December S&P 500 futures (ESZ23) are trending up +0.50% this morning as market participants geared up for a slew of U.S. economic data while also awaiting earnings results from notable cloud sector players Salesforce and Snowflake.
In Tuesday’s trading session, Wall Street’s major indexes closed in the green. PDD Holdings Inc (PDD) surged over +18% after the company reported upbeat Q3 results. Also, Boeing Co (BA) gained more than +1% after RBC Capital Markets upgraded the stock to Outperform from Sector Perform with a price target of $275. On the bearish side, Micron Technology Inc (MU) fell over -1% after the largest U.S. maker of computer memory semiconductors increased its Q1 adjusted operating expenses outlook. In addition, Morgan Stanley (MS) dropped more than -1% after Societe Generale downgraded the stock to Hold from Buy.
Economic data on Tuesday showed the U.S. CB consumer confidence index stood at 102.0 in November, stronger than expectations of 101.0. Also, the U.S. S&P/CS HPI composite - 20 n.s.a. came in at +3.9% y/y in September, weaker than expectations of +4.0% y/y.
Fed Governor Christopher Waller said Tuesday he’s “increasingly confident” that monetary policy is currently well-positioned to slow the economy and bring inflation back to the 2% target. “Inflation rates are moving along pretty much like I thought. If progress continues for several more months...three months, four months, five months…we could start lowering the policy rate just because inflation is lower,” Waller said. Also, Chicago Fed President Austan Goolsbee stated that he believed overall inflation was decreasing at a pace not observed since the 1950s. At the same time, Fed Governor Michelle Bowman suggested that the central bank would likely need to increase borrowing costs further to bring inflation down to its 2% target.
“The (Fed’s) mixed messaging is fairly normal, and it occurs every time the Fed is near the end of a cycle, as certain members of the FOMC and certain Fed governors will feel more strongly than others that it’s time to stop,” said Oliver Pursche, senior vice president at Wealthspire Advisors.
Meanwhile, U.S. rate futures have priced in a 98.9% probability of no hike at the December meeting and a 96.8% chance of no hike at the January meeting. Also, U.S. rate futures have priced in a 40.6% probability of a 25 basis point rate cut at the March FOMC meeting.
On the earnings front, notable companies like Salesforce Inc (CRM), Snowflake (SNOW), and Dollar Tree (DLTR) are set to report their quarterly figures today.
On the economic data front, investors will likely focus on the Commerce Department’s second estimate of gross domestic product (GDP), due later in the day. Economists, on average, forecast that U.S. GDP will stand at +4.9% q/q in the third quarter, compared to the second-quarter value of +2.1% q/q.
U.S. GDP Price Index will also be closely watched today. Economists foresee this figure to come in at +3.5% q/q in the third quarter, compared to the second-quarter number of +1.7% q/q.
U.S. Wholesale Inventories preliminary data will come in today. Economists expect October’s figure to be +0.1% m/m, compared to the previous number of +0.2% m/m.
U.S. Crude Oil Inventories data will be reported today as well. Economists estimate this figure to be -0.933M, compared to last week’s value of +8.701M.
In the bond markets, United States 10-year rates are at 4.291%, down -1.03%.
The Euro Stoxx 50 futures are up +0.64% this morning as investors digested the latest remarks from Federal Reserve officials as well as regional economic data while also bracing for the release of Eurozone inflation numbers later in the week. Gains in real estate and automobile stocks are leading the overall market higher. Meanwhile, the benchmark 10-year German bond yield dropped to a level not seen in over three months following data indicating a slowdown in inflation in the German state of North Rhine-Westphalia. The preliminary inflation reading for Germany will be released later in the session. In corporate news, Siltronic Ag (WAF.D.DX) climbed more than +7% after Berenberg upgraded the German chip equipment supplier to Buy from Hold.
Spain’s CPI (preliminary) and Eurozone’s Consumer Confidence data were released today.
The Spanish November CPI has been reported at -0.4% m/m and +3.2% y/y, weaker than expectations of +0.1% m/m and +3.7% y/y.
Eurozone November Consumer Confidence stood at -16.9, in line with expectations.
Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.56%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.26%.
China’s Shanghai Composite closed lower today as Meituan’s cautious fourth-quarter guidance sparked concerns among investors regarding the outlook for the country’s consumer spending recovery. Meituan plunged over -12% after the food-delivery giant warned that growth in its core meal delivery business would decelerate in the fourth quarter, coupled with an increase in promotional spending. Meanwhile, analysts do not anticipate a quick turnaround in the property market in 2024 despite increased policy support. “Homebuyers’ sentiments remain weak amid uncertain employment and income prospects,” Fitch Ratings said in a report on Wednesday. On the ground of this, Hong Kong-listed mainland developers slumped. Investor attention is currently centered on the upcoming release of the Chinese purchasing manager indexes for November, scheduled for Thursday.
Japan’s Nikkei 225 Stock Index closed lower today as investors continued to lock in profits following last week’s rally. Financial stocks led the declines on Wednesday, with Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group falling over -2%. Meanwhile, the 10-year Japanese government bond yield fell to the lowest level in nearly three months on Wednesday following the decline in U.S. Treasury yields spurred by dovish comments from Fed Governor Christopher Waller. In other news, Bank of Japan board member Seiji Adachi stated on Wednesday that although risks to Japan’s inflation were tilted to the upside, it was too early to initiate discussions about ending the central bank’s negative interest rate policy. “It is appropriate to patiently continue monetary easing at this point,” Adachi said. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +5.70% to 17.05.
Pre-Market U.S. Stock Movers
NetApp Inc (NTAP) soared over +12% in pre-market trading after the data infrastructure company reported upbeat Q2 results and boosted its FY24 forecast.
Workday Inc (WDAY) climbed more than +8% in pre-market trading after the back-office software provider posted better-than-expected Q3 results and raised its full-year subscription revenue guidance.
Leslies Inc (LESL) tumbled over -14% in pre-market trading after the company reported mixed Q4 results and issued below-consensus FY24 guidance.
Las Vegas Sands Corp (LVS) slumped more than -5% in pre-market trading after announcing a proposed secondary public offering of $2 billion of shares held by top shareholder Miriam Adelson.
Jabil Circuit Inc (JBL) slid over -6% in pre-market trading after the company lowered its Q1 revenue guidance.
Airbnb Inc (ABNB) dropped about -1% in pre-market trading after Jefferies downgraded the stock to Hold from Buy.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Wednesday - November 29th
Salesforce Inc (CRM), Synopsys (SNPS), Snowflake (SNOW), Dollar Tree (DLTR), Hormel Foods (HRL), Okta (OKTA), Nutanix (NTNX), Donaldson (DCI), Bilibili (BILI), PVH (PVH), Ncino (NCNO), Arrowhead Pharma (ARWR), Patterson (PDCO), Credo Technology Holding (CRDO), Construction Partners (ROAD), Foot Locker (FL), Vestis (VSTS), Victoria’s Secret Co (VSCO), La-Z-Boy (LZB), Petco Health and Wellness (WOOF), Noah (NOAH), Farfetch A (FTCH), Zhihu (ZH).
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