Stock Market Update

Equity futures point to a slightly lower open this morning after the major averages finished with modest gains in yesterday's action. 

Congressional leaders from both parties failed to reach a deal on government funding, making a government shutdown likely. The Senate will vote again today on a resolution that looks to fund the government through November 21, according to Politico. 

CNBC reports that if a shutdown occurs, this week's Employment Situation Report, along with other key economic data releases, will not be released, further complicating the market's expectations for additional rate cuts this year.

The market will receive a few economic data points this morning, including the September Consumer Confidence Index (Briefing.com consensus: 96.0) at 10:00 ET.

Fed Vice Chair Phillip Jefferson (FOMC voting member) stated in a speech this morning, "I see the risks to employment as tilted to the downside and risks to inflation to the upside," though Mr. Jefferson did not offer a definitive opinion on the future monetary policy path. 

In corporate news:

• Boeing (BA 216.89, -0.19, -0.1%) is developing a new airplane to replace the Boeing 737 Max, according to The Wall Street Journal.
• Jefferies (JEF 66.33, -0.15, -0.2%) beat EPS expectations by $0.21 and beat revenue expectations. 
• Spotify (SPOT 695.07, -33.40, -4.6%) Founder and Chief Executive Officer Daniel Ek will transition to the role of Executive Chairman effective January 1, 2026. The stock was downgraded to Neutral from Buy at Goldman Sachs, with a price target of $770.
• Tesla (TSLA 440.80, -2.41, -0.5%) has faced departures from several senior staff members, according to The Financial Times.

Reviewing overnight developments:

Equity indices in the Asia-Pacific region ended Tuesday on a mostly lower note. Japan's Nikkei: -0.3%, Hong Kong's Hang Seng: +0.9%, China's Shanghai Composite: +0.5%, India's Sensex: -0.1%, South Korea's Kospi: -0.2%, Australia's ASX All Ordinaries: -0.1%.

In news: 

• One of Bank of Japan's most dovish policymakers spoke in favor of a rate hike, adding that a new policy perspective will be needed to address upside risks.
• Separately, the Japanese government raised its view of consumer spending for the first time in 13 months.However, Retail Sales were down in August.
• The Bank of Japan will release its bond purchase plan for Q4 tomorrow.
• China reported its private and official PMI readings with private readings pointing to slight growth while official readings essentially reflected a standstill in manufacturing and services.
• The Reserve Bank of Australia left its cash rate at 3.60%, as expected.

In economic data: 

• China's September Manufacturing PMI 49.8 (expected 49.6; last 49.4) and Non-Manufacturing PMI 50.0 (expected 50.3; last 50.3). RatingDog September Manufacturing PMI 51.2 (expected 50.3; last 50.5) and RatingDog Non-Manufacturing PMI 52.9 (expected 52.4; last 53.0)
• Japan's August Industrial Production -1.2% m/m (expected -0.7%; last -1.2%). August Retail Sales -1.1% yr/yr (expected 1.0%; last 0.4%). August Housing Starts -9.8% yr/yr (expected -5.2%; last -9.7%) and Construction Orders 38.9% yr/yr (last -19.0%)
• South Korea's August Industrial Production 2.4% m/m (last 0.3%); 0.9% yr/yr (expected 1.3%; last 5.0%). August Retail Sales -2.4% m/m (last 2.7%) and August Service Sector Output -0.7% m/m (last 0.2%)
• Australia's August Building Approvals -6.0% m/m (expected 2.6%; last -10.0%); -1.2% yr/yr (expected 8.3%; last 9.2%). August Private Sector Credit 0.6% m/m, as expected (last 0.7%) and August Private House Approvals -2.6% m/m (last 1.3%)
• New Zealand's September ANZ Business Confidence 49.6 (last 49.7)

Major European indices trade near their flat lines. STOXX Europe 600: -0.1%, Germany's DAX: -0.1%, U.K.'s FTSE 100: +0.1%, France's CAC 40: -0.4%, Italy's FTSE MIB: UNCH, Spain's IBEX 35: +0.1%.

In news:

• The market received a big batch of data today, including weak August Retail Sales in Germany (-0.2% m/m; expected 0.6%) and cool CPI in France (-1.0% m/m; expected -0.9%).
• Meanwhile, Germany's flash CPI report for September that will be released at 8:00 ET is expected to show a slight acceleration in the yr/yr rate to 2.3% from 2.2% in August.
• Reports from France suggest that the country's flat tax may be raised as part of next year's budget.
• Spain lowered its net debt issuance target for the year by EUR5 bln due to strong growth.

In economic data:

• Germany's August Retail Sales -0.2% m/m (expected 0.6%; last -0.5%); 1.8% yr/yr (last 3.3%). August Import Price Index -0.5% m/m (expected -0.2%; last -0.4%); -1.5% yr/yr (last -1.4%). September Unemployment Change 14,000 (expected 8,000; last -9,000) and Unemployment Rate 6.3%, as expected (last 6.3%)
• U.K.'s Q2 GDP 0.3% qtr/qtr, as expected (last 0.7%); 1.4% yr/yr (expected 1.2%; last 1.3%). Q2 Business Investment -1.1% qtr/qtr (expected -4.0%; last 4.1%); 3.0% yr/yr (expected 0.1%; last 5.8%). Q2 Current Account deficit GBP28.9 bln (expected deficit of GBP24.8 bln; last deficit of GBP21.2 bln)
• France's August Consumer Spending 0.1% m/m (expected 0.3%; last -0.6%). Flash September CPI -1.0% m/m (expected -0.9%; last 0.4%); 1.2% yr/yr (expected 1.3%; last 0.9%). August PPI -0.2% m/m (last 0.5%); 0.1% yr/yr (last 0.5%)
• Italy's flash September CPI -0.2% m/m (expected -0.1%; last 0.1%); 1.6% yr/yr (expected 1.7%; last 1.6%). August PPI -0.6% m/m (last 0.5%); 0.2% yr/yr (last 1.6%). July Industrial Sales 0.4% m/m (last 1.2%); 1.2% yr/yr (last 0.3%)
• Swiss September KOF Leading Indicators 98.0 (expected 97.1; last 96.2)