Five things you need to know before the market opens on Thursday December 1:
1. -- Stock Futures Drift Lower After Powell-Induced Rally
U.S. equity slipped lower Thursday, following on from one of the strongest rallies on Wall Street in months, as investors looked to a key inflation reading that could add weight to a long-awaited clarification on rate hikes from Fed Chairman Jerome Powell.
Powell set markets alight yesterday during a speech at the Brookings Institution in Washington, where he said that the central bank could consider smaller rate hikes, likely as early as December, as it monitors the impact of its inflation fight on the broader economy.
"Monetary policy affects the economy and inflation with uncertain lags, and the full effects of our rapid tightening so far are yet to be felt," Powell said. "Thus, it makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down.
The remarks, as well as his suggestion that the Fed could execute a so-called 'soft landing' for the economy that includes slowing inflation while avoid recession, triggered a sharp turnaround in stocks yesterday, with the S&P 500 rising 3.09% to close above its 200-day moving average -- a key measure of performance for technical analysts -- for the first time since early April.
Traders are also re-setting assumptions for the Fed's next policy meeting, which ends on December 14, and are now pricing in an 81.8% chance of a 50 basis point rate hike, an increase that would take the Fed Funds rate to a range of between 4.25% and 4.5%.
The U.S. dollar index extended its retreat in overnight trading, falling another 0.39% to 105.535, while benchmark 10-year notes were holding firm at 3.629% following yesterday's 9 basis point decline.
Investors will likely focus their attention on the release of PCE Price Index data for the month of October, set for 8:30 am Eastern time, to consolidate Powell's remarks. Economists are looking for the core deflator, the Fed's preferred inflation gauge, to ease to 0.3%, with modestly higher readings for spending and incomes.
Heading into the start of the trading day on Wall Street, futures tied to the S&P 500 are priced for a modest 9 point opening bell dip while those linked to the Dow Jones Industrial Average are indicating a 70 point pullback. The tech-heavy Nasdaq is priced for a 40 point decline.
Overnight in Asia, reports of planned changes in China's Covid policies, including an allowance for home quarantine and reduced mass testing, revived hopes of a broader re-opening in the new year and lifted stocks in both Shanghai and elsewhere.
The region-wide MSCI ex-Japan index was marked 1.58% higher heading into the close of trading while Europe's Stoxx 600 rose 0.66% in early Frankfurt trading as part of a follow-on rally to last night's close on Wall Street.
2. -- Salesforce Slumps As Co-CEO Steps Down, Clouding Q3 Earnings Beat
Salesforce (CRM) shares slumped lower in pre-market trading after it said co-CEO Bret Taylor will leave the enterprise software group, clouding a firmer-than-expected third quarter earnings report.
Taylor, who had been with Salesforce for the past six years, will leave the group on January 31, leaving Marc Benioff as the sole CEO and chairman.
For the three months ending in October, Salesforce posted a Street-beating bottom line of $1.40 per share as demand for its work-flow solutions remained solid, with sales rising 14% from last year to $7.84 billion.
Salesforce repeated its forecast for full-year revenues in the region of $30.9 to $31.00 billion with non-GAAP earnings are expected to come in between $4.92 to $4.94 per share, a 19 cent bump from its August forecast.
Salesforce shares were marked 6.86% lower in pre-market trading to indicate an opening bell price of $149.25 each.
3. -- Costco Slides After Softer November Sales Data
Costco Wholesale (COST) shares moved lower in pre-market trading after the bulk-discount retailer reported weaker-than-expected November sales
Costco said sales for the four weeks ending on November 27 rose 5.7% from last year to $19.17 billion, a sharply slower rate than the 7.7% pace recorded over the month of October and the 10.1% advance the group booked in September.
Costco will publish earnings for the three months ending in November, its fiscal first quarter, on December 8, with investors looking for a bottom line of $3.12 per share on overall revenues of $53.92 billion.
Costco shares were marked 2.9% lower in pre-market trading to indicate an opening bell price of $523.50 each.
4. -- Five Below Surges After Q3 Earnings Beat, Solid Outlook
Five Below (FIVE) shares surged higher in pre-market trading after the discount-focused retailer posted stronger-than-expected third quarter earnings and noted the sales continued to accelerate over the final weeks of the period.
Five Below, which recently began selling items for as much as $10, said said earnings for the three months ending in October fell 32% from last year to 29 cents per share, topping Street forecasts by 15 cents, as revenues rose 6.2% to $645 million.
The solid momentum, which contrasts many of its retail-sector rivals, allowed Five Below to boost its full-year profit forecast to between $2.97 and $3.02 per share, with revenues coming in just over $3 billion.
Five Below shares were marked 8.95% higher in pre-market trading to indicate an opening bell price of $175.25 each.
5. -- General Electric
General Electric (GE) shares edged higher in pre-market trading after the industrial icon issued final approval of its plans to spin-off its healthcare division into a stand-alone public company.
GE shareholders will receive one share of GE HealthCare for every three shares of the main group they own, with the distribution set to take place after the close of trading on January 3. The following day, GE said, GE HealthCare shares will debut on the Nasdaq under the ticker symbol GEHC.
GE Vernova, the group's power and renewables division, will likely spun-out into the public markets through a tax-free deal in 2024. That will leave GE Aerospace as the final piece of the group's breakup, which will be run by CEO Larry Culp. Shares in the group will continue to trade on the New York Stock Exchange.
GE shares were marked 0.43% higher in pre-market trading to indicate an opening bell price of $86.34 each.
