Morning Markets
December E-Mini S&P 500 futures (ESZ23) are up +0.24%, and Dec Nasdaq 100 E-Mini futures (NQZ23) are up +0.38%.
Stock index futures are mildly higher on some positive corporate news. Nvidia is up more than +1% in pre-market trading, recovering from a -5% drop after investors initially reacted cooly to the company’s better-than-expected Q3 earnings results. Also, Microsoft is up nearly +1% after it helped get Sam Altman reinstated as CEO of OpenAI. Market reaction was muted toward this morning’s U.S. economic news that showed weekly jobless claims fell more than expected, and Oct capital goods new orders nondefense ex-aircraft unexpectedly declined.
A slight easing of geopolitical risks in the Middle East is a positive factor for stocks after Hamas agreed to free 50 hostages from Gaza in return for a four-day ceasefire with Israel and the release of 150 Palestinian prisoners.
Crude oil prices are down more than -3% today after this weekend’s OPEC+ meeting was delayed until Nov 30 as talks ran into trouble amid Saudi dissatisfaction with other members’ oil production levels.
On the negative side for stocks, Deere & Co is down more than -5% in pre-market trading after forecasting 2024 net income well below consensus. Also, Guess is down more than -14% after reporting weaker-than-expected Q3 EPS and cutting its full-year adjusted EPS forecast.
U.S. weekly initial unemployment claims fell -24,000 to a 5-week low of 209,000, showing a stronger labor market than expectations of 227,000. Weekly continuing claims unexpectedly fell -22,000 to 1.840 million, better than expectations of an increase to 1.875 million.
U.S. Oct capital goods new orders nondefense ex-aircraft, a proxy for capital spending, unexpectedly fell -0.1% m/m, weaker than expectations of +0.1% m/m.
The markets are discounting a 0% chance for a +25 bp rate hike at the next FOMC meeting on Dec 12-13 FOMC and a 2% chance for that +25 bp rate hike at the following FOMC meeting on Jan 30-31, 2024. The markets are then discounting a +31% chance for a -25 bp rate cut at the March 19-20, 2024, FOMC meeting and a 76% chance for that same -25 bp rate cut at the Apr 30-May 1, 2024 FOMC meeting.
U.S. and European government bond yields today are lower. The 10-year T-note yield fell to a 2-month low of 4.362% and is down -0.8 bp at 4.385%. The 10-year German bund yield is down -2.8 bp at 2.538%. The 10-year UK gilt yield is down -0.1 bp at 4.104%.
Overseas stock markets are mixed. The Euro Stoxx 50 is up +0.40%. China’s Shanghai Composite Index closed down -0.79%. Japan’s Nikkei Stock Index closed up +0.29%.
The Euro Stoxx 50 today climbed to a 3-1/4 month high and is moderately higher. Better-than-expected corporate earnings results are lifting the overall market. Sage Group Plc jumped more than +6% to a record high after forecasting strong 2024 organic sales. Also, steelmakers are climbing, led by a +7% increase in Thyssenkrupp AG after reporting strong Q4 earnings. On the negative side, Kingfisher Plc dropped more than -7% after reporting weaker-than-expected Q3 sales and lowering its full-year adjusted pretax profit forecast.
China’s Shanghai Composite today closed moderately lower. Chinese artificial intelligence (AI) stocks were under pressure after Nvidia’s earnings results failed to impress. Also, property stocks fell back after rallying Tuesday when authorities drafted a list of 50 real estate companies that would be eligible for a range of financing as the government seeks to support the ailing property sector. On the positive side, Chinese internet stocks rose after Baidu and Kuaishou reported stronger-than-expected quarterly earnings. Also, Chinese obesity drugmakers rose after Novo Nordisk A/S/ said it expects shortages of Ozempic and Victoza to continue next year in Europe as demand soars for diabetes drugs that can also help with weight loss.
Japan’s Nikkei Stock Index today recovered from early losses and closed moderately higher. Strength in automakers and electronics companies led to a rebound in Japanese stocks today. Also, weakness in the yen today sparked a rally in exporter stocks. In addition, short covering emerged in Japanese stocks in late trading today ahead of Thursday’s Labor Thanksgiving holiday. On the negative side, Japanese AI hardware stocks retreated after Nvidia’s strong earnings results remained below lofty expectations.
Pre-Market U.S. Stock Movers
Nvidia (NVDA) erased a -5% decline and is up more than +1% in pre-market trading after reporting Q3 revenue of $18.12 billion, stronger than the consensus of $16.09 billion, and forecast Q4 adjusted gross margin of 75%-76%, above the consensus of 72.6%.
Microsoft (MSFT) rose nearly +1% in pre-market trading after Open AI said it would bring back Sam Altman and overhaul its board with new directors, a victory for Microsoft, which backed the company with a $10 billion stake.
Applied Materials (AMAT) gained more than +1% in pre-market trading after Redburn upgraded the stock to buy from neutral with a price target of $175.
Clorox (CLX) rose nearly +2% in pre-market trading after JPMorgan Chase upgraded the stock to neutral from underweight.
GoDaddy (GDDY) climbed more than +2% in pre-market trading after RBC Capital Markets upgraded the stock to outperform from sector perform with a price target of $124.
Deere & Co (DE) tumbled more than -5% in pre-market trading after forecasting 2024 net income of $7.75 billion-$8.25 billion, well below the consensus of $9.32 billion.
Nordstrom Inc (JWN) slid more than-1% in pre-market trading after reporting Q3 total revenue of $3.32 billion, below the consensus of $3.42 billion.
Autodesk (ADSK) dropped more than-6% in pre-market trading after forecasting 2024 adjusted EPS of $7.43-$7.49, the midpoint below the consensus of $7.47.
Guess (GES) sank more than -14% in pre-market trading after reporting Q3 EPS of 49 cents, weaker than the consensus of 61 cents, and cutting its full-year adjusted EPS forecast to $2.67-$2.74 from a previous estimate of $2.88-$3.08.
HP Inc (HPQ) fell more than -29% in pre-market trading after reporting Q4 EPS of 90 cents, right on expectations, but forecasting Q4 adjusted EPS of 76 cents-86 cents, the midpoint below the consensus of 85 cents.
Urban Outfitters (URBN) tumbled more than -7% in pre-market trading after reporting Q3 net sales of $324.4 million, below the consensus of $325.5 million.
APA Corp (APA) dropped more than -2% in pre-market trading after Citigroup downgraded the stock to neutral from buy.
Dlocal Ltd (DLO) fell more than -10% in pre-market trading after reporting Q3 EPS of 13 cents, weaker than the consensus of 15 cents.
Earnings Reports (11/22/2023)
Chico's FAS Inc (CHS), Deere & Co (DE), Infinera Corp (INFN), VMware Inc (VMW).
On the date of publication, Rich Asplund 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 solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
