Mike Dolan gives us a look at what the U.S. markets and global markets will be like today.

One of the “Magnificent Seven” top U.S. Megacaps, the so-called was able to ride to the rescue.

Amazon’s impressive results after the bell Thursday, following a turbulent week on the markets, confirmed the strength of U.S. consumers.

 

Amazon shares rose 5% in after-hours trading, unlike the reactions to similar results this week from its Big Tech competitors. The company stated that its cloud growth has stabilized, and its fourth-quarter forecasts met expectations.

After the cash markets closed with their lowest closing prices since May, both Nasdaq futures and S&P500 were expected to rebound into the weekend.

Relief is welcomed. The reserve is welcome.

This decline is largely due to the spiraling cost of long-term loans.

The fact that the U.S. economy grew by more than twice as much in the third quarter, to reach a two-year high of 4.9%, is one of the reasons why the Treasury markets have been on edge for the past few weeks. They were afraid the strength of the growth would prevent the Federal Reserve from cutting rates for at least a year.

The heat is evident with nominal U.S. GDP growth at or near 8%, depending on the inflation indicator you are using. The nominal U.S. rate of growth during the third quarter was nearly twice as high as China’s.

 

Bond markets took Thursday’s GDP data, which showed a slower-than-expected 2.4% core PCE inflation rate. This was largely due to the near 5% yields on 10-year Treasury bonds. Even the headline GDP rate, which was racy and above expectations of a 5%+ print, fell short.

The 10-year yield fell by 15 basis points from peak to trough each day. It has stabilized at 4.85% overnight ahead of Friday’s PCE monthly reading and the Fed policy meeting next week.

Bond relief may have flattered overnight stock bounces, but earnings season, in aggregate, is also pretty good. Over 80% of companies beat their targets so far, and S&P500 firms are on track for an annual profit increase of 2.6% in Q3 and 12% by 2024.

Exxon Mobil, a company that has recently acquired Chevron, and Exxon Mobil are due to report on Friday. Apple, the most valuable company in America, will be writing next week.

The MSCI all-country index (.MIWD00000PUS) has also recovered from its lowest level since the beginning of March.

After data revealed that industrial companies in China extended their gains for September, the sentiment of investors improved.

Geopolitical worries eased after China’s top diplomatic Wang Yi, stated on Thursday that the United States and China needed “in-depth and comprehensive” dialogue in order to reduce misunderstandings and stabilize bilateral relationships.

The war in the Middle East is likely to keep the markets on edge through Friday as tensions move toward the U.S. engagement in Syria overnight.

The dollar (.DXY). Dropped from its week-highs and retreated below the 150 yen mark it had breached Thursday. This was despite the Bank of Japan not intervening as some had feared.

In Europe, the European Central Bank kept interest rates the same on Thursday. However, its plans for balance sheet runoff remained unchanged. This is a small comfort to those who expected a quicker unwinding of its bond holdings.

The European stock indexes were subdued on Friday. France’s blue-chip index lagged behind peers following a gloomy forecast by pharmaceutical company Sanofi that sent its shares down 15 percent.

Britain’s NatWest (NWG.L.) fell more than 10% after a downgrade in profit forecasts and the news that the Financial Conduct Authority was investigating the lender’s handling of accounts of a former Brexit Party leader.

The following key developments should help to provide direction for the U.S. market on Friday:

* U.S. September personal income/consumption, PCE inflation gauge, and Dallas Sept Fed PCE estimate. Final Oct. University of Michigan Consumer Survey reading

* U.S. Corporate Earnings: Exxon Mobil (Exxon Mobil), Chevron (Chevron), Abbvie (Abbvie), Colgate-Palmolive(Colgate-Palmolive), TRowe Price Aon, Xcel Energy Stanley Black & Decker CBRE LyondellBasell Charter Communications Phillips 66

* European Central Bank President Christine Lagarde attended the European Union Summit in Brussels

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