Stock Market Update

The S&P 500 futures are down three points and are trading in-line with fair value, the Nasdaq 100 futures are down 30 points and are trading 0.1% below fair value, and the Dow Jones Industrial Average futures are down three points and are trading fractionally above fair value.

Buyer conviction is lacking, but once again so is seller conviction. Equity futures indications are mixed, steered in part by a wait-and-see mindset. Specifically, participants are waiting to see if this market succumbs to selling interest or once again shows bull market stamina and squeezes higher despite calls it is due for a pullback.

The S&P 500 and Dow Jones Industrial Average both managed new record highs yesterday, bolstered in part by China's policy stimulus measures. The PBOC was back at it last night, announcing a 30 basis points cut to its medium term lending facility, yet the response was more subdued (relatively speaking). China's Shanghai Composite gained 1.2% on the heels of Tuesday's 4.2% surge.

Sweden's Riksbank also got in on the stimulus action. Its key policy rate was cut by 25 basis points to 3.25%, as expected, and the bank hinted at a faster pace of easing incoming months.

Lower rates in the U.S. are juicing mortgage refinancing activity. The MBA's Mortgage Applications Index jumped 11% wk/wk with refinance applications up 20% and purchase applications up 1%. At 10:00 a.m. ET, the August New Home Sales Report (Briefing.com consensus 695K; prior 739K) will be released.

Separately, KB Home (KBH 82.00, -5.43, -6.2%) released its quarterly results after yesterday's close, coming up shy of earnings estimates. The stock is down 6%. The earnings calendar after today's close will feature results from Micron (MU 94.60, +0.60, +0.6%).

Today's trade will also include a $70 billion 5-yr note auction. Results will be announced at 1:00 p.m. ET.

In corporate news:

• KB Home (KBH 82.00, -5.43, -6.2%): misses by $0.02, beats on revs, home gross profit margin, excluding charges, decreased 80 bps yr/yr; Raises FY24 housing revenue guidance, narrows housing gross profit margin guidance
• Progress Software (PRGS 60.48, +3.33, +5.8%): beats by $0.12, beats on revs; guides NovQ EPS below consensus, revs above consensus; expects to close ShareFile acquisition before the end of its fiscal year
• Worthington Enterprises (WOR 43.36, -1.93, -4.3%): misses by $0.21, misses on revs; says it has positive long-term outlook especially with the recent recalibration of interest rates
• Amentum Services (AMTM 32.00, +2.49, +8.4%): will be added to the S&P 500 effective prior to the open of trading on Monday, September 30, replacing Bath & Body Works (BBWI 30.00, -0.07, -0.2%)
• SAP SE (SAP 225.67, -5.26, -2.3%): being investigated by U.S. for price fixing, according to Bloomberg
• Ford (F 10.64, -0.23, -2.1%): Morgan Stanley downgrades to Equal Weight from Overweight
• General Motors (GM 46.60, -1.47, -3.1%): Morgan Stanley downgrades to Underweight from Equal Weight
• Rivian (RIVN 11.45, -0.39, -3.3%): Morgan Stanley downgrades to Equal Weight from Overweight

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended the midweek session on a mixed note with markets in China and Hong Kong seeing an extension of Tuesday's gains. Japan's Nikkei: -0.2%, Hong Kong's Hang Seng: +0.7%, China's Shanghai Composite: +1.2%, India's Sensex: +0.3%, South Korea's Kospi: -1.3%, Australia's ASX All Ordinaries: -0.2%.
  • In economic data:
    • Japan's September Corporate Services Price Index 2.7% yr/yr (expected 2.6%; last 2.7%) and July BoJ Core CPI 1.8% yr/yr, as expected (last 1.8%)
    • South Korea's September Consumer Confidence 100.0 (last 100.8)
    • Australia's August CPI 2.7%, as expected (last 3.5%)
  • In news:
    • The People's Bank of China followed Tuesday's raft of policy changes with an announcement that the medium-term lending facility rate will be lowered by 30 basis points to 2.00%. The stimulus news overshadowed focus on growing vehicle inventories in China, which are forcing dealers to cut prices.
    • Australia's CPI growth decelerated to a three-year low in August.
    • Standard & Poor's affirmed Australia's AAA rating with a Stable outlook.
• Major European indices trade near their flat lines. STOXX Europe 600: +0.1%, Germany's DAX: -0.2%, U.K.'s FTSE 100: +0.4%, France's CAC 40: -0.2%, Italy's FTSE MIB: +0.2%, Spain's IBEX 35: +0.1%.
  • In economic data:
    • France's September Consumer Confidence 95 (expected 92; last 93)
    • Spain's August PPI -1.3% yr/yr (last -1.6%)
    • Swiss September ZEW Expectations -8.8 (last -3.4)
  • In news:
    • Sweden's central bank lowered its policy rate by 25 basis points to 3.25% and hinted at a faster pace of easing in the coming months.
    • ECB policymaker Knot said that the ECB is likely to continue easing through the first half of next year while policymaker Nagel said that Germany's economy will eventually improve, though it still needs major reforms.
    • Software company SAP is being investigated by U.S. authorities over alleged price fixing.
    • Spain is maintaining its target for a 2.5% deficit in 2025.