March S&P 500 E-Mini futures (ESH24) are up +0.50%, and March Nasdaq 100 E-Mini futures (NQH24) are up +0.67% this morning, rebounding from the previous day’s sell-off, while market participants geared up for a new round of U.S. economic data and awaited an earnings report from footwear and sports apparel giant Nike.
In Wednesday’s trading session, Wall Street’s major indices closed in the red. FedEx Corporation (FDX) slumped over -12% and was the top percentage loser on the benchmark S&P 500 after the Memphis-based shipping giant posted downbeat Q2 results and slashed its full-year revenue forecast. Also, Warner Bros Discovery Inc (WBD) plunged more than -5% following a report from Axios that the company is engaged in discussions with Paramount Global about a potential merger. In addition, General Mills Inc (GIS) fell over -3% after the Cheerios cereal maker lowered its full-year organic sales growth forecast. On the bullish side, Alphabet Inc (GOOGL) rose more than +1% following a report from The Information stating that the tech giant could restructure its ad sales unit to enhance efficiency and leverage automation.
Economic data on Wednesday showed that the U.S. CB consumer confidence index rose to a 5-month high of 110.7 in December, stronger than expectations of 103.8. Also, U.S. November existing home sales unexpectedly rose +0.8% m/m to 3.82M, stronger than expectations of 3.78M.
Philadelphia Fed President Patrick Harker said Wednesday that the U.S. central bank should begin to reduce its policy rate, albeit not immediately. “It’s important that we start to move rates down. We don’t have to do it too fast, and we’re not going to do it right away,” Harker said in a local radio interview.
Meanwhile, U.S. rate futures have priced in a 12.4% chance of a 25 basis point rate cut at January’s monetary policy meeting and a 71.1% chance of a 25 basis point rate cut at the March meeting.
On the earnings front, notable companies like Nike (NKE), Paychex (PAYX), Carnival Corp (CCL), and CarMax (KMX) are set to report their quarterly figures today.
Today, all eyes are focused on the final U.S. GDP reading in a couple of hours. Economists, on average, forecast that U.S. GDP will stand at +5.2% q/q in the third quarter, compared to the second-quarter value of +2.1% q/q.
Also, investors will likely focus on the U.S. GDP Price Index, which came in at +1.7% q/q in the second quarter. Economists anticipate the third-quarter figure to be +3.5% q/q.
The U.S. Philadelphia Fed Manufacturing Index will also be closely watched today. Economists foresee this figure to stand at -3.0 in December, compared to the previous value of -5.9.
U.S. Initial Jobless Claims data will be reported today as well. Economists anticipate this figure to be 214K, compared to last week’s value of 202K.
In the bond markets, United States 10-year rates are at 3.881%, up +0.08%.
The Euro Stoxx 50 futures are down -0.44% this morning following overnight Wall Street losses as investors took some profits ahead of the long Christmas weekend. Losses in real estate and automobile stocks are leading the overall market lower. Meanwhile, investors are now turning their attention to the final estimate of U.S. third-quarter GDP and the weekly jobless claims report later in the day for additional insights into the global interest rate trajectory. In corporate news, Commerzbank Ag (CBK.D.DX) rose about +2% following approval from the European Central Bank for the German lender to repurchase up to 600 million euros ($656.88 million) in shares.
The European economic data slate is mainly empty on Thursday.
Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.57%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -1.59%.
China’s Shanghai Composite closed higher today after data indicated signs of recovery in the country’s struggling property market. New energy, artificial intelligence, and tourism stocks led the gains on Thursday. Mainland developers listed in Hong Kong also gained ground following an HSBC Holdings Plc report on Wednesday, revealing a 25.7% surge in the transaction area of Shanghai’s second-hand homes from December 15th to December 18th. During the same period, the average daily sales of new home units in the city increased by almost 41%, while Beijing experienced a notable surge of 122%. Also, the report said that new home sales in 30 major cities rose by 6% compared to the previous week, with growth primarily led by sales in top cities. Meanwhile, the Wall Street Journal reported on Thursday that the Biden administration is considering increasing tariffs on certain Chinese goods, including electric vehicles, in an attempt to reduce dependence on Asia’s largest economy and support the U.S. clean-energy industry, citing people familiar with the matter.
“If monetary policy turns loose early next year, we can expect a major rebound. The sustainability of the rebound will mainly depend on the recovery and liquidity situation,” said Zhang Chi, an analyst at Sinolink Securities.
Japan’s Nikkei 225 Stock Index closed sharply lower today following overnight losses on Wall Street and a sell-off in index heavyweight Toyota Motor Corp. All sectors of the Nikkei 225 ended in the red, with consumer cyclical and healthcare stocks experiencing the largest declines. Meanwhile, Japan’s government revised its economic growth projections for the current fiscal year slightly higher on Thursday, citing expectations of stronger external demand offsetting weak domestic consumption. In the semiannual economic outlook, the projected real economic growth rate for the fiscal year 2023/24 is now estimated at 1.6%, an increase from the 1.3% forecasted six months ago. Also, the real economic growth rate is anticipated to experience a slight deceleration to 1.3% in the next fiscal year beginning in April, a modest increase from the earlier estimate of 1.2%. In addition, nominal gross domestic product is expected to increase by 5.5% in the current fiscal year and 3.0% in the following year. In corporate news, Toyota Motor Corp plunged over -4% after officials raided the offices of its subsidiary, Daihatsu Motor Co., in connection with false safety tests, and the automaker recalled 1 million cars in the U.S. due to an airbag sensor glitch. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +3.17% to 17.24.
Pre-Market U.S. Stock Movers
Micron Technology Inc (MU) climbed over +6% in pre-market trading after the memory producer reported upbeat Q1 results and issued above-consensus Q2 guidance.
Immunovant Inc (IMVT) soared more than +7% in pre-market trading following the announcement of positive initial Phase 2 results for batoclimab in patients with Graves’ disease.
BlackBerry Ltd (BB) slumped over -5% in pre-market trading after the company reported mixed Q3 results and offered weak Q4 revenue guidance.
Salesforce Inc (CRM) rose about +2% in pre-market trading after Morgan Stanley upgraded the stock to Overweight from Equal Weight with a price target of $350.
Spotify Technology SA (SPOT) gained more than +2% in pre-market trading after Pivotal Research upgraded the stock to Buy from Hold with a price target of $265.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Thursday - December 21st
Nike (NKE), Cintas (CTAS), Paychex (PAYX), Carnival Corp (CCL), CarMax (KMX), AAR (AIR), Worthington Steel (WS), Apogee (APOG), Mission Produce (AVO), Limoneira (LMNR).
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