earnings. Corporate earnings so far continue to demonstrate resilience amid global supply chain concerns. Meanwhile, Treasury Secretary Janet Yellen expressed confidence in the economy’s recovery from the pandemic. This week, a lot of the attention will also be on the upcoming Fed meeting on Tuesday and Wednesday. The central bank is widely expected to announce that it will begin to taper its $120 billion monthly bond purchases and conclude the program by the middle of next year.
“Depending on where you are looking, you are getting very different stories on the outlook for global markets. If you look at equities and the rally you are seeing, you think everything is OK. If you look at the bond market and how yields are moving, there’s obviously a lot more concern around inflation and policy normalization.”- Kerry Craig, Global Market Strategist at JPMorgan Asset Management
On the economic front, the Census Bureau reports construction spending data for September at 2 p.m. ET today. At the same time, the Institute for Supply Management will be releasing its Manufacturing Purchasing Managers Index for October. As of 6:51 a.m. ET, the Dow, S&P 500, and Nasdaq futures are increasing by 0.45%, 0.44%, and 0.41% respectively.
China EV Deliveries In Focus
Early Monday in China, Xpeng (NYSE: XPEV) announced its vehicle delivery results for October 2021. The Chinese smart electric vehicle (EV) maintained its strong momentum in October with a total of 10,138 Smart EVs delivered. This represents a 233% increase year-over-year and the second month surpassing the 10,000 unit benchmark. And that’s an impressive feat considering we are all in the midst of a global semiconductor shortage.
Meanwhile, Li Auto (NASDAQ: LI) announced that it delivered 7,649 Li ONEs in October 2021, increasing by 107.2% year-over-year. Finally, Nio (NYSE: NIO) delivered just 3,667 vehicles in October 2021. That represents a decline of 27.5% year-over-year. This came as a result of restructuring and upgrades of manufacturing lines as well as certain supply chain volatilities. Also, the Chinese EV trio are due to report their third-quarter earnings in the coming weeks. Like Tesla (NASDAQ: TSLA), they seem to have managed the pandemic-fueled global chip shortage relatively well. All three startups beat their own guidance for Q3 EV deliveries, after lowering delivery expectations over the course of the quarter.
Meanwhile, BYD (OTCMKTS: BYDDF) is likely to report October sales later this week. The Chinese EV and battery giant’s sales are proving especially robust. In September, BYD’s EV and plug-in hybrid sales rose by roughly 10,000 for the fourth straight month, topping 70,000. With Musk calling his China EV rivals “the most competitive in the world”, it wouldn’t hurt to keep an eye on these Chinese EV stocks moving forward.
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American Airlines (AAL) Cancels More Than 1,500 Flights Over The Weekend
American Airlines (NASDAQ: AAL) has canceled more than 1,500 flights since Friday. The airline blamed staff shortages and bad weather for the disruption. It’s the latest mass flight disruption to face travelers as some carriers struggle to handle a rebound in travel demand. Many airlines, including American, are trying to staff up again to match the demand. This would minimize any potential disruption coming their way, especially during the upcoming holiday season.
“With additional weather throughout the system, our staffing begins to run tight as crew members end up out of their regular flight sequences,” said American’s COO David Seymour. He said that most customers were rebooked the same day and that he expects the operation to stabilize in November.
Recall that Southwest Airlines (NYSE: LUV) have also posted mass flight cancellations earlier this month. In detail, it cancelled more than 2,000 flights, costing it $75 million. Separately, Spirit Airlines (NYSE: SAVE) said the cancelations and delays cost it $50 million earlier in August. Now, there’s no doubt American Airlines would face losses of similar magnitude. But Seymour is confident that more team members will be in place for the holiday season as many flight attendants are returning this month.
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Diamondback Energy Earnings On Tap After The Stock Market Closes Today
Diamondback Energy (NASDAQ: FANG) which posted stellar results in the previous quarter, is set to report another period of explosive growth. Fueling such momentum is the combination of the high oil prices and the strong earnings from the oil giants last week. Be it ExxonMobil (NYSE: XOM), Chevron (NYSE: CVX) or Saudi Aramco, these oil giants are seeing their profits soaring amid surging oil and gas prices.
For starters, Diamondback Energy is a land-based U.S. E&P that has operations primarily in the Permian Basin. About 60% of its production is oil, another 20% is in natural gas and the remaining is in natural gas liquids. Although the company has been struggling to keep its earnings in positive territory. Many believe this shouldn’t be a problem moving forward, as global energy demand kicks into high gear.
Analysts are calling for earnings per share of $2.65, more than tripling from earnings per share (EPS) of $0.62 in the year-ago period. Revenue is forecast to surge about 111% year-over-year to $1.52 billion, boosted by soaring crude oil and natural gas prices. Beyond these figures, investors will also be watching on the company’s production targets for the year ahead after increasing 36% in the second quarter. With skyrocketing energy prices, it will be interesting to see how these translate to movements in FANG stock.
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Notable Earnings To Watch In The Stock Market Today
As we kick start the first trading week of November, investors’ focus remains on corporate earnings results. For those keen to catch companies reporting before the opening bell, there is no shortage of names to note. The list includes ON Semiconductor Corp (NASDAQ: ON), PG&E Corp. (NYSE: PCG) and Trivago (NASDAQ: TRVG), just to name a few.
Alternatively, if you are looking to track earnings after the closing bell, there are several on tap as well. These include the likes of Diamondback Energy, Clorox (NYSE: CLX), Chegg (NYSE: CHGG) and Avis Budget Group (NASDAQ: CAR) among others. Whether it is keeping up with Chinese EV delivery numbers or following earnings, investors seem to have plenty of exciting news to consider and digest as we begin another week filled with earnings.
