Morning Call: U.S. stocks little changed ahead of Sep non-farm payrolls; Dec E-mini S&Ps down -0.01%; Euro Stoxx 50 down -0.38% at a 2-week low.
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 ESZ18 - S&P 500 E-Mini

Overnight Markets and News

Dec E-mini S&Ps (ESZ18 +0.05%) this morning are down slightly by -0.01% ahead of U.S. Sep non-farm payrolls later this morning. European stocks are down -0.38% at a 2-week low as losses in mining stocks lead the overall market lower with the price of copper (HGZ18 -0.16%) down -0.32% at a 2-week low. Technology stocks are also lower on concern about further escalation of the U.S.-China trade war after Bloomberg news reported Thursday that China infiltrated U.S. companies with spyware installed on equipment manufactured in China. The threat of higher interest rates is another negative for European equities after the yield on the 10-year German bund climbed to a 4-1/2 month high of 0.57%. Asian stocks settled mostly lower: Japan -0.60%, Hong Kong -0.19%, China closed for holiday, Taiwan -1.88%, Australia +0.15%, Singapore -0.67%, South Korea -0.17%, India -2.25%. Japan's Nikkei Stock Index fell to a 2-week low, led by losses in semiconductor stocks, and Hong Kong's Hang Seng Stock Index dropped to a 3-week low as suppliers of technology to China sold-off on news that China had hacked American computer networks using a microchip built by its spies. A 15% plunge in Chinese computer maker Lenovo led losses in the Hang Seng. Asian markets are also concerned of a sell-off in Chinese stocks when they resume trading Monday after being closed this week for holidays.

The dollar index (DXY00 +0.05%) is up +0.09%. EUR/USD (^EURUSD -0.08%) is down -0.10%. USD/JPY (^USDJPY +0.01%) is down -0.02%.

Dec 10-year T-note prices (ZNZ18 -0-015) are down -2 ticks.

German Aug factory orders rose +2.0% m/m, stronger than expectations of +0.8% m/m.

German Aug PPI rose +0.3% m/ and +3.1% y/y, stronger than expectations of +0.2% m/m and +2.9% y/y with the +3.1% y/y gain the largest year-on-year increase in 11 months.

Japan Aug household spending rose +2.8% y/y, stronger than expectations of +0.1% y/y and the biggest increase in 3 years.

Japan Aug labor cash earnings rose +0.9% y/y, weaker than expectations of +1.3% y/y. Aug real cash earnings unexpectedly fell -0.6% y/y, weaker than expectations of no change and the biggest decline in 6 months.

The Japan Aug leading index CI rose +0.5 to 104.4, stronger than expectations of +0.3 to 104.2. The Aug coincident index rose +1.4 to 117.5, stronger than expectations of +1.3 to 117.4.

U.S. Stock Preview

Key U.S. news today includes: (1) Sep non-farm payrolls (expected +184,000, Aug +201,000) and Sep unemployment rate (expected -0.1 to 3.8%, Aug unch at 3.9%), (2) Sep avg hourly earnings (expected +0.3% m/m and +2.8% y/y, Aug +0.4% m/m and +2.9% y/y), (3) Aug trade balance (expected -$53.5 billion, Jul -$50.1 billion), (4) Dallas Fed President Robert Kaplan (non-voter) speaks in a moderated Q&A session at a event in Waco, TX, (5) Atlanta Fed President Raphael Bostic (voter) speaks at the Financial Literacy and Economic Education Conference in Atlanta, GA, (6) Aug consumer credit (expected +$15.0 billion, Jul +$16.64 billion).

Notable Russell 2000 earnings reports today include: none.

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

Equity conferences during the remainder of this week: none.

Market Comments

Dec S&P 500 E-minis (ESZ18 +0.05%) this morning are little changed, down -0.25 of a point (-0.01%). Thursday's closes: S&P 500 -0.82%, Dow Jones -0.75%, Nasdaq 100 -1.93%. The S&P 500 on Thursday tumbled to a 3-week low and closed lower on the surge in interest rates for a second day after the 10-year T-note yield climbed to a 7-1/3 year high, which undercut interest-rate-sensitive utility and real estate stocks in particular. The broad market was also dragged lower by a slump in technology stocks. Stocks found some underlying support on the +2.3% increase in U.S. Aug factory orders, stronger than expectations of +2.1% and the biggest increase in 11 months.

Dec 10-year T-notes (ZNZ18 -0-015) this morning are down -2 ticks. Thursday's closes: TYZ8 -8.50, FVZ8 -4.25. Dec 10-year T-notes on Thursday fell to a contract and 8-1/3 year nearest-futures low and closed lower. T-note prices were undercut by stronger-than-expected U.S. economic data on weekly jobless claims and Aug factory orders and by the increase in the 10-year T-note breakeven inflation expectations rate to a 4-1/2 month high. There was also continued stop-loss selling with the slump in T-note prices to a new contract low.

The dollar index (DXY00 +0.05%) this morning is up +0.086 (+0.09%), EUR/USD (^EURUSD -0.08%) is down -0.0012 (-0.10%), and USD/JPY (^USDJPY +0.01%) is down -0.02 (-0.02%). Thursday's closes: Dollar Index -0.011 (-0.01%), EUR/USD +0.0036 (+0.31%), USD/JPY -0.62 (-0.54%). The dollar index on Thursday fell back from a 6-week high and closed little changed. The dollar index was supported by the stronger-than-expected U.S. economic data on weekly jobless claims and Aug factory orders and by the surge in the 10-year T-note yield to a 7-1/3 year high, which improved the dollar's interest rate differentials. The dollar was undercut by strength in EUR/UD on hawkish comments from ECB Executive Board member Coeure who said the Eurozone economy "is in the best shape it has been in for many years."

Metals prices this morning are mixed with Dec gold (GCZ18 +0.46%) +4.7 (+0.39%), Dec silver (SIZ18 +0.65%) +0.080 (+0.55%) and Dec copper (HGZ18 -0.16%) -0.009 (-0.32%) at 2-week low. Thursday's closes: Dec gold -1.3 (-0.11%), Dec silver -0.080 (-0.55%), Dec copper -5.65 (-1.99%). Metals on Thursday closed lower on the rally in the dollar index to a 6-week high. Copper was also undercut by concern that U.S. housing market demand will slow after the 10-year T-note yield rose to a 7-1/3 year high, which is pushing mortgage rates higher.

Nov WTI crude oil prices (CLX18 +0.28%) this morning are up +8 cents (+0.11%) and Nov gasoline (RBX18 -0.13%) is -0.20 (-0.10%). Thursday's closes: Nov crude oil -2.08 (-2.72%), Nov gasoline -3.74 (-1.75%). Nov crude oil and gasoline on Thursday closed lower on comments from Saudi Energy Minister Khalid Al-Falih who said OPEC has about 1.3 million bpd of spare production capacity and on comments from IEA Executive Director Birol who warned that rising oil prices put demand growth at risk. Crude oil prices were also undercut by the slide in the crack spread to a 1-week low, which curbs the incentive for refiners to purchase crude oil to refine into gasoline.

Overnight U.S. Stock Movers

Costco Wholesale (COST -0.65%) dropped 3% in after-hours trading after it said problems with its IT systems would soon prompt it to report a "material weakness" in some of the information-technology systems that supports its financial reporting.

Eli Lilly (LLY +4.02%) was upgraded to 'Outperform' from 'Market Perform' at BMO Capital Markets with a price target od $130.

Esterline Technologies (ESL -0.40%) was rated a new 'Overweight' at Alembic Global Advisors with a price target of $106.

Tesla (TSLA -4.40%) fell more than 2% in after-hours trading after CEO Musk tweeted "The short seller enrichment commission is doing incredible work."

CNX Midstream Partners LP (CNXM +0.36%) was rated a new 'Overweight' at MUFG Securities Americas with a price target of $24.

Patterson-UTI Energy (PTEN -1.01%) was rated a new 'Outperform' at Bernstein with a price target of $21.

Cutera (CUTR -1.68%)tumbled 16% in after-hours trading after it forecast Q3 revenue of $40 million, weaker than consensus of $45.2 million, and then cut its full-year revenue outlook to $165 million-$170 million from a prior estimate of $178 million-$181 million.

Smart Global Holdings (SGH -6.08%) jumped nearly 10% in after-hours trading after it reported Q4 adjusted EPS of $1.72, better than consensus of $1.66, and then projected Q1 non-GAAP EPS of $1.74-$1.79, stronger than consensus of $1.69.

Paratek Pharmaceuticals (PRTK +12.85%) gained 4% in after-hours trading after it said it received acceptance from the European Medicines Agency for its Omadacycline for treatment of community-acquired bacterial pneumonia and acute bacterial skin infections.

Pixelworks (PXLW -4.64%) rose 6% in after-hours trading after it said Nokia's 7.1 smartphone incorporates Pixelwork's PX8418 mobile processing chip.

EMCORE (EMKR -1.30%) rallied almost 14% in after-hours trading after it boosted Q4 revenue guidance to $24.2 million to $25.2 million from a prior view of $21 million to $23 million.

KemPharm (KMPH -1.65%) slumped more than 25% in after-hours trading after it offered $25 million of the company's shares at $3.00 to $3.25 a share, more than 20% below Thursday's closing price of $4.18.