Election Day opens with a split market and renewed pressure on technology
Five things to know before the open on Tuesday, November 3.
Good morning. Technology selling is still setting the tone, but the premarket picture is split: Dow futures are lower while Nasdaq-100 futures are higher. Oil has recovered part of Monday's steep drop, and voters are heading to the polls for the U.S. midterm elections.
1. A split start after another difficult night for technology
Dow futures were down about 0.7% in the latest premarket update, while S&P 500 futures were slightly lower and Nasdaq-100 futures were higher. These are premarket indications, not the opening prices of the cash indexes.
South Korea's Kospi and Taiwan's main stock index each closed down 3.59%. The Asian losses followed Monday's uneven U.S. session, when the Nasdaq Composite lost 1.07% and the Dow gained 0.41%. Our First Light report has the overnight context.
2. Apple's sales beat runs into a margin squeeze
Apple's September-quarter revenue rose 12% to $114.5 billion and diluted earnings reached $2.10 a share. But management forecast December-quarter gross margin of 45% to 46%, below the 47.9% it just reported, as memory costs rise.
The shares were lower in premarket trading. The distinction is between sales and profitability: Apple expects revenue to grow 7% to 10% in the holiday quarter, even as higher component costs weigh on the margin outlook. Read the full results and outlook.
3. Shopify grows revenue 32%, but expectations remain demanding
Shopify reported third-quarter revenue of $3.74 billion, up 32%, and adjusted earnings of 49 cents a share. Revenue matched analysts' expectations and adjusted earnings exceeded the 47-cent estimate, according to Investing.com. Gross merchandise volume, the value of orders handled through its platform, was $119.15 billion, below the $120.08 billion estimate cited by the outlet.
The company expects fourth-quarter revenue growth at a low-thirties percentage rate and gross-profit growth at a high-twenties rate. Its earnings call is scheduled for 8:30 AM ET. The results show that fast growth and an earnings beat do not necessarily mean a company has cleared every expectation.
4. Oil claws back part of Monday's fall
Brent and West Texas Intermediate crude futures were higher Tuesday after both benchmarks fell more than 7% on Monday. The rebound leaves some of the previous session's oil-price relief intact, rather than reversing the entire move.
A U.S. official told Reuters that the United States struck Iran's Qeshm Island; officials cited by The Wall Street Journal described the action as defensive. Diplomatic efforts are continuing, but an agreement to end the conflict is not in place. The renewed uncertainty puts supply risks back in focus after Monday's sharp decline.
5. Election Day meets the jobs and earnings calendar
Control of Congress is on the ballot in the U.S. midterm elections. Market prices during the regular session will precede a complete election result, so an early move should not be treated as a verdict on the outcome.
The September Job Openings and Labor Turnover Survey and factory orders are due at 10:00 AM ET. AMD reports after the close, another test for the chip sector after Monday's 7.5% decline. Overseas, the Reserve Bank of Australia raised its cash rate to 4.85% in a 6-3 vote, keeping persistent inflation on the global policy agenda.
