A look at the day ahead in U.S. and global markets from Mike Dolan

Markets caught a break on Thursday as the white heat of the corporate earnings season saw a beat for megacap Tesla that sent its shares surging 12% before the bell while bond yields beat a retreat on soft business surveys overseas.

There was also some wariness that recent pre-election trades betting on a win for Republican Donald Trump in next month’s White House race may be a tad premature. There’s still no clear indication from polling on how the close contest will break, with nearly 25 million early votes already cast, according to tracking data.

With U.S. flash business surveys for October and weekly jobless claims data due out later, the relentless rise in Treasury yields over the past week seemed to cool and 10-year yields fell back below 4.2% after the prior session’s Wall Street stock swoon.

Even though Federal Reserve easing projections over the next year have been pegged back by as much as 50 basis points over the past month, rate cut fever remains rife abroad.

The Bank of Canada sliced 50bps off its policy rates on Wednesday and sub-forecast euro zone business surveys for October continued to show the regional economy there in contraction this month, keeping speculation of accelerated European Central Bank easing alive.

In Japan too, business surveys showed shrinking activity this month and Bank of Japan governor Kazuo Ueda on Wednesday indicated he was in no rush to ‘normalise’ rates there further – even if he remained wary of excessive yen weakness.

Japan’s Finance Minister Katsunobu Kato then issued a warning against currency speculation on Wednesday, expressing concern over “one-sided, rapid” moves in the currency market.

With that and the cue from ebbing Treasury yields, the dollar retreated broadly from near three-month highs and dipped back below 152 yen.

For stocks, however, it was hard to see beyond the torrent of incoming earnings updates.

And Tesla’s beat stole the show overnight – lifting Wall Street stock futures by a half point or more ahead of Thursday’s open.

Shares in the electric vehicle giant shot up nearly 12% in pre-market trade after it forecast surging car sales growth and CEO Elon Musk reassured investors he was still looking to expand the company’s core EV business.

The stock jump set the company up to add around $80 billion to its market capitalization and will likely wipe out nearly all the year-to-date losses when trading resumes today.

But it wasn’t all sweetness and light on the corporate front and Boeing’s stock plunged 4% overnight on news that its factory workers voted to reject a contract offer and continue a more than five-week strike.

The strike news compounded the previous day’s dour earnings news, which saw the planemaker rack up losses of nearly $8 billion for a torrid year that also included a quality crisis from January’s mid-air panel blowout.

Boeing CFO Brian West said he expects the company will continue burning cash in full year 2025 and the last three months of 2024, sending shares of down almost 2% on Wednesday.

European and UK stocks advanced early today, however, amid more positive updates from British bellwethers Unilever, Anglo American and Barclays that sent each of those stocks up 4%.

The euro was helped a touch by comments from ECB President Christine Lagarde on Wednesday that policymakers should remain cautious about further easing.

By contrast with Europe, China and Hong Kong stocks fell and mainland gauges snapped a four-day winning streak as investors grew cautious about domestic stimulus measures and weighed the potential impact from the U.S. election.

Back on Wall Street, the tussle for attention between robust growth, dampened Fed expectations, election risks and a heavy earnings diary with big industrial names on the diary was set to make for another noisy session.

The Fed’s latest Beige Book on economic conditions released on Wednesday showed U.S. economic activity was little changed from September through early October while firms saw an uptick in hiring.

Key developments that should provide more direction to U.S. markets later on Thursday:

* Flash October business surveys for the United States and around the world from S&P Global, weekly jobless claims, Sept new home sales, Kansas City Federal Reserve Oct business surveys

* International Monetary Fund and World Bank Annual Meetings in Washington, speakers include Bank of England Governor Andrew Bailey, BoE policymaker Catherine Mann and European Central Bank chief economist Philip Lane

* Cleveland Fed President Beth Hammack speaks

* US corporate earnings: Dow, Honeywell, UPS, Northrop Grumman, Valero, DTE, Capital One, KKR, Nasdaq, S&P Global, Principal Financial, Cincinnati Financial, CBRE, Allegion, Textron, Western Digital, L3Harris, VeriSign, Hasbro, Keurig Dr Pepper, Universal Health, Southwest Airlines, Mohawk, Weyerhauser, Dexcom, Edwards Lifesciences, Dover, Union Pacific etc

* US Treasury auctions 5-year inflation protected securities

* German Chancellor Olaf Scholz meets India’s Prime Minister Narendra Modi in New Delhi

(By Mike Dolan,; mike.dolan@thomsonreuters.com)

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