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Dow Jones Industrial Average Futures Signal Lower Start Ahead of FOMC

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Nov 2, 2016 at 9:12 AM
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Dow Jones Industrial Average (DJIA) futures are below fair value, indicating a lower start for stocks this morning. Weighing on the market is a disappointing report from ADP, showing fewer jobs than expected added in the private sector for October. Employment concerns could be in focus later in the day, when the Federal Open Market Committee (FOMC) releases a statement following the conclusion of its two-day meeting. The Fed is not expected to move on interest rates this month, but today's comments could give clues on what's to come in December, when a rate hike is largely predicted.

Also pressuring stocks today is a drop in oil prices, after the American Petroleum Institute (API) reported a 9.3-million-barrel rise in crude stockpiles -- much larger than expected -- ahead of today's weekly crude inventories report from the Energy Information Administration (EIA). December-dated oil was last seen down 1.5% at $45.96 per barrel. Meanwhile, election worries continue to keep investors on edge, and a hefty round of earnings reports is drawing mixed reactions so far today.

Continue reading for more on today's market, including: 

Dow Futures November 2

Futures on the Dow Jones Industrial Average (DJIA) are 43 points below fair value.

5 Things You Need to Know Today
  1. The Chicago Board Options Exchange (CBOE) saw 700,198 call contracts traded on Tuesday, compared to 604,605 put contracts. The resultant single-session equity put/call ratio jumped to 0.86, while the 21-day moving average ticked up to 0.66.
  2. An upbeat earnings result for Chinese e-tailer Alibaba Group Holding Ltd (NYSE:BABA) has the stock up 3.7% ahead of the open. While put action popped on Tuesday, the stock's long-term option bulls should be applauding this morning's news.
  3. Brocade Communications Systems, Inc. (NASDAQ:BRCD) is set to add 8.5% at the open, after the company agreed to be bought by semiconductor firm Broadcom Ltd (NASDAQ:AVGO). The $5.9 billion deal values BRCD at $12.75 per share -- a level BRCD hasn't seen on a closing basis since early 2015.
  4. Online review site Yelp Inc (NYSE:YELP) is surging 10.8% in pre-market trading. The company reported a surprise quarterly profit, and shareholders will be hoping the stock can pull a repeat performance of its two most recent post-earnings sessions.
  5. The weekly crude inventories report from the EIA is due later this morning, but the economic spotlight will be on this afternoon's announcement from the FOMC. The day's calendar is also packed with earnings from Facebook (FB), First Solar (FSLR), Qualcomm (QCOM), Time Warner (TWX), Transocean (RIG), Twenty-First Century Fox (FOXA), and Whole Foods Market (WFM), among others.

Buzz Stocks Nov 2

Overseas Trading

Stocks in Asia ended lower, pressured by uncertainty surrounding the upcoming U.S. presidential election and falling oil prices. A stronger yen sent Japan's Nikkei 1.8% lower, while South Korea's Kospi lost 1.4% after President Park Geun-hye replaced several key cabinet positions in the wake of recent political drama. Chinese markets also fell on election fears, with the Shanghai Composite ending down 0.6%. Elsewhere, the Hong Kong Hang Seng surrendered 1.5%.

European markets are sinking on U.S. election uncertainty -- and ahead of today's policy announcement from the FOMC. Lagging auto and bank stocks are also pressuring regional benchmarks -- overshadowing the eurozone's final IHS Markit purchasing managers index (PMI) for October, which rose by its fastest pace since October 2014. At last check, London's FTSE 100 is down 0.4%, the French CAC 40 is 0.6% lower, and the German DAX has given up 0.7%.

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