Stocks Rising into Final Hour on De-Escalating Mideast War Tensions, US Earnings Outlook Optimism, Lower Oil, Biotech/Consumer Discretionary Sector Strength

Economic/Market Gauges:

• North American Investment Grade CDS Index 55.9 -.4% 
• BofA Private Credit Proxy Index 70.9 +.1% 
• Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .35 unch.
• BofA Global Financial Stress Indicator -.14 -4.0 basis points
• European Financial Sector CDS Index 61.9 +.3% 
• Emerging Market CDS Index 143.2 -.5% 
• Israel Sovereign CDS 56.2 -3.8% 
• Bloomberg Global Trade Policy Uncertainty Index .8 +.1
• US Morning Consult Daily Consume Sentiment Index 85.0 -.2

• Citi US Economic Surprise Index 24.2 -3.0

• Citi Eurozone Economic Surprise Index 62.6 -1.2

• Citi Emerging Markets Economic Surprise Index 18.8 +.6
• S&P 500 Current Quarter EPS Growth Rate YoY(4 of 500 reporting) +19.0% -.8 percentage point
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 402.61 +.57:  Growth Rate +22.7% +.1 percentage point, P/E 19.3 unch.
• S&P 500 Current Year Estimated Profit Margin 16.29% +1.0 basis point
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) n/a
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 1,046.83 +61.38: Growth Rate +55.9% +9.1 percentage points, P/E 18.5 -1.0
• Bloomberg US Financial Conditions Index 1.26 -1.0 basis point
• US Yield Curve 21.0 basis points (2s/10s) +.25 basis point
• Bloomberg Industrial Metal Index 182.3 +.6%
• Dutch TTF Nat Gas(European benchmark) 71.8 euros/megawatt-hour -2.0%
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 9.4% unch.
• US Atlanta Fed GDPNow Q3 Forecast +5.1% unch.
• US 10-Year T-Note Yield 4.96% unch.
• 1-Year TIPS Spread 2.33 -1.0 basis point

• Highest target rate probability for Dec. 9th FOMC meeting: 47.4% (+1.4 percentage points) chance of 4.0%-4.25%. Highest target rate probability for Jan. 27th meeting: 43.9%(-1.0 percentage point) chance of 4.25%-4.5%. (current target rate is 3.75-4.0%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +2,000 open in Japan 
• China A50 Futures: Indicating +63 open in China
• KOSPI 200 Futures: Indicating +25 open in South Korea 

• DAX Futures: Indicating +28 open in Germany

Portfolio:

• Higher: On gains in my tech/consumer discretionary/industrial/biotech sector longs
• Disclosed Trades: None
• Market Exposure: 100% net long

Bear Radar

Style Underperformer:

• Large-Cap Value -.2%

Sector Underperformers:

• 1) Shipping -2.7% 2) Banks -2.1% 3) Telecom -1.6%

Stocks Falling on Unusual Volume: 

• VLO, FRO, DGX, TEN, ABVX, EXPE, FSLY, VIK, SECZ, SCHW, TRMD, DBX, ECO, LTH, LPLA, BSP, NYT, RCL, CLDX, NKTR, WGS, GSHD, PLNT, QNST and EVER

Stocks With Unusual Put Option Activity:

• 1) ABUS 2) EXE 3) MTUM 4) FEZ 5) RXT

Stocks With Most Negative News Mentions:

• 1) GDDY 2) LINC 3) DGX 4) AVEX 5) GUTS

Sector ETFs With Most Negative Money Flow:

• 1) SMH 2) XOP 3) HACK 4) UFOX 5) DTCR

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Large-Cap Growth +.8%

Sector Outperformers:

• 1) Biotech +2.1% 2) Homebuilding +2.1% 3) Airlines +2.0%

Stocks Rising on Unusual Volume:

• VKTX, MAZE, VICR, INOD, SGRY, ABSI, BLLN, OMER, SRAD, TNGX, ONON, DKS, CPRI, USDE, MDB, TRLV, RMBS, ERO, MPWR, RARE, TTAN, SHOP, SRRK, HIMS, TWLO, TTAN, BHE, MRNA, LEN, BBW, MLTX, TLX, PS, ROG, GLBE, VOR, GLXY, BAND, EGO, EQX, AZO, DFH, KLRA, AMGN, PBLS, AXTA, HL, IAG, HMY, CHKP, SAIL, MANE and LZB

Stocks With Unusual Call Option Activity:

• 1) ABUS 2) GLND 3) KVYO 4) GLAS 5) GRAB 

Stocks With Most Positive News Mentions:

• 1) SHOP 2) VICR 3) ONON 4) VKTX 5) MAZE

Sector ETFs With Most Positive Money Flow:

• 1) XLF 2) IGV 3) XLU 4) XLK 5) XLV

Charts: 

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume

Tomorrow's Earnings/Economic Releases of Note; Market Movers

Earnings of Note 
Company/Estimate 

Before the Open:

• (CTAS)/1.35
• (CBRL)/.17
• (GIS)/.72
• (PAYX)/1.32 

After the Close: 

• (FUL)/1.47
• (SFIX)/-.06 

Economic Releases 

9:45 am EST

• The S&P Global US Manufacturing PMI for Sept. is estimated to fall to 53.7 versus 53.9 in Aug.
• The S&P Global US Services PMI for Sept. is estimated to fall to 55.9 versus 56.5 in Aug.
• The S&P Global US Composite PMI for Sept. is estimated to fall to 54.9 versus 56.0 in Aug. 

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -578,000 barrels versus a -640,000 barrel decline the prior week. Gasoline supplies are estimated to rise by +54,600 barrels versus a +794,000 barrel gain the prior week. Distillate inventories are estimated to fall by -337,400 versus a +1,585,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to 

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Barr speaking, 10Y 10-Note auction, weekly MBA Mortgage Applications report, DA Davidson Diversified Industrials/Services Conference, Bernstein Insights Healthcare Forum, (OKTA) investor meeting and the (MCD) investor day could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -7.3% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 17.1 +.2
• 8 Sectors Rising, 3 Sectors Declining
• 50.4% of Issues Advancing, 47.4% Declining 
• TRIN/Arms 1.01 -9.0%
• Non-Block Money Flow +$140.8M
  
• 17 New 52-Week Highs, 103 New Lows
• 46.0% (+1.0%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 41.0 -2.2

Polymarket: 

• Will China invade Taiwan by June 30th 2027? 9.0% +1.0 percentage point
• Strait of Hormuz traffic returns to normal by October 31st 9.0% +2.0 percentage points
• Iran agrees to end enrichment of uranium by Dec. 31st 13.0% unch.
• Israel withdraws from Lebanon by December 31st 5.0% unch.
• US Invades Iran before 2027 16.0% -1.0 percentage point
• US announces end of Iranian blockade by October 31st 65.0% +23.0 percentage points

Other

• Bloomberg Global Risk-On/Risk-Off Index 133.2 +.3%
• Global Monitor Iran Instability Index 64.0 -1.0
• Strait of Hormuz Oil Tanker Traffic Curtailed Estimate 90.0% unch.
• US High-Yield Tech Sector OAS Index 397.5 -6.25 basis points
• Bloomberg Cyclicals/Defensives Index 269.9 -.8%
• Morgan Stanley Growth vs Value Index 154.3 +.2%
• CNN Fear & Greed Index 36.0 (FEAR) +2.0
• 1-Day Vix 7.4 -26.6%
• Vix 14.3 -3.6%
• Total Put/Call .81 +11.0%

Tuesday Watch

Night Trading 

• Asian equity indices are +.5% to +2.0% on average. 
• Asia Ex-Japan Investment Grade CDS Index 69.5 -.25 basis point. 
• China Sovereign CDS 33.25 -.25 basis point.
• China Iron Ore Spot 97.0 USD/Metric Tonne unch. 
• Crude Oil 96.19/bbl. +.43%. 
• Gold 4,390.0 USD/t oz. +.16%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.15 +.03%.
• Bloomberg Emerging Markets Currency Index 34.02 -.04%.
• Bloomberg Global Risk-On/Risk Off Index 132.9 +.1%.
• US 10-Year Yield 4.96% +1.0 basis point.
• Japan 30-Year Yield 4.08% n/a.
• Volatility Index(VIX) futures 17.9 -.5%.
• Euro Stoxx 50 futures +.35%. 
• S&P 500 futures +.02%.
• NASDAQ 100 futures +.36%.

Morning Preview Links

BOTTOM LINE: Asian indices are modestly higher, boosted by technology and financial shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 100% net long heading into the day.