Morning Markets
December E-Mini S&P 500 futures (ESZ23) are up +0.47% at a 3-3/4 month high, and Dec Nasdaq 100 E-Mini futures (NQZ23) are up +0.61%.
Stock index futures this morning are moderately higher after Q3 GDP was revised higher and the Q3 core deflator was revised lower, reinforcing speculation the U.S. economy is continuing to grow at a moderate pace with easing price pressures that will allow the Fed to end its interest rate hiking campaign. Lower bond yields today are also supportive for stocks, with the 10-year T-note yield falling to a 2-1/2 month low.
On the positive side for stocks, Foot Locker jumped more than +8% in pre-market trading after reporting Q3 comparable sales fell less than expected and raised its full-year sales forecast. Also, Workday is up more than +8% after reporting Q3 revenue above consensus and raising its 2024 subscription revenue forecast. In addition, General Motors is up more than +7% after saying it will boost its dividend by 33% and implement a $10 billion stock buyback program.
On the negative side, Dollar Tree is down more than -2% after reporting Q3 adjusted EPS below consensus. Also, Hormel Foods is down more than -2% after reporting weaker-than-expected Q4 net sales. In addition, Jabil Inc. is down more than -7% after forecasting 2024 revenue well below consensus.
U.S. Q3 GDP was revised upward by +0.3 to +5.2% (q/q annualized), stronger than expectations of +5.0%. The Q3 GDP price index was revised upward by +0.1 to 3.6%, stronger than expectations of no change at 3.5%, but the Q3 core PCE deflator was revised downward by -0.1 to 2.3%, weaker than expectations of no change at 2.4%.
The markets are discounting a 1% chance for a +25 bp rate hike at the next FOMC meeting on Dec 12-13 FOMC and a 0% chance for that +25 bp rate hike at the following FOMC meeting on Jan 30-31, 2024. The markets are then discounting a 46% chance for a -25 bp rate cut at the March 19-20, 2024, FOMC meeting and a 100% 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 dropped to a 2-1/2 month low of 4.249% and is down -0.8 bp at 4.313%. The 10-year German bund yield fell to a 4-month low of 2.420% and is down -4.6 bp at 2.451%. The 10-year UK gilt yield is down -4.9 bp at 4.124%.
Overseas stock markets are mixed. The Euro Stoxx 50 is up +0.62%. China’s Shanghai Composite Index closed down -0.56%. Japan’s Nikkei Stock Index closed down -0.26%.
The Euro Stoxx 50 today rallied to a 3-1/2 month high and is moderately higher. Market sentiment improved in Europe, which spurred the buying of risk assets after Eurozone Nov economic confidence rose more than expected to a 4-month high. Also, easing price pressures in Europe sparked a rally in government bonds and knocked the 10-year German bund yield down to a 4-month low. Spain's Nov CPI unexpectedly eased, and German CPI in Nov rose less than expected at the smallest pace of increase in nearly 2-1/2 years, bolstering speculation the ECB was finished raising interest rates. On the negative side, European bank stocks underperformed on negative carryover from a slide in Asian bank stocks.
ECB Governing Council member Stournaras cautioned against premature bets on when the ECB will lower interest rates, saying, "The current numbers betting on a rate cut in April seem a bit optimistic."
Eurozone Nov economic confidence rose +0.3 to a 4-month high of 93.8, stronger than expectations of 93.6.
German Nov CPI (EU harmonized) eased to +2.3% y/y from +3.0% y/y in Oct, better than expectations of +2.5% y/y and the smallest pace of increase in nearly 2-1/2 years.
Spain Nov CPI (EU harmonized) unexpectedly eased to +3.2% y/y from +3.5% y/y in Oct, better than expectations of an increase to +3.7% y/y.
China’s Shanghai Composite today closed moderately lower. Weakness in Chinese technology stocks weighed on the overall market. Also, an -11% fall in Meituan was a drag on the overall market after the company warned that its main meal delivery business would slow this quarter. On the positive side, suppliers of PDD Holdings rallied after the company reported stronger-than-expected Q3 earnings. Also, Chinese high-voltage fast-charging related stocks rose after Huawei Technologies commented on demand for the technology.
Japan’s Nikkei Stock Index today fell to a 2-week low and finished moderately lower. A rally in the yen to a 2-1/2 month high against the dollar today undercut Japanese exporter stocks. Apparel makers retreated today, led by a -3 % fall in Asics after CLSA downgraded the stock. Also, a slide in government bond yields today weighed on Japanese bank stocks as the 10-year JGB bond yield stumbled to a 2-1/2 month low. On the positive side, BOJ member Adachi indicated his preference to wait until at least April before the BOJ exits its ultra-easy monetary policy, saying, “We need to continue with easing patiently, and we’re not at a phase to discuss an exit strategy, given eh current economy and inflation.”
Pre-Market U.S. Stock Movers
Foot Locker (FL) jumped more than +8% in pre-market trading after reporting Q3 comparable sales fell -8%, a smaller decline than the consensus of -9.77%, and raised its full-year sales forecast to a decline of -8.0% to -8.5% from a previous estimate of -8% to -9%.
CrowdStrike Holdings (CRWD) climbed more than +2% in pre-market trading after reporting Q3 revenue of $786 million, stronger than the consensus of $777.4 million, and raised its 2024 revenue forecast to $3.05 billion from a previous forecast of $3.03 billion-$3.04 billion, above the consensus o $3.04 billion.
General Motors (GM) rallied more than +8% in pre-market trading after saying it would boost its dividend by 33% and implement a $10 billion stock buyback program.
Workday (WDAY) jumped more than+8% in pre-market trading after reporting Q3 revenue of $1.87 billion, better than the consensus of $1.85 billion, and raised its 2024 subscription revenue forecast to $6.60 billion from a prior estimate of $6.57 billion-$6.59 billion.
NetApp (NTAP) surged more than +11% in pre-market trading after reporting Q2 adjusted EPS of $1.58, stronger than the consensus of $1.39, and raising its 2024 adjusted EPS forecast to $6.05-$6.25 from a previous estimate of $5.65-$5.85, above the consensus of $5.73.
Fluence Energy (FLNC) surged more than +18% in pre-market trading after reporting Q4 total revenue of $673 million, well above the consensus of $510.5 million, and forecasting 2024 total revenue of $2.7 billion-$3/3 billion, the midpoint above the consensus of $2.78 billion.
Las Vegas Sands (LVS) tumbled more than -4% in pre-market trading on news that Miriam Adelson is selling $2 billion of stock in the company.
Dollar Tree (DLTR) dropped more than -2% in pre-market trading after reporting Q3 adjusted EPS of 97 cents, weaker than the consensus of $1.01.
Hormel Foods (HRL) fell more than -2% in pre-market trading after reporting Q4 net sales of $3.20 billion, below the consensus of $3.26 billion.
Jabil Inc (JBL) sank more than -7% in pre-market trading after forecasting 2024 revenue of about $31 billion, weaker than the consensus of $33.67 billion.
Patterson Cos (PDCO) tumbled more than -5% in pre-market trading after reporting Q2 net sales of $1.65 billion, weaker than the consensus of $1.70 billion.
Petco Health & Wellness Co (WOOF) plunged more than -11% in pre-market trading after reporting Q3 net sales of $1.49 billion, below the consensus of $1.51 billion.
Earnings Reports (11/29/2023)
Dollar Tree Inc (DLTR), Donaldson Co Inc (DCI), Five Below Inc (FIVE), Hormel Foods Corp (HRL), nCino Inc (NCNO), Nutanix Inc (NTNX), Okta Inc (OKTA), Petco Health & Wellness Co Inc (WOOF), Pure Storage Inc (PSTG), PVH Corp (PVH), Salesforce Inc (CRM), Snowflake Inc (SNOW), Synopsys Inc (SNPS), Vestis Corp (VSTS), Victoria's Secret & Co (VSCO).
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.
