Monday's Final Takeaways: GM Hybrid Plans & Brazil Post-Election Rally

Marley Kayden (0:01)

Welcome back to Market On Close. I'm Marley Kayden here in Chicago alongside Sam Vadas at the New York Stock Exchange. Here's some final thoughts on the session today. We got some data this morning. The September ISM Services PMI slipping to 54.9 from 55.4 in August. That missed expectations looking for 55.2.

It also signaled some cooling in the services sector. But the bigger concern, of course, lies with inflation. The prices paid index climbing to 74 from 72.6, so strong demand, supply chain delays and higher energy costs add to businesses' input costs. There was a bright spot in employment, which returned to expansion territory just barely at 50.1. But the report underscores the Fed's continued challenge of balancing a resilient economic activity with renewed inflationary pressures as the markets continue to assess the outlook for interest rates going forward. There was a stock specific story that stuck out to me today in the wake of our conversations over the past month about how hybrids are poised to start taking share in the auto market. GM announcing today it is going to introduce a hybrid into its US lineup, but no specific timeline was given as to when. The company's VP of Propulsion Engineering said, We are not tone deaf to our customers. We know what they want and we want to give that to them as quickly as we can. GM has largely been missing from the hybrid market after making a big bet on electric vehicles, but sales of hybrid models in the US reached a record 19 percent of the market back in August, driven by higher gas prices and slowing EV demand with the expiration of those tax credits. Those are just two things that stuck out to me, but Sam, what caught your eye during the session today?

Sam Vadas (1:36)

Yeah, consumers keep winning that tug of war, don't they, Marley? In the auto market as we keep discussing. Yeah, a couple of international stories. Brazilian stocks, as I mentioned, were on an absolute tear today while the Brazilian real made its biggest move in four years, and it came after the right-wing Senator Flavio Bolsonaro got a surprise early lead ahead of leftist President Lula da Silva in the first round of the elections of the weekend. Bolsonaro got roughly 47 percent of the vote compared to Lula's 45 percent. Bolsonaro is viewed as more market friendly, and the outcome is already much better than investors were pricing in. The Brazilian ETF EWZ, as I mentioned, rallied in double digits today as ADRs absolutely ripped. The pair will head for a runoff election on October the 25th. Let's see if that performance can hold up as well as far as stocks are concerned.

Switching gears over to Europe, the Europe hit a 17-month low today as political uncertainty over in Spain adds to the concerns already stemming from France's fiscal situation. Spanish PM Pedro Sanchez called for an early election for next month after housing protests in the country, and it comes amid a political shift to the right across the region. The euro had already been under pressure from a sell-off in French government debt that had been widening the gap with Germany by 150 basis points. Now I spoke to Richard Flynn from Charles Schwab UK about this growing role that political uncertainty is really playing in markets right now, and he also highlighted how markets are getting a bit nervous about the upcoming UK budget again as well. But heading into tomorrow, Marley, what are you going to be looking out for?

Marley Kayden (3:09)

The end of my favorite Hollywood saga expected tomorrow, Sam. The Paramount Skydance Warner Brothers discovery deal set to close. The $111 billion merger will create a combined company called Skydance. As we told you on Friday, the combined company will be led by David Ellison and the former CEO of Mattel. Skydance's film division will be led by Paramount executives while their Warner Brothers counterparts will not be joining the new company. For the news outlets, Mark Thompson and Barry Weiss will continue to head CNN and CBS News respectively and it will move over to the NICI and change its ticker to Sky D starting tomorrow as well. Sam, what will you be watching?

Sam Vadas (3:45)

Is it really the end, Marley?

Aren't they just going to bring out a new episode that always kind of happens? I don't know, but we'll be watching. I'm going to be looking at the macro tomorrow. We've got ADP, we've got some international trade as well. Exports, imports, obviously closely watched as far as the trade balance is concerned that does feed into GDP. So we'll be keeping an eye on that.