December S&P 500 results (ESZ23) up +0.21%, and December Nasdaq 100 E-Mini futures (NQZ23) is up +0.23% this morning as market participants anticipated a reading on the Federal Reserve’s preferred inflation metric.
In Wednesday’s trading session, the main Wall Street averages ended mixed. Cigna Corp (CI) fell more than -8% following a Wall Street Journal report stating that the health insurance giant is engaged in merger discussions with Humana, which analysts said would be challenged by antitrust regulators. Also, Hormel Foods Corporation (HRL) slipped more than -4% after reporting weaker-than-expected Q4 results and issuing a soft FY24 outlook. On the bullish side, NetApp Inc (NTAP) rose over +14% and was the top percentage gainer on the benchmark S&P 500 after the infrastructure data company reported better-than-expected Q2 results and raised its FY24 forecast. In addition, General Motors Company (GM) gained more than +9% after the automaker said it would boost its dividend by 33% and buy back $10 billion in shares.
The Bureau of Economic Analysis released its second estimate of US Q3 GDP growth on Wednesday, revising it up to +5.2% q/q on an annualized basis from the previous reading of +4.9% q/q.
Cleveland Fed President Loretta Mester said Wednesday that monetary policy is “in a good place” for policymakers to assess upcoming information about the economy and financial conditions. Also, Atlanta Fed President Raphael Bostic said in an essay that he has more confidence that the downward trajectory of inflation is likely to continue, and economic activity will slow in the coming months. At the same time, Richmond Fed President Thomas Barkin said he was “skeptical” that inflation was on its way down to 2% and argued for keeping the option to raise interest rates if inflation remained constant. “If inflation comes down naturally and smoothly, wonderful. But if inflation flares up again, I think you want to have the ability to do more on rates,” Barkin said.
“It’s certainly likely that you’ll see a little more division within the Fed because there are some conflicting (views). The Fed is likely to push back on market expectations of a rate cut,” said Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management Company.
Meanwhile, US rates futures are priced in a 95.8% chance of no hike at the December FOMC meeting and a 92.0% chance of no hike at the January FOMC meeting. Also, US rates were priced in a 44.5% probability of a 25 basis point rate hike at the conclusion of the Fed’s March meeting.
In other news, the Federal Reserve’s Beige Book report, released on Wednesday, indicated a slowdown in US economic activity in recent weeks as consumers pulled back on discretionary spending. “Sales of discretionary items and durable goods, such as furniture and appliances, declined on average as consumers showed more price sensitivity,” according to the report released Wednesday.
Today, all eyes are on the US core personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge, due in a few hours. Economists, on average, expect the core PCE price index to come in at +0.2% m/m and +3.5% y/y in October, compared to the previous values of +0.3% m/m and +3.7% y/. y.
Also, investors are likely to focus on the US Chicago PMI, which stood at 44.0 in October. Economists predict that the November figure will be 45.4.
US Pending Home Sales data will be reported today. Economists expect this figure to stand at -2.0% m/m in October, compared to the previous figure of +1.1% m/m.
US Personal Spending data will also be closely watched today. Economists forecast Personal Spending at +0.2% m/m in October, compared to the previous figure of +0.7% m/m.
US data on Initial Jobless Persons will also be reported today. Economists estimate this figure at 220K, compared to last week’s value of 209K.
In the bond markets, US 10-year yields are at 4.291%, up +0.49%.
Euro Stoxx 50 futures are up +0.21% this morning as investors digested fresh Eurozone inflation data as they remain cautious ahead of a decisive US inflation print. Energy and insurance stocks gained ground on Thursday, while chemical stocks underperformed. Data on Thursday showed that Eurozone headline inflation fell more than expected in November while core inflation moderated for a fourth month. Meanwhile, investors are anticipating an earlier start to interest rate cuts by the European Central Bank next year and deeper easing after a series of unexpectedly low inflation readings in the region’s major economies. In corporate news, Asr Nederland (ASRNL.NA) soared more than +11% after the Dutch insurance company announced a final agreement with interest groups regarding single-linked products, with the agreed amount significantly below expectations. At the same time, Oci NV (OCI.NA) fell more than -6% after Jefferies downgraded the chemicals maker to Hold from Buy.
Germany’s Retail Sales, France’s CPI (preliminary), France’s GDP (preliminary), Germany’s Unemployment Rate, Germany’s Unemployment Change, Italy’s CPI (preliminary), Eurozone Unemployment Rate, the CPI of the Eurozone (preliminary), and the Core CPI of the Eurozone (preliminary) data were released today.
German October Retail Sales stood at +1.1% m/m and -0.1% y/y, stronger than expectations of +0.4% m/m and -2.0% y/y.
The French November CPI came in at -0.2% m/m, weaker than expectations of +0.1% m/m.
French GDP was reported at -0.1% q/q and +0.6% y/y in the third quarter, weaker than expectations of +0.1% q/q and +0.7% y/y.
The German November Unemployment Rate was at 5.9%, weaker than expectations of 5.8%.
The German November Unemployment Rate came in at 22K, in line with expectations.
The Italian November CPI stood at -0.4% m/m, weaker than expectations of -0.2% m/m.
Eurozone October Unemployment Rate was at 6.5%, in line with expectations.
Eurozone November CPI was reported at +2.4% y/y, weaker than expectations of +2.7% y/y.
Eurozone November Core CPI came in at +3.6% y/y, weaker than expectations of +3.9% y/y.
Asian stock markets closed in the green today. China’s Shanghai Composite Index (SHCOMP) closed up +0.26%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.50%.
China’s Shanghai Composite closed higher today as disappointing purchasing managers’ index data strengthened the case for imminent fiscal and monetary easing. Tourism and healthcare stocks outperformed on Thursday. An official factory survey showed on Thursday that China’s manufacturing activity contracted for a second straight month in November and at an accelerated pace, pointing to the need for more government policy support measures to bolster economic growth. In another worrying sign, China’s vast services sector unexpectedly eased in November. Meanwhile, state media reported Wednesday that Chinese President Xi Jinping visited Shanghai and gained insight into the city’s efforts to improve its competitiveness as an international financial center. In corporate news, Powerlong Real Estate Holdings Limited plunged more than -11% after the builder defaulted on a dollar bond, struggling with sluggish sales and worsening liquidity.
“Still weak data may see authorities put more options of policy support on the table as markets continue to look for the conviction for a sustained recovery,” said Jun Rong Yeap, market analyst at IG Asia Pte.
China’s November Manufacturing PMI stood at 49.4, weaker than expectations of 49.7.
China’s November Non-manufacturing PMI came in at 50.2, weaker than expectations of 51.1.
Japan’s Nikkei 225 Stock Index closed higher today, booking its best month in two years, driven by a robust corporate earnings season and optimism surrounding the belief that US interest rates have peaked. All sectors of the Nikkei 225 ended in the green, with health care and energy stocks experiencing the biggest gains. Government data showed on Thursday that Japan’s manufacturing rose for a second straight month in October, driven by the production of integrated circuits and cars. Separately, data showed that Japanese retail sales rose in October compared to the same month last year, marking a 20th consecutive month of gains. Meanwhile, Bank of Japan Governor Toyoaki Nakamura argued on Thursday for the continuation of monetary easing, citing his lack of confidence in the country’s ability to achieve sustainable 2% inflation supported by wage growth. “We now see a one-in-a-thousand chance of achieving a virtuous cycle of wages and prices,” Nakamura said. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed -2.82% to 16.57.
The Japanese October Industrial Production arrived at +1.0% m/m, stronger than expectations of +0.8% m/m.
Japan’s October Retail Sales stood at +4.2% y/y, weaker than expectations of +5.9% y/y.
Japan’s November Heman Confidence came in at 36.1, stronger than expectations of 35.6.
Premarket US stock transferors
Salesforce Inc (CRM) soared over +8% in premarket trading after the company reported solid Q3 results and issued above-consensus Q4 guidance.
Snowflake Inc (SNOW) climbed more than +8% in premarket trading after the data storage giant posted upbeat Q3 results and boosted its full-year product revenue forecast.
Pure Storage Inc (PSTG) fell more than -16% in premarket trading after the maker of flash storage products offered weaker-than-expected Q4 and FY24 revenue guidance.
Nutanix Inc (NTNX) gained more than +10% in premarket trading after the company reported better-than-expected Q1 results and raised its FY24 revenue guidance.
Snap Inc (SNAP) rose more than +3% in premarket trading after Jefferies upgraded the stock to Buy from Hold.
Okta Inc (EIGHT) fell more than -2% in premarket trading after KeyBanc downgraded the stock to Sector Weight from Overweight.
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Today’s US Earnings Spotlight: Thursday – November 30
RBC (RY), Toronto Dominion Bank (TD), Canadian Imperial Bank (CM), Kroger (KR), Ulta Beauty (ULTA), UiPath (PATH), BRP Inc (DOOO), Academy Sports (ASO), Ambarella (AMBA ). ), Pagerduty (PD), Cracker Barrel Old (CBRL), American Woodmark (AMWD), CleanSpark (CLSK), REX American Resources (REX), Movado (MOV), Titan Machinery (TITN), Zumiez (ZUMZ), Tillys ( TLYS), Duluth Holdings Inc (DLTH), 111 Inc (YI), Big Lots (BIG).
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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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