Morning Call: M&A activity boosts technology stocks to lead the overall market higher; Dec E-mini S&Ps up +0.77%.
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 ESZ18 - S&P 500 E-Mini
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Overnight Markets and News

Dec E-mini S&Ps (ESZ18 +1.03%) this morning are up +0.77% and European stocks are up +1.02% on strength in technology stocks. M&A activity gave the technology sector a lift as Red Hat surged 52% in pre-market trading after it was purchased by IBM for about $33 billion. A rally in automobile stocks is also boosting European stocks on a report that China's National Development and Reform Commission, China's top regulator, is proposing cutting the tax levied on new car purchases in half to 5% from 10% for vehicles with engines no bigger than 1.6 liters. European bank stocks are higher as well after quarterly earnings from HSBC Holdings Plc beat expectations. Asian stocks settled mixed: Japan -0.16%, Hong Kong +0.38%, China -2.18%, Taiwan +0.29%, Australia +1.11%, Singapore +0.32%, South Korea -0.95%, India +2.15%. China's Shanghai Composite fell to a 1-week low on concern about weaker corporate earnings after data showed China Sep industrial profits rose at the slowest pace in 6 months.

The dollar index (DXY00 +0.05%) is up +0.10%. EUR/USD (^EURUSD +0.05%) is up +0.10%. USD/JPY (^USDJPY +0.44%) is up +0.29%.

Dec 10-year T-note prices (ZNZ18 -0-060) are down -5.5 ticks.

UK Sep net consumer credit rose +0.8 billion pounds, weaker than expectations of +1.2 billion pounds and the smallest increase in 6 months.

UK Sep mortgage approvals rose 65,300, stronger than expectations of 64,700.

Japan Sep retail sales fell -0.2% m/m, right on expectations and the first decline in 4 months.

China Sep industrial profits rose +4.1% y/y, the smallest increase in 6 months.

U.S. Stock Preview

Key U.S. news today includes: (1) Sep personal spending (expected +0.4%, Aug +0.3%) and Sep personal income (expected +0.4%, Aug +0.3%), (2) Sep PCE deflator (expected +0.1% m/m and +2.0% y/y, Aug +0.1% m/m and +2.2% y/y) and Sep core PCE deflator (expected +0.1% m/m and +2.0% y/y, Aug unch m/m and +2.0% y/y), (3) Chicago Fed President Charles Evans (non-voter) speaks at a Chicago Fed banking conference, (4) Oct Dallas Fed manufacturing activity (expected +0.9 to 29.0, Sep -2.8 to 28.1).

Notable S&P 500 earnings reports today include: Akamai Technology (consensus $0.83), Essex Property Trust (3.14), Affiliated Managers Group (3.42), AvalonBay Communities (2.26), Everest Re (2.73), Vornado Realty Trust (0.98), Mondelez (0.60), KLA-Tencor (2.21).

U.S. IPO's scheduled to price today: none.

Equity conferences during the remainder of this week: H2O AI World London Conference on Mon, Gabelli & Company Automotive Aftermarket Symposium on Mon, Singapore International Energy Week on Mon, JAMstack Conference on Mon, GSMA Mobile Russia & CIS Conference on Tue, SecureWorld Denver Conference on Wed, Solix EMPOWER New York Conference on Thu, TRANSACT Tech San Francisco Conference on Thu, Data Center Summit on Fri.

Market Comments

Dec S&P 500 E-minis (ESZ18 +1.03%) this morning are up +20.50 points (+0.77%). Friday's closes: S&P 500 -1.73%, Dow Jones -1.19%, Nasdaq 100 -2.34%. The S&P 500 on Friday sold off to a 5-3/4 month low and closed sharply lower on a slump in technology stocks, led by a 7% drop in Amazon and a 2% decline in Alphabet, after they both reported disappointing quarterly earnings results. Stocks were also undercut by the University of Michigan U.S. Oct consumer sentiment index report of -0.4 to 98.6, weaker than expectations of unchanged at 99.0. There was also technical selling as losses in the S&P 500 accelerated to a 5-3/4 month low. A positive factor was U.S. Q3 GDP report of +3.5% (q/q annualized) pace, stronger than expectations of +3.3%.

Dec 10-year T-notes (ZNZ18 -0-060) this morning are down -5.5 ticks. Friday's closes: TYZ8 +16.00, FVZ8 +10.75. Dec 10-year T-notes on Friday rallied to a 5-week high on the sharp decline in stocks, which boosted the safe-haven demand for T-notes, and on the +1.6% q/q increase in U.S. Q3 core PCE, weaker than expectations of +1.8% q/q.

The dollar index (DXY00 +0.05%) this morning is up +0.10 (+0.10%), EUR/USD (^EURUSD +0.05%) is up +0.0011 (+0.10%), and USD/JPY (^USDJPY +0.44%) is up +0.32 (+0.29%). Friday's closes: Dollar Index -0.320 (-0.33%), EUR/USD +0.0028 (+0.25%), USD/JPY -0.51 (-0.45%). The dollar index on Friday retreated from a 2-1/4 month high and closed lower on the decline in T-note yields, which weakened the dollar's interest rate differentials. There was also weakness in USD/JPY which fell to a 1-1/2 month low as the slide in stocks boosted safe-haven demand for the yen.

Metals prices this morning are mixed with Dec gold (GCZ18 -0.36%) -3.9 (-0.32%), Dec silver (SIZ18 -0.10%) -0.020 (-0.14%), and Dec copper (HGZ18 +0.88%) +0.021 (+0.77%). Friday's closes: Dec gold +3.4 (+0.28%), Dec silver +0.070 (+0.48%), Dec copper -0.0135 (-0.49%). Metals on Friday settled mixed with Dec gold at a 3-1/4 month high and Dec copper at a 5-week low. Metals prices were boosted by the weaker dollar and by the sell-off in stocks, which boosted safe-haven demand for precious metals. Copper prices fell on concern the sell-off in stocks will crimp economic growth and diminish demand for copper, and also on Chinese demand concerns after weekly Shanghai copper inventories rose +8,154 MT to a 2-1/4 month high of 148,943 MT.

Dec WTI crude oil prices (CLZ18 -0.28%) this morning are down -32 cents (-0.37%) and Dec gasoline (RBZ18 -0.02%) is -0.45 (-0.25%). Friday's closes: Dec crude oil +0.26 (+0.39%), Dec gasoline +0.16 (+0.19%). Dec crude oil and gasoline on Friday closed higher on dollar weakness and the stronger-than-expected U.S. Q3 GDP report of +3.5%, which signals increased fuel demand and consumption. Crude oil prices were undercut by the plunge in the S&P 500 to a 5-3/4 month low, which undercut confidence in the economic outlook and in energy demand.

Overnight U.S. Stock Movers

Red Hat (RHT -3.19%) surged 5% in pre-market trading after IBM agreed to purchase it for about $33 billion. International Business machines (@symbolPercentChange(IBM is down nearly 6% on the news.

Apple (AAPL -1.59%) was rated a new 'Buy' at Jeffries with a price target of $265.

Martin Marietta (MLM -3.25%) was rated a new 'Buy' at Nomura Instinet with a price target of $220.

Proofpoint (PFPT -15.59%) was upgraded to 'Buy' from 'Neutral' at Goldman Sachs with a price target of $114.

Ford Motor (F -0.11%) was upgraded to 'Buy' from 'Neutral' at Goldman Sachs with a price target of $12.

Core Laboratories (CLB -1.46%) was upgraded to 'Buy' from 'Hold' at Stifel with a price target of $110.

Ralph Lauren (RL +0.14%)was rated a new 'Buy' at Deutsche Bank with a price target of $149.

National Oilwell Varco (NOV -3.03%) was upgraded to 'Outperform' from 'In-Line' at Evercore ISI with a price target of $44.

Colgate-Palmolive (CL -6.64%) was downgraded to 'Underweight' from 'Neutral' at JPMorgan Chase with a price target of $54.

Lennar (LEN +3.98%) was upgraded to 'Outperform' from 'Neutral' at Wedbush with a price target of $50.

CSX Corp (CSX -0.71%) may move higher initially this morning after Mantle Ridge LP reported a 5.1% stake in the company.

The board of Pacific Premier Bancorp (PPBI -2.15%) approved a $100 million stock buyback program.