Morning Call: U.S. and European stocks fall back after Tuesday's sharp rally; Dec E-mini S&Ps down -0.25%; 10-year German bund yield falls to a 2-week low of 0.464%.
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 ESZ18 - S&P 500 E-Mini

Overnight Markets and News

Dec E-mini S&Ps (ESZ18 -0.31%) this morning are down -0.25% ahead of the minutes of the Sep 25-26 FOMC meeting, which will be looked at for clues as to the pace of future Fed rate hikes or if policy makers may be close to pausing their rate hike campaign. European stocks are down -0.09%, led by losses in automakers, after data showed Eurozone Sep new car registrations plunged -23%. Losses in European stocks were limited as government bond yields fell with the 10-year German bund yield dropping to a 2-week low of 0.464%. Asian stocks settled mixed: Japan +1.29%, Hong Kong closed for holiday, China +0.60%, Taiwan -0.02%, Australia +1.18%, Singapore +1.21%, South Korea +1.14%, India -1.09%. China's Shanghai Composite recovered from a 3-3/4 year low and moved higher after data showed Chinese credit growth expanded more than expected in September.

The dollar index (DXY00 +0.31%) is up +0.27%. EUR/USD (^EURUSD -0.28%) is down -0.24%. USD/JPY (^USDJPY +0.01%) is up +0.03%.

Dec 10-year T-note prices (ZNZ18 -0-020) are down -4.5 ticks.

EU Sep new car registrations fell -23.5% y/y to 1.091 million and year-to-date are up +2.5% at 11,951,957.

China Sep new yuan loans increase by 1.380 trillion yuan, stronger than expectations of 1.359 trillion yuan. Sep aggregate financing increased by +2.210 trillion yuan, stronger than expectations of +1.554 trillion yuan and the most in 8 months.

UK Sep CPI of +0.1% m/m and +2.4% y/y was weaker than expectations of +0.3% m/m and +2.6% y/y. Sep core CPI rose +1.9% y/y, weaker than expectations of +2.0% y/y.

The UK Aug house price index rose +3.2% y/y, stronger than expectations of +2.8% y/y.

U.S. Stock Preview

Key U.S. news today includes: (1) weekly MBA mortgage applications (previous -1.7% to 346.7 with purchase sub-index -1.1% to 238.0 and refi sub-index -2.6% to 921.2), (2) Sep housing starts (expected -5.6% to 1.210 million, Aug +9.2% to 1.282 million) (3) EIA weekly Petroleum Status Report, (4) Fed Governor Lael Brainard speaks on Fintech and Financial Inclusion at a Boston Fed conference, (5) minutes of the Sep 25-26 FOMC meeting (funds rate target range raised by +25 bp to 2.00%/2.25%).

Notable Russell 2000 earnings reports today include: Abbott Labs (consensus $0.75), Northern Trust (1.61), US Bancorp (1.04), United Rentals (4.57), Kinder Morgan (0.21).

U.S. IPO's scheduled to price today: Valtech SE (VTEC), PhaseBio Pharmaceuticals (PHAS), Studio City Intl Holdings (MSC).

Equity conferences during the remainder of this week: MRO Europe on Tue, Arm TechCon Conference on Tue-Thu, Connected Health Conference on Wed, CXO Summit on Thu, European Society for Medical Oncology Meeting on Fri.

Market Comments

Dec S&P 500 E-minis (ESZ18 -0.31%) this morning are down -7.00 points (-0.25%). Tuesday's closes: S&P 500 +2.15%, Dow Jones +2.17%, Nasdaq 100 +2.94%. The S&P 500 on Tuesday closed sharply higher on stronger-than-expected corporate Q3 earnings results from U.S. bellwether stocks such as Morgan Stanley, Adobe, and Johnson & Johnson. Stocks were also boosted by the unexpected increase in the U.S. Aug JOLTS job openings by +59,000 to a record 7.136 million and by the U.S. Sep manufacturing production report of +0.2%, right on expectations.

Dec 10-year T-notes (ZNZ18 -0-020) this morning are down -4.5 ticks. Tuesday's closes: TYZ8 +2.00, FVZ8 +0.50. Dec 10-year T-notes on Tuesday closed higher on carry-over support from a rally in German bunds after the German Oct ZEW survey expectations of economic growth fell -14.1 to a 6-year low of -24.7. T-notes were also supported by a flattening of the yield curve as dealers sold shorter-dated government debt and bought longer-dated debt. Bearish factors included the rally in stocks and the stronger-than-expected U.S. economic data on Aug JOLTS job openings and the Oct NAHB housing market index.

The dollar index (DXY00 +0.31%) this morning is up +0.26 (+0.27%), EUR/USD (^EURUSD -0.28%) is down -0.0028 (-0.24%), and USD/JPY (^USDJPY +0.01%) is up +0.03 (+0.03%). Tuesday's closes: Dollar Index -0.011 (-0.01%), EUR/USD -0.0005 (-0.04%), USD/JPY +0.48 (+0.43%). The dollar index on Tuesday fell to a 2-week low and closed lower on reduced geopolitical risks from Turkey as the Turkish lira rose to a 2-month high against the dollar after Turkey this past weekend freed a U.S. pastor held captive there. There were reduced political risks in Italy that were bullish for EUR/USD after the Italian coalition government reached an agreement on a budget accord to submit to the European Commission.

Metals prices this morning are mixed with Dec gold (GCZ18 -0.09%) -2.6 (-0.21%), Dec silver (SIZ18 +0.13%) -0.031 (-0.21%) and Dec copper (HGZ18 +0.40%) +0.006 (+0.22%). Tuesday's closes: Dec gold +0.7 (+0.06%), Dec silver -0.026 (-0.18%), Dec copper -0.009 (-0.32%). Metals on Tuesday settled mixed. Metals prices were undercut by the rally in stocks, which curbs safe-haven demand for precious metals. Copper prices were undercut by the +2,475 MT increase in LME copper inventories, the first increase since Sep 21. A bullish factor was the fall in the dollar index to a 2-week low.

Nov WTI crude oil prices (CLX18 -0.49%) this morning are down -41 cents (-0.57%) and Nov gasoline (RBX18 +0.21%) is -0.07 (-0.04%). Tuesday's closes: Nov crude oil +0.14 (+0.20%), Nov gasoline +3.30 (+1.70%). Nov crude oil and gasoline on Tuesday closed higher on the slide in the dollar index to a 2-week low and on the rally in stocks, which shows confidence in the economic outlook and is positive for energy demand. Crude oil prices were undercut by expectations for Wednesday's weekly EIA crude inventories to climb +2.5 million bbl.

Overnight U.S. Stock Movers

KB Home (KBH +3.81%) was downgraded to 'Underperform' from 'Neutral' at Credit Suisse with a price target of $18.

Netflix (NFLX +3.98%) jumped 12% in after-hours trading after it reported Q3 EPS of 89 cents, higher than consensus of 68 cents, and said it expects Q4 global subscriber growth of 9.4 million, well above consensus of 7.1 million. Roku (ROKU +3.19%) rallied nearly 4% and Spotify (SPOT +3.45%) climbed 3% on the bullish Netflix news.

International Business Machines (IBM +2.83%) dropped 4% in after-hours trading after it reported Q3 revenue of $18.76 billion, weaker than consensus of $19.08 billion.

NetApp (NTAP +3.44%) was upgraded to 'Buy' from 'Neutral' at Goldman Sachs with a price target of $91.

Lam Research (LRCX +1.94%) rose more than 3% in after-hours trading after it reported Q1 adjusted EPS of $3.36, higher than consensus of $3.22, and forecast Q2 adjusted EPS of $3.45 to $3.85, above consensus of $3,27.

Interactive Brokers Group (IBKR +3.12%) fell almost 3% in after-hours trading after it reported Q3 net revenue of $439 million, less than consensus of $445.5 million.

United Continental Holdings (@symbolPercentChange((UAL +2.68%) climbed more than 5% in after-hours trading after it raised guidance on the bottom range of full-year adjusted EPS to $8.00 to $8.75 from a prior view of $7.25 to $8.75, the midpoint above consensus of $8.21.

Vicor (VICR +3.96%) rallied 15% in after-hours trading after it reported that its Q3 gross margin as a percentage of revenue rose to 50% from 44.2% a year ago.

Cree Inc (CREE +7.20%) rose nearly 4% in after-hours trading after it reported Q1 adjusted EPS of 22 cents. well above consensus of 12 cents, and then forecast Q2 adjusted EPS of 15 cents to 19 cents, better than consensus of 13 cents.

Universal Forest Products (UFPI +3.90%) slid 3% in after-hours trading after it reported Q3 EPS of 66 cents, below consensus of 73 cents.

Del Taco Restaurants (TACO -1.62%) fell 2% in after-hours trading after it reported Q3 revenue of $117.8 million, weaker than consensus of $120 million, and then forecast full-year revenue of $504 million to $507 million, below consensus of $511.6 million.

Eiger BioPharmaceuticals (EIGR +7.09%) dropped 8% in after-hours trading after it said its Ubenimex for treatment of lower leg lymphedema did not meet the primary endpoint of a Phase 2 study.