CNBC Pro: Credit Suisse is under pressure, but short sellers appear to be eyeing another global bank
Investor anxiety over Credit Suisse sent its shares tumbling, but short sellers appear to be eyeing another European bank, data shows.
Credit Suisse is only the eighth-most shorted European bank, with 2.42% of its floated shares used to bet against it, according to data analytics firm S3 Partners.
Some French, Italian and German banks are even more heavily shorted.
— Ganesh Rao
UBS: Expect ‘periodic rebounds’ in stocks, but more volatility in the near term
Mark Haefele, chief investment officer at UBS Global Wealth Management, says investors can expect periodic rebounds in stocks like we’re seeing today, but volatility will persist.
“After falling more than 9% in September and extending its year-to-date decline to nearly 25% as of Friday’s close, we think the S&P 500 was looking oversold,” Haefele said in a note Tuesday morning.
He suggested that some of last week’s selling pressure may have been driven by “quarter-end rebalancing,” which has now abated as we enter the fourth quarter.
“With sentiment toward equities already very weak, periodic rebounds are to be expected. But markets are likely to stay volatile in the near term, driven primarily by expectations around inflation and policy rates,” Haefele said.
“While risk assets rebounded on Monday, we think a more sustained rally in equities is likely to require indications of a clear downtrend in U.S. inflation (e.g. at least three months of core PCE inflation of +0.2% month-over-month or lower), along with signs of a cooling labor market. This week’s JOLTS job openings data and the September labor report will be key data releases to watch.”
— Elliot Smith
Stocks on the move: Greggs, Accelleron up 5%
Shares of British bakery chain Greggs gained 5.6% in early trade after reporting a rise in quarterly sales despite the deepening cost of living crisis and plummeting consumer confidence in the U.K.
– Elliot Smith
CNBC Pro: Want a ‘defensive move’ with up to 5% return? Buy this fund, says strategist
It’s been a volatile year for both stocks and bonds, with major Wall Street indexes just ending their worst month since March 2020, and Treasury yields remaining elevated.
However David Dietze, chief investment strategist at Point View Wealth Management, says “pockets of opportunity” still exist.
“Short-term defensive measures probably are warranted,” Dietze told CNBC’s “Street Signs Asia” on Monday, and named his favorite fund to play the market right now.
— Weizhen Tan
Watch fourth quarter earnings guidance more than third quarter actual numbers, S&P Global says
Fourth quarter earnings forecasts companies give when reporting third quarter results will be far more important to the market’s future direction than the actual third quarter numbers themselves, S&P Global believes.
“October brings earnings, with Q3 estimates already declining 7%, and the whisper numbers a bit more than that,” Howard Silverblatt, senior index analyst wrote over the weekend. “The larger concern (than the actual numbers for Q3, when consumers were still spending) is the guidance for Q4, as consumers have pulled back, inflation continues and the Fed’s `adjustments’ will have a more substantial impact.”
Third quarter earnings for the S&P 500 are projected by analysts to grow 6.1% compared with the same quarter a year ago, and almost 18% over the second quarter of 2022, S&P Global said.
Next year’s estimates call for a 14.3% earnings growth over 2022, and a corresponding forward P/E ratio of 15.0.
Silverblatt also looked at typical performance for the S&P 500 in the month of October. “Historically, the index posts gains 57.4% of the time, with an average gain of 4.18% for the up months, a 4.67% average decrease for the down months and an overall average decrease of 0.46%,” he wrote.
— Scott Schnipper
CNBC Pro: Here’s what’s next for stocks, according to Wall Street pros
September is finally behind us, much to the relief of many equity investors who endured a difficult month, with all major U.S. indexes posted steep losses.
With a historically weak month now firmly in the rearview mirror, what is the outlook for stocks as we enter into the fourth quarter of the year?
CNBC Pro combed through the research to find out what Wall Street thinks.
Pro subscribers can read more here.
— Zavier Ong
European markets: Here are the opening calls
European stocks are heading for a higher open on Tuesday, building on gains seen in yesterday’s trading session.
The U.K.’s FTSE index is expected to open 30 points higher at 6,934, Germany’s DAX 126 points higher at 12,324, France’s CAC 40 up 58 points at 5,850 and Italy’s FTSE MIB 245 points higher at 21,043, according to data from IG.
The higher open expected in Europe comes after a rebound on Wall Street Monday. There, stocks rallied to start the new month and quarter on a positive note, as Treasury yields eased from levels not seen in roughly a decade. It was the best day since June 24 for the Dow, and the S&P 500′s the best day since July 27.
Earnings come from Greggs on Tuesday and euro zone producer prices data for August is released.
— Holly Ellyatt