Open to close, stocks, data, earnings and news

Euro zone business activity fell further than expected last month, increasing the likelihood of a recession in the 19-member common currency bloc.

S&P Global’s final euro zone composite PMI (purchasing managers’ index), seen as a reliable gauge of economic health, dropped to a 20-month low of 48.1 in September from 48.9 in August, short of a preliminary estimate of 48.2. Any reading below 50 indicates contraction.

– Elliot Smith

Swedish financial services companies Avanza and Nordnet fell 5% and 6%, respectively, in early trade after publishing their monthly figures for September.

At the top of the Stoxx 600, German chipmaker Infineon gained 4%.

More German companies are planning to hike prices in the coming month, according to a new Ifo Institute survey published Wednesday.

Price expectations across the whole economy for the coming month hit 53.5 points in September, up from a seasonally-adjusted 48.1 in August. The food price indicator stood at a full 100 points, up from 96.9 in August.

“Unfortunately, this probably means the wave of inflation isn’t about to subside,” says Timo Wollmershäuser, head of forecasts at Ifo.

“Especially when it comes to gas and electricity, the price pipeline is not yet exhausted.”

– Elliot Smith

Interest rate rises, soaring energy prices and political turmoil in some parts of the world have battered stocks going into the final quarter of this year.

To help investors navigate the volatility, Bank of America has revealed its top “short-term stock recommendations” for the next quarter, which they expect to “significantly outperform” their peers.

CNBC Pro subscribers can read about five of their stock picks here.

— Ganesh Rao

One factor helping equity markets on Tuesday could be a slightly weaker dollar, which is falling for the fifth-straight day.

The DXY US Dollar Currency Index was down 1.5% in afternoon trading at 110.06. The index was trading as high as 114.78 last week, when there was concern about a failure of the UK government bond market.

The British pound and the euro were each more than 1% against the dollar on Tuesday. The greenback was also down against the Japanese yen.

—Jesse Pound, Gina Francolla

Market veteran Phil Blancato, whose firm has more than $4 billion in assets under management, said he expects next week to be a “turnaround week” for markets.

Investors should take the chance to “jump into the market,” he said, as he named two stocks to take advantage of the rally ahead.

Pro subscribers can read more here.

— Zavier Ong

Stifel chief equity strategist Barry Bannister said stocks can advance further after this week’s sharp two-day rally.

“I don’t think you have to worry about a recession until the second half of ’23,” Stifel chief equity strategist Barry Bannister said Tuesday on CNBC’s “Closing Bell: Overtime.” “So there is room for a rally as you go into the early part of next year.”

The strategist said there could be a “conditional pause” at the December meeting as the Federal Reserve reviews the impact of its interest rate hiking plan on inflation.

“Inflation leading indicators are all falling, global liquidity has tightened quite a bit. They don’t want to kill the patient to cure the disease,” Bannister said. “And if the data kept going their way, then the pause would last, and if the data don’t go their way, they would hike again and we would go right back down.”

— Sarah Min

There’s unlikely to be a sustainable market bottom unless three conditions are met, according to Morgan Stanley.

“We … remind readers that the last few innings of every bear market are very challenging to trade as volatility becomes extreme,” they wrote. “None of the conditions we have been looking for to call an end to this bear market are in place.”

Pro subscribers can read more here.

— Weizhen Tan

European stocks are heading for a lower open on Wednesday, bucking a positive trend seen in the previous session.

The U.K.’s FTSE index is expected to open 27 points lower at 7,059, Germany’s DAX 59 points lower at 12,606, France’s CAC 40 down 25 points at 6,005 and Italy’s FTSE MIB 112 points lower at 21,426, according to data from IG.

The declines expected on Wednesday come after European markets rallied yesterday, with the pan-European Stoxx 600 closing 3% higher. Travel and leisure stocks jumped 6.1% to lead gains as all sectors and major bourses entered positive territory.

The British pound rose Tuesday after the U.K. government’s dramatic policy U-turn and the yields on Britain’s sovereign bonds also dipped lower after a heavy sell-off last week.

Data releases on Wednesday include final euro zone PMI data for September and German import and export data for August. Earnings come from Tesco and Bang & Olufsen.

— Holly Ellyatt