Tuesday October 6th


Wall Street on edge now earnings season gets underway

U.S. stock index futures pointed to a lower open on Tuesday ahead of key earnings, after stocks extended Friday's post-jobs report rally Monday, closing sharply higher. Traders will watch market action carefully on Tuesday to see if stocks can demonstrate a successful retest of the lows ahead of what some expect to be a lackluster earnings season. The earnings schedule picked up slowly with PepsiCo reporting earnings and revenue that beat expectations. Yum Brands is scheduled to report after the bell. The unofficial start to earnings season comes Thursday with Alcoa's earnings after the bell. On the data front, the August trade deficit came in at $48.3 billion, the widest in five months. Treasury yields held lower, with the 10-year at 2.04 percent and the 2-year at 0.59 percent. The dollar held slightly lower, with the euro at $1.12 and the yen at 120.35 yen against the greenback. U.S. stocks closed more than 1.5 percent higher Monday, extending Friday's surprise intraday reversal, as investors digested the implications of the jobs data on the timing of a rate hike and awaited quarterly earnings. All three major averages closed within 10 percent of their 52-week highs, or out of correction territory. In Europe, stocks traded slightly higher on Tuesday following Monday's rebound, after poor industrial data out of Germany. Shares in embattled German carmaker Volkswagen were once again in focus, down 2.1 percent after the company admitted that 8 million vehicles were fitted with the "defeat devices" that allowed them to cheat diesel emissions test in the European Union, according to a report in German newspaper Handelsblatt. Shares in miner Glencore were off as much 6 percent after more broker downgrades, which followed a stunning rally on Monday saw the company's stock close 17 percent higher. Most Asian equities extended gains into a second session on Tuesday following another U.S. rally, while investors kept an eye on the region's central banks. Markets in China remain closed until Wednesday for National Day holidays. Nikkei up 1%. Japan's benchmark Nikkei index ended at its highest level since September 17, rallying as much as 2 percent. Speculation among market participants is high that the Bank of Japan (BoJ) could announce a fresh round of monetary stimulus this month, possibly as early as Wednesday, amid contracting growth and deflationary consumer prices. Oil rose on Tuesday after a session of hefty gains on signals that the world's biggest producers of crude may act jointly to support prices, which have more than halved over the past year. Russia and Saudi Arabia discussed the oil market in a meeting last week, Russia's energy minister said, echoing demands by OPEC's secretary-general for all oil producers to work together to tackle a global surplus. Brent crude, the global oil benchmark, was up 47 cents at $49.72 a barrel by 8:25 a.m. EDT (1225 GMT). It rose 2.3 percent on Monday. The U.S. benchmark, West Texas Intermediate crude, was 14 cents higher at $46.40 a barrel. The contract gained 1.6 percent in the previous session. Gold continued to gain on Tuesday as the dollar eased in the wake of disappointing U.S. economic data that has raised doubts over a Federal Reserve rate rise this year. Spot gold ticked up 0.7 percent to $1,144.20 an ounce. Prices had hit a one-week high above $1,140 in the previous session, supported by a weaker dollar.