December Nasdaq 100 E-Mini futures (NQZ23) are trending up +0.12% this morning as U.S. Treasury yields continued to fall, with investors digesting earnings from chip designer Nvidia and bracing for a slew of U.S. economic data ahead of the U.S. Thanksgiving holiday.
NVIDIA Corporation (NVDA) fell about -1% in pre-market trading after the semiconductor giant reported upbeat Q3 results and provided Q4 revenue guidance that topped average analysts’ estimates but failed to meet the high expectations of shareholders who have bet heavily on an artificial intelligence boom. Also, the company said it anticipates a significant decrease in sales in China due to recent export control measures imposed by the Biden Administration. Nvidia noted that this decline will be offset by growth in other regions.
The minutes of the Federal Open Market Committee’s Oct. 31-Nov. 1 meeting leaned slightly hawkish, with all officials expressing the intention to “proceed carefully” and make policy decisions at every meeting based on incoming economic data. The minutes showed FOMC members’ inclination to keep rates at restrictive levels for “some time” amid signs that inflation continues to cool, yet they refrained from indicating an imminent prospect of rate cuts. “In discussing the policy outlook, participants continued to judge that the stance of monetary policy needed to be kept sufficiently restrictive to return inflation to the Committee’s 2 percent objective over time,” according to the FOMC minutes released Tuesday.
In Tuesday’s trading session, Wall Street’s major indexes closed lower. Jacobs Engineering Group Inc (J) slumped over -8% after the company reported weaker-than-expected quarterly profit and provided a below-consensus FY24 adjusted EBITDA forecast. Also, Lowe’s Companies Inc (LOW) slid more than -3% after the home improvement retailer posted weaker-than-anticipated Q3 same-store sales and cut its full-year adjusted revenue guidance. In addition, Zions Bancorporation (ZION) fell over -4% after Citigroup downgraded the stock to Neutral from Buy. On the bullish side, Agilent Technologies Inc (A) soared more than +8% and was the top percentage gainer on the benchmark S&P 500 after the provider of instruments to laboratories reported upbeat Q4 results. Also, Dick’s Sporting Goods Inc (DKS) gained over +2% after posting better-than-expected Q3 results and boosting its annual comparable sales forecast.
Economic data on Tuesday showed U.S. existing home sales fell -4.1% m/m to a 13-year low of 3.79M in October, weaker than expectations of 3.90M.
Meanwhile, U.S. rate futures have priced in a 94.8% probability of no hike at the December FOMC meeting and a 94.8% chance of no hike at January’s monetary policy meeting. Also, U.S. rate futures have priced in a 26.6% probability of a 25 basis point rate cut at the March meeting.
Today, all eyes are focused on U.S. Core Durable Goods Orders data in a couple of hours. Economists, on average, forecast that October Core Durable Goods Orders will come in at +0.1% m/m, compared to the previous value of +0.5% m/m.
Also, investors will likely focus on U.S. Durable Goods Orders data, which stood at +4.7% m/m in September. Economists foresee the October figure to be -3.1% m/m.
U.S. Initial Jobless Claims data will be reported today. Economists foresee this figure to stand at 225K, compared to the previous figure of 231K.
The U.S. Michigan Consumer Sentiment Index will come in today. Economists expect November’s figure to be 60.4, compared to 63.8 in October.
U.S. Crude Oil Inventories data will be reported today as well. Economists estimate this figure to be +1.160M, compared to last week’s value of +3.592M.
In the bond markets, United States 10-year rates are at 4.395%, down -0.52%.
The Euro Stoxx 50 futures are up +0.16% this morning as market participants digested some positive corporate news as well as the minutes from the last meeting of the U.S. Federal Reserve. Gains in real estate stocks are leading the overall market higher. In corporate news, Sage Group Plc (SGE.LN) surged over +10% after the software company reported an 18% increase in full-year underlying operating profit. Also, Thyssenkrupp Ag (TKA.D.DX) gained about +7% after reporting full-year results with “strong” free cash flow. At the same time, Kingfisher Plc (KGF.LN) plunged more than -6% after the home improvement retailer lowered its annual profit forecast for the second time in three months.
The European economic data slate is mainly empty on Wednesday.
Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.79%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.29%.
China’s Shanghai Composite today closed lower as investors awaited more cues regarding the promised stimulus measures from Beijing. New energy stocks led the declines on Wednesday. According to a Reuters report, advisors to the Chinese government will recommend economic growth targets for 2024 in the range of 4.5% to 5.5% during an annual meeting of policymakers, as Beijing aims to create jobs and uphold long-term development objectives. The advisers noted that achieving these targets would necessitate Beijing to enhance fiscal stimulus. The proposals will be presented next month at the ruling Communist Party’s annual Central Economic Work Conference, which deliberates on policy plans and the economic outlook for the world’s second-largest economy. Meanwhile, the offshore yuan steadied after a previous advance following China’s central bank setting the currency fixing at its strongest level since June. In corporate news, Hong Kong shares of Baidu Inc climbed over +4% after the company posted solid Q3 results and flagged a limited impact from U.S. chip curbs against China.
Japan’s Nikkei 225 Stock Index closed slightly higher today as a weaker yen lifted export-oriented stocks. Utilities, healthcare, and materials stocks led the gains on Wednesday. Export-heavy automobile stocks also advanced, with Subaru Corp gaining over +2% and Isuzu Motors Ltd rising nearly +2%. However, chip stocks underperformed amid weakness in Nvidia’s shares, with chip-testing equipment maker Advantest plunging over -4%. Meanwhile, Japanese government bond yields rebounded from multi-month lows on Wednesday, driven by the Bank of Japan’s decision to reduce the purchase amounts of certain bonds during its regular buying operations. In other news, Japan’s government on Wednesday reduced its economic outlook for November in its first such downgrade in 10 months due to subdued demand impacting both capital spending and consumer expenditure. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -2.80% to 17.37.
Pre-Market U.S. Stock Movers
NVIDIA Corporation (NVDA) fell about -1% in pre-market trading after the semiconductor giant reported upbeat Q3 results and provided Q4 revenue guidance that topped average analysts’ estimates but failed to meet the high expectations of shareholders who have bet heavily on an artificial intelligence boom.
Guess? Inc (GES) slumped over -15% in pre-market trading after the company reported downbeat Q3 results and slashed its FY24 guidance.
Dlocal Ltd (DLO) plunged more than -12% in pre-market trading after the company posted weaker-than-expected Q3 results.
HP Inc (HPQ) fell over -1% in pre-market trading after reporting weaker-than-anticipated Q4 sales and providing soft Q1 guidance.
Urban Outfitters Inc (URBN) slid more than -6% in pre-market trading despite reporting better-than-expected Q3 results.
Virgin Galactic Holdings Inc (SPCE) dropped over -4% in pre-market trading after Morgan Stanley downgraded the stock to Underweight from Equal Weight.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Wednesday - November 22nd
Deere&Company (DE), Ehang (EH), Gaotu Techedu DRC (GOTU), Lexinfintech (LX), Jiayin (JFIN), Baozun Inc (BZUN).
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