December S&P 500 E-Mini futures (ESZ24) are trending down -0.02% this morning, taking a breather after the benchmark index finished with its 41st record close this year, while investors looked ahead to remarks from a Federal Reserve official as well as an earnings report from semiconductor giant Micron.
In yesterday’s trading session, Wall Street’s main stock indexes ended in the green, with the benchmark S&P 500 and blue-chip Dow notching new all-time highs and the tech-heavy Nasdaq 100 posting a 2-1/4 month high. Nvidia (NVDA) climbed about +4% following a report from Barron’s that the company’s chief executive officer, Jensen Huang, was done selling his shares. Also, stocks exposed to China surged after Beijing announced a slew of stimulus measures, with JD.com (JD) soaring more than +13% and PDD Holdings (PDD) advancing over +11% to lead gainers in the Nasdaq 100. In addition, Uber Technologies (UBER) rose more than +3% after Raymond James resumed coverage of the stock with a Strong Buy rating and a price target of $90. On the bearish side, Visa (V) slumped over -5% and was the top percentage loser on the Dow after the U.S. Justice Department filed a lawsuit against the company, alleging that it illegally monopolized the U.S. debit card market.
Economic data released on Tuesday showed that the U.S. Conference Board’s consumer confidence index unexpectedly fell to 98.7 in September, missing the 103.9 consensus and marking the biggest drop since August 2021. Also, the U.S. July S&P/CS HPI Composite - 20 n.s.a. eased to +5.9% y/y from +6.5% y/y in June, in line with expectations. In addition, the U.S. Richmond Fed manufacturing survey unexpectedly fell to a 4-1/3 year low of -21 in September, weaker than expectations of -13.
“We got a little bit of cold water with the consumer confidence number [yesterday morning] that might add to concerns the Fed may have been a little late,” said Michael James, senior vice president of equity trading at Wedbush Securities.
Meanwhile, Fed Governor Michelle Bowman stated Tuesday that the central bank should reduce interest rates at a “measured” pace, noting that inflationary risks persist and the labor market has not shown significant weakening. “Turning to the risks to achieving our dual mandate, I continue to see greater risks to price stability, especially while the labor market continues to be near estimates of full employment,” Bowman said.
U.S. rate futures have priced in a 41.8% probability of a 25 basis point rate cut and a 58.2% chance of a 50 basis point rate cut at the next FOMC meeting in November.
On the earnings front, notable companies like Micron Technology (MU), Cintas (CTAS), and Jefferies Financial (JEF) are set to report their quarterly figures today.
On the economic data front, investors will focus on U.S. New Home Sales data, which is set to be released in a couple of hours. Economists, on average, forecast that August New Home Sales will stand at 699K, compared to the previous figure of 739K.
U.S. Building Permits data will also be released today. Economists expect the August figure to be 1.475M, compared to 1.406M in July.
U.S. Crude Oil Inventories data will be reported today as well. Economists estimate this figure to be -1.300M, compared to last week’s value of -1.630M.
In addition, market participants will be anticipating a speech from Fed Governor Adriana Kugler.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 3.750%, up +0.32%.
The Euro Stoxx 50 futures are down -0.38% this morning, giving back some of the previous session’s gains, which were spurred by China’s comprehensive monetary stimulus package. Technology and energy stocks lost ground on Wednesday. Data released Wednesday by the statistics agency Insee showed that the consumer confidence indicator in France increased in September to its highest level since February 2022. Meanwhile, European Central Bank governing council member Klaas Knot stated Tuesday that the ECB is expected to continue to lower interest rates at least until the first half of 2025, aiming for a level between 2% and 3%. “I would expect us to continue to gradually reduce interest rates in the coming time, also in the first half of 2025,” Knot said in an interview with the Dutch TV program Nieuwsuur. In corporate news, SAP Se (SAP.D.DX) slid over -3% following news that the U.S. Justice Department is investigating the company and others for allegedly conspiring to overcharge government agencies over a decade.
France’s Consumer Confidence data was released today.
The French September Consumer Confidence arrived at 95, stronger than expectations of 92.
Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed up +1.16%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.19%.
China’s Shanghai Composite Index closed higher today as investors remained optimistic that Beijing’s comprehensive stimulus package would spark a market recovery and jumpstart the country’s sluggish economy. Brokers and bank stocks led the gains on Wednesday. The offshore yuan advanced past 7 per dollar for the first time since May 2023. China’s central bank on Wednesday reduced the interest rate on its one-year policy loans by the largest margin ever recorded, initiating a sweeping program to restore confidence in the world’s second-largest economy. The People’s Bank of China cut the interest rate on its 1-year medium-term lending facility to 2.0% from 2.3%, while also injecting 300 billion yuan worth of liquidity into the country’s financial system. However, Wednesday’s move was no surprise and had been signaled in advance by China’s central bank governor, Pan Gongsheng. In a press briefing on Tuesday, Pan announced that the seven-day reverse repurchase rate, China’s main policy rate, would be reduced from 1.7% to 1.5%, lowering the borrowing costs of PBOC’s medium-term lending facility by 30 basis points. Meanwhile, analysts cautioned that the recent measures might only grant China a reprieve given the magnitude of the challenges confronting the economy. In corporate news, Liaoning Shenhua Holdings gained over +3% after the company’s chairman and president, Li Jingwei, stepped down due to job changes.
Japan’s Nikkei 225 Stock Index ended lower today, snapping a 4-session winning streak, likely due to position adjustments as investors awaited new catalysts. Financial and healthcare stocks led the declines on Wednesday. Bank of Japan data released Wednesday showed that a key indicator of Japan’s service-sector inflation remained steady in August from the previous month, reinforcing the central bank’s view that increasing wages are prompting more firms to offset higher labor costs with price increases. Meanwhile, BOJ Governor Kazuo Ueda stated on Tuesday that the central bank could take its time analyzing market and global economic developments when setting monetary policy, indicating that it was in no hurry to raise interest rates further. In corporate news, Nippon Shinyaku surged over +14% after announcing that Johnson & Johnson received approval for the drug “Yuvanci” in Japan, along with news that commercialization partner Capricor Therapeutics intends to file for full FDA approval of “deramiocel.” Investors are now turning their attention to the minutes of the central bank’s last meeting, due on Thursday, and Tokyo’s inflation data, due on Friday, to further guide their expectations for the BOJ’s monetary policy. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -6.95% to 24.77.
The Japanese August Corporate Services Price Index arrived at +2.7% y/y, stronger than expectations of +2.6% y/y.
Pre-Market U.S. Stock Movers
KB Home (KBH) slumped over -6% in pre-market trading after the homebuilder reported weaker-than-expected Q3 EPS.
Worthington Enterprises (WOR) slid more than -4% in pre-market trading after the company posted downbeat Q1 results.
DoorDash (DASH) rose over +1% in pre-market trading after KeyBanc upgraded the stock to Overweight from Sector Weight with a $177 price target.
Hewlett Packard Enterprise (HPE) gained more than +2% in pre-market trading after Barclays upgraded the stock to Overweight from Equal Weight with a price target of $24.
Ford (F) fell over -2% in pre-market trading after Morgan Stanley downgraded the stock to Equal Weight from Overweight.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Wednesday - September 25th
Micron (MU), Cintas (CTAS), Jefferies Financial (JEF), H B Fuller (FUL), Concentrix (CNXC), Worthington Steel (WS).
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