Morning Call: U.S. and European stocks recover after Wednesday's plunge; Dec E-mini S&Ps up +0.80%; 10-year German bund yield falls to a 1-1/2 month low of 0.380%.
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 ESZ18 - S&P 500 E-Mini
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Overnight Markets and News

Dec E-mini S&Ps (ESZ18 +0.79%) this morning are up +0.80% and European stocks recovered from a 1-3/4 year low and are up +0.81%. Stronger than expected Q1 quarterly earnings results from Microsoft have pushed the stock up 5% in pre-market trading to lead a rally in technology stocks that is pushing the overall market higher. A rally in automakers lifted European stocks out of negative territory as Peugeot SA jumped 6% to lead auto stocks higher when the carmaker said plants are running "at full capacity" as demand remains strong for new models. Weaker than expected German Oct IFO business confidence fueled a rally in German bunds as the 10-year bund yield fell to a 1-1/2 month low of 0.380%. Trading activity in Europe was muted ahead of the results of the ECB meeting and press conference from ECB President Draghi later today. Asian stocks settled mostly lower: Japan -3.72%, Hong Kong -1.01%, China +0.02%, Taiwan -2.44%, Australia -2.83%, Singapore -0.63%, South Korea -1.71%, India -1.01%. Japan's Nikkei Stock Index tumbled to a 6-1/2 month low due to a sell-off in technology stocks and the plunge in U.S. equities on Wednesday. Chinese equity markets stabilized and actually recovered early losses and closed slightly higher on reports that state-sponsored funds were buying stocks in the last hour of trade. Chinese equities rebounded even after the yuan fell to a new 1-3/4 year low of 6.9558 against the dollar.

The dollar index (DXY00 -0.10%) is down -0.10%. EUR/USD (^EURUSD +0.14%) is up +0.09%. USD/JPY (^USDJPY +0.08%) is up +0.02%.

Dec 10-year T-note prices (ZNZ18 -0-015) are down -1.5 ticks.

The German Oct IFO business climate fell -0.9 to 102.8, weaker than expectations of -0.5 to 103.2.

Japan Sep PPI services rose +1.2% y/y, right on expectations.

U.S. Stock Preview

Key U.S. news today includes: (1) weekly initial unemployment claims (expected +5,000 to 215,000, previous -5,000 to 210,000) and continuing claims (expected +4,000 to 1.644 million, previous -13,000 to 1.640 million), (2) Sep durable goods orders (expected -1.5% and +0.4% ex transportation, Aug +4.4% and unch ex transportation), (3) Sep wholesale inventories (expected +0.5%, Aug +1.0%) and Sep retail inventories (Aug +0.7%), (4) Sep pending home sales (expected unch m/m and -2.6% y/y, Aug -1.8% m/m and -2.5% y/y), (5) Oct Kansas City Fed manufacturing activity (expected +1 to 14, Sep -1 to 13), (6) Fed Vice Chairman Richard Clarida speaks about his outlook for the U.S. economy and monetary policy at an event in Washington, D.C., (7) Treasury auctions $31 billion of 7-year T-notes, (8) Cleveland Fed President Loretta Mester (voter) speaks to the Money Marketeers of NYU.

Notable S&P 500 earnings reports today include: Amazon (consensus $3.11), Alphabet (10.45), Twitter (0.14), Intel (1.15), American Airlines (1.13), Comcast (0.61), Expedia (3.10), Merck (1.14), Newmont Mining (0.19), Ratheon (1.97), Simon Property Group (3.00), VeriSign (1.20), Waste Management (1.11).

U.S. IPO's scheduled to price today: Gamida Cell (GMDA), Lovesac (LOVE).

Equity conferences during the remainder of this week: Collaborative Robots, Advanced Vision and AI Conference on Wed-Thu.

Market Comments

Dec S&P 500 E-minis (ESZ18 +0.79%) this morning are up +21.25 points (+0.80%). Wednesday's closes: S&P 500 -3.09%, Dow Jones -2.41%, Nasdaq 100 -4.63%. The S&P 500 on Wednesday sold off to a 5-1/2 month low and settled sharply lower on carry-over weakness from a decline in European stocks to a 1-3/4 year low after the Eurozone Oct Markit manufacturing PMI fell -1.1 to a 2-year low of 52.1. There was also severe weakness in technology stocks, led by an 8% sell-off in Texas Instruments, after the company forecast slower growth for the rest of the year. Stocks were also undercut by concern about a slowdown in the U.S. housing market after Sep new home sales fell -5.5% to a 1-3/4 year low of 553,000, weaker than expectations of -0.6% to 625,000.

Dec 10-year T-notes (ZNZ18 -0-015) this morning are down -1.5 ticks. Wednesday's closes: TYZ8 +11.50, FVZ8 +7.00. Dec 10-year T-notes on Wednesday rose to a 3-week high and closed higher on the larger-than-expected decline in U.S. Sep new home sales to a 1-3/4 year low and the slump in stock prices, which boosted the safe-haven demand for T-notes.

The dollar index (DXY00 -0.10%) this morning is down -0.10 (-0.10%), EUR/USD (^EURUSD +0.14%) is up +0.0010 (+0.09%), and USD/JPY (^USDJPY +0.08%) is up +0.02 (+0.02%). Wednesday's closes: Dollar Index +0.473 (+0.49%), EUR/USD -0.0079 (-0.69%), USD/JPY -0.18 (-0.16%). The dollar index on Wednesday climbed to a 2-1/4 month high and closed higher on the slump in EUR/USD to a 2-1/4 month low after the Eurozone Oct Markit manufacturing PMI fell to a 2-year low, which is dovish for ECB policy. The dollar was also boosted by hawkish comments from Dallas Fed President Kaplan who said the Fed should keep raising interest rates until we get into the range of a "neutral stance."

Metals prices this morning are higher with Dec gold (GCZ18 +0.37%) +4.8 (+0.39%), Dec silver (SIZ18 +0.57%) +0.099 (+0.67%) and Dec copper (HGZ18 +0.05%) +0.003 (+0.09%). Wednesday's closes: Dec gold -5.7 (-0.46%), Dec silver -0.117 (-0.79%), Dec copper -0.0005 (-0.02%). Metals on Wednesday closed lower on the rally in the dollar index to a 2-1/4 month high and the larger-than-expected drop in U.S. Sep new home sales to a 1-3/4 year low, which is negative for copper demand.

Dec WTI crude oil prices (CLZ18 +0.40%) this morning are up +3 cents (+0.04%) and Dec gasoline (RBZ18 +0.29%) is +0.15 (+0.08%). Wednesday's closes: Dec crude oil +0.39 (+0.59%), Dec gasoline -1.51 (-0.82%). Dec crude oil and gasoline on Wednesday settled mixed. Product prices were boosted by the -4.826 million bbl decline in EIA gasoline inventories to a 10-month low (a bigger decline than expectations of -1.75 million bbl), and the -2.262 million bbl decline in EIA distillate supplies (a bigger decline than expectations of -2.0 million bbl). Crude oil prices were undercut by the rally in the dollar index to a 2-1/4 month high, and by the +6.346 million bbl increase in EIA crude supplies to a 4-month high, more than expectations of +3.5 million bbl.

Overnight U.S. Stock Movers

Microsoft (MSFT -5.35%) rallied nearly 5% in pre-market trading after it reported Q1 EPS of $1.14, better than consensus of 96 cents.

Tesla (TSLA -1.92%) jumped 11% in after-hours trading after it reported an unexpected Q3 adjusted EPS profit of $2.90, well above consensus for a -15 cents EPS loss.

Align Technology (ALGN -6.69%) slumped more than 20% in after-hours trading after it forecast Q4 EPS of $1.10 to $1.15, well below consensus of $1.33.

Xilinx (XLNX -7.70%) climbed 11% in after-hours trading after it forecast Q3 sales of $760 million to $780 million, well above consensus of $718.7 million.

Vertex Pharmaceuticals (VRTX -6.36%) slid 3% in after-hours trading after it reported Q3 adjusted revenue of $783.9 million, below consensus of $786.9 million.

Norfolk Southern (NSC +2.05%) was upgraded to 'Buy' from 'Hold' at Stifel with a price target of $189.

Hilton Worldwide Holdings (HLT -7.33%) was upgraded to 'Buy' from 'Neutral' at B Riley FBR with a price target of $85.

F5 Networks (FFIV -4.23%) rose more than 3% in after-hours trading after it reported Q4 adjusted EPS of $2.90, well above consensus of $2.63, and then forecast Q1 adjusted EPS of $2.51 to $2.54, higher than consensus of $2.47.

Equifax (EFX -3.09%) tumbled almost 13% in after-hours trading after it reported Q3 adjusted EPS of $1.41, below consensus of $1.42, and then forecast Q4 adjusted EPS of $1.30 to $1.35, weaker than consensus of $1.43.

O'Reilly Automotive (ORLY -5.14%) fell nearly 5% in after-hours trading after it forecast Q4 EPS of $3.60 to $3.70, below consensus of $3.74.

Visa (V -3.49%) gained 2% in after-hours trading after it reported Q4 adjusted EPS of $1.21, better than consensus of $1.20.

Whirlpool (WHR -4.97%) rallied 9% in after-hours trading after it reported Q3 ongoing EPS of $4.55, well above consensus of $3.76, and then forecast full-year ongoing EPS of $14.50 to $14.80, higher than consensus of $14.00.

Kraton (KRA -5.31%) dropped more than 5% in after-hours trading after it reported Q3 adjusted EPS of $1.02, weaker than consensus of $1.29.

Advanced Micro Devices (AMD -9.17%) sold-off nearly 17% in after-hours trading after it forecast Q4 revenue of about $1.45 billion, plus or minus $50 million, weaker than consensus of $1.6 billion.

Ford Motor (F -4.77%) jumped 7% in after-hours trading after it reported Q3 automotive revenue of $34.70 billion, above consensus of $33.56 billion.