December S&P 500 results (ESZ23) up +0.28%, and December Nasdaq 100 E-Mini futures (NQZ23) is up +0.06% this morning as US Treasury yields continued to fall after this week’s mild US inflation and jobs data spurred expectations among investors that interest rates have peaked.
In Thursday’s trading session, Wall Street’s main indexes closed mixed. Cisco Systems Inc (CSCO) slipped over -9% after the web giant cut its full-year revenue guidance. Also, Walmart Inc (WMT) plunged more than -8% after the retail giant struck a cautious tone about the outlook for US shoppers. On the bullish side, Macy’s Inc (M) climbed over +5% after the department store operator reported better-than-expected Q3 results. In addition, Intel Corporation (INTC) gained more than +6% after Mizuho Securities upgraded the stock to Buy from Neutral with a price target of $50.
The Labor Department report on Thursday showed that claims for state jobless benefits rose +13K to a seasonally adjusted 231K last week, higher than the expected figure of 220K. Also, the US Philly Fed’s manufacturing gauge stood at -5.9 in November, stronger than expectations of -9.0. In addition, US October Industrial Production fell -0.6% m/m, compared to the -0.3% m/m consensus and +0.1% m/m in September.
Cleveland Fed President Loretta Mester said Thursday that she has not yet determined whether another rate hike is needed, stressing that officials have time to watch how the economy develops. “We’re in a more balanced place, but I don’t think we can say right now what the next policy meeting will necessarily be,” Mester said.
Meanwhile, US futures prices have a 99.7% chance of no hike at the next central bank meeting in December and a 95.6% chance of no hike at the January monetary policy meeting. Also, US rates were priced in a 34.3% probability of a 25 basis point rate cut at the March FOMC meeting.
In other news, US President Joe Biden on Thursday signed a temporary spending bill to prevent a government shutdown, following its approval by the Senate a day earlier, the White House said.
Today, all eyes are focused on the preliminary US Building Permits data in a few hours. Economists, on average, expect October’s Building Permits to stand at 1.450M, compared to the previous value of 1.471M.
The US Housing Starts data will also be reported today. Economists expect this figure to stand at 1.345M in October, compared to the previous figure of 1.358M.
In addition, investors will likely focus on speeches by Chicago Fed President Austan Goolsbee, Boston Fed President Susan Collins and San Francisco Fed President Mary Daly.
In the bond markets, US 10-year rates are at 4.390%, down -1.19%.
Euro Stoxx 50 futures are up +0.72% this morning as investors increased their bets on interest rate cuts next year in response to new indications of a global economic slowdown. Gains in real estate and health care are driving the overall market higher. Eurostat confirmed on Friday that year-on-year headline inflation in the Eurozone reached its lowest point since July 2021. Separately, data revealed on Friday that retail sales in the UK unexpectedly fell in October, signaling a new warning for the economy. Meanwhile, money markets are currently pricing in a percentage point of European Central Bank rates next year. In corporate news, Volvo Car Ab (VOLCB.S.DX) fell more than -10% after majority shareholder China Geely sold a small portion of its stock at a large discount to the previous day’s closing price.
UK Core Retail Sales, UK Retail Sales, Eurozone CPI and Eurozone Core CPI data were released today.
UK October Core Retail Sales stood at -0.1% m/m and -2.4% y/y, weaker than expectations of +0.4% m/m and -1.5% y/y.
UK October Retail Sales came in at -0.3% m/m and -2.7% y/y, weaker than expectations of +0.3% m/m and -1.5% y/y.
Eurozone October CPI was reported at + 0.1% m / m and + 2.9% y / y, in line with expectations.
Eurozone October Core CPI arrived at +0.2% m/m and +4.2% y/y, in line with expectations.
Asian stock markets settled in the green today. China’s Shanghai Composite Index (SHCOMP) closed up +0.11%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.48%.
China’s Shanghai Composite closed slightly higher today. Bloomberg reported on Friday that China’s central bank told several nationwide lenders to cap interest rates on interbank debt instruments this month, highlighting the regulator’s latest efforts to stabilize financial markets by keeping funding costs stable and mitigating volatility risks. Meanwhile, Hong Kong-listed tech stocks fell on Friday, with Alibaba Group plunging nearly -10% after the e-commerce giant abandoned plans to spin off its cloud business, citing uncertainties related to US restrictions on chips used in artificial intelligence applications. Also, the company said in regulatory filings that the family trust of Chinese billionaire Jack Ma intends to sell 10 million US Depositary Shares of Alibaba for about $871 million. In other news, China’s commerce minister expressed concern about US semiconductor export controls, sanctions against China and tariffs on Chinese imports during his meeting with US Commerce Secretary Gina Raimondo on Thursday, his ministry reported on Friday.
Japan’s Nikkei 225 Stock Index closed higher today, marking its third consecutive winning week, supported by a robust domestic earnings season that just ended. Utilities, healthcare and materials stocks led the gains on Friday. Bank of Japan Governor Kazuo Ueda said on Friday that the central bank will “patiently” support ultra-loose monetary policy, as the continued achievement of its 2% inflation target is still unclear. “Trip inflation is likely to gradually accelerate towards our 2% inflation target through fiscal 2025. But this must be accompanied by a positive wage-inflation cycle. Uncertainty about whether Japan will see such a positive wage-inflation cycle is high,” he said to the parliament. Meanwhile, Japan’s 10-year yield fell to its lowest level since late September, driven by speculation about short-covering and after a decline in Treasury yields on Thursday. In other news, Berkshire Hathaway Inc. of Warren Buffett sold yen bonds at lower costs in his second Japanese deal this year amid growing speculation that the billionaire investor could increase his investments in the nation’s stock market. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed -2.51% to 18.28.
Premarket US stock transferors
Gap Inc (GPS) rose around +18% in premarket trading after the retailer reported upbeat Q3 results.
ChargePoint Holdings Inc (CHPT) tanked more than -24% in premarket trading after the EV charging network operator cut its Q3 revenue guidance and announced a new CEO.
Applied Materials Inc (AMAT) plunged more than -7% in premarket trading following a Reuters report stating that the Justice Department is investigating the company for allegedly shipping “hundreds of millions” of dollars worth of equipment to Semiconductor Manufacturing International Corporation without the required export licenses.
Ross Stores Inc (ROAST) climbed over +6% in premarket trading after the off-price retailer posted stronger-than-expected Q3 results.
Analog Devices Inc (ADI) rose more than +2% in premarket trading after Morgan Stanley upgraded the stock to Overweight Equal Weight.
Expedia Inc (ESPECIALLY) gained more than +3% in premarket trading after Evercore ISI upgraded the stock to Outperform from In Line.
You can see more premarket shares here
Today’s US Earnings Spotlight: Friday – November 17th
BJs Wholesale Club (BJ), Spectrum Brands (SPB), Buko (BKE), Twist Bioscience (TWST), Destination XL Group (DXLG), Huize (HUIZ).
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As of the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. For more information, please see Barchart’s Disclosure Policy here.
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