Five things you need to know before the market opens on Friday December 9:
1. -- Stock Futures Higher With Fed Decision In Sight
U.S. equity moved cautiously higher Friday as traders looked to close out a difficult week highlight by a sharp pullback in Treasury yields and added concerns over a near-term recession.
Stocks managed to snap a four-day losing streak last night, with the S&P 500 closing 0.75% higher in New York but settling just under the 4,000 point mark, a level that keeps its month-to-date decline at around 2.9%.
The gains were tempered, however, by a sharply inverted Treasury yield curve, where the gap between 3-month bills and 10-year notes, pegged at around 80 basis points, the steepest since 2001 and a worrying harbinger of recession risks.
Investors are now focused on earnings prospects as they largely neutralize the Federal Reserve's rate hike plans -- which are expected to lift the benchmark Fed Funds rate to a range of between 5% and 5.25% by the spring of next year -- and focus on slowing inflation dynamics in the world's largest economy.
To that end, traders are likely to closely-track today's factory gate inflation reading for the month of November, scheduled for 8:30 am Eastern time, as well as the University of Michigan's consumer sentiment survey 90 minutes later.
Overnight in Asia, weakening inflation data from China underscored the economic damage caused by Beijing's 'zero Covid' health policies, many of which are being loosened over the coming weeks, with factory gate prices contracting for a second consecutive month in November.
The anticipation of a boost from policymakers next year, aimed at reviving prospects in the world's second-largest economy, lifted China stocks into the close of trading and carried the MSCI ex-Japan benchmark to a solid 1.20% gain for the session.
In Europe, the Stoxx 600 was marked 0.21% higher, with gains blunted in part by caution ahead of next week's Federal Reserve rate decision on Wednesday and expectations of a hawkish follow-up from the European Central Bank on Thursday, when policymakers are likely to lift their benchmark refinancing rate by 50 basis points to 2.5%.
Heading into the start of the trading day on Wall Street, futures tied to the S&P 500 are priced for a 10 point opening bell gain while those linked to the Dow Jones Industrial Average are indicating a 62 point bump. The tech-heavy Nasdaq is priced for a 41 point advance.
2. -- Costco Slips After Modest Q1 Earnings Miss
Costco (COST) shares edged lower in pre-market trading after the bulk discount retailer posted softer-than-expected first quarter earnings amid a pullback in sales over the final weeks of autumn.
Costco said diluted earnings for the three months ended Nov. 20, the company's fiscal first quarter, came in a $3.09 per share, just shy of Street forecasts, as rose 8.1% to $54.437 billion. Membership revenues rose 5.7% to $1 billion while renewal rates remained at an impressive 92.5%.
The group hinted at "when", rather than "if" it would raise its membership fees, pegged between $60 and $120 per year, but remained non-committal as to the timing.
"An increase could help offset some cost inflation, although the company mentioned it would want to maintain its value proposition to their loyal customers by passing on more price savings, but they do not want to raise membership fees if they think consumers are struggling," said D.A. Davidson analyst Michael Baker.
Costco shares were marked 0.3% lower in pre-market trading to indicate an opening bell price of $480.00 each.
3. -- Lululemon Slumps On Muted Holiday Sales Forecast, Inventory Build
Lululemon (LULU) shares slumped lower in pre-market trading after the high-end athletic wear retailer forecast a softer holiday season that clouded a solid third quarter earnings report.
Lululemon said it sees earnings of between $4.20 and $4.30 per share over the January quarter, will revenues in the region of $2.61 to $2.65 billion. The upper-end of both figures largely matched Street forecasts, but were weighed in part by a significant build-up in inventories, which rose 84.5% from last year.
For the three months ending in October, Lululemon posted a bottom line of $2 per share, topping Street forecasts by 4 cents, with revenues rising 28% to $1.9 billion.
Lululemon shares were marked 7.5% lower in pre-market trading to indicate an opening bell price of $346.38 each.
4. -- Broadcom Higher After Solid Q4 Earnings, Near-Term Outlook
Broadcom (AVGO) shares moved higher in pre-market trading after the chipmaker posted better-than-expected fourth quarter earnings and a solid near-term outlook.
Broadcom's adjusted earnings of $10.45 per share topped Street forecasts by around 17 cents, while revenues rose 21% to an analyst-topping $8.93 billion, a figure the group expects to see recorded over the current quarter. Broadcom also said it sees adjusted earnings of around $5.94 per share for the current quarter.
"Looking into 2023 financial year, Broadcom did not provide guidance or update its backlog, which previously stood at $31 billion last quarter, but indicated that it is fully booked out for the year with non-cancelable backlog and expects to grow," said KeyBanc Capital Markets analyst John Vinh.
Broadcom shares were marked 3.2% higher in pre-market trading to indicate an opening bell price of $548.01 each.
5. -- Bath & Body Works Leaps After Activist Third Point Reveals Stake
Bath & Body Works (BBWI) shares jumped higher in pre-market trading after activist investor Third Point unveiled a significant stake in the personal care products retailer.
Third Point, run by hedge fund billionaire Dan Loeb, amassed a 6.02% stake in Bath & Body Works shares as of November 30, according to papers filed with the Securities & Exchange Commission late Thursday, adding that it "reserves the right to seek changes in board composition and/or take measures" before the retailer's next annual meeting.
Last month, Bath & Body Works boosted its full-year profit forecast to between $3.00 and $3.20 per share, a 6.6% improvement at the higher end, following a better-than-expected third quarter update that included net sales of $1.6 billion that offset a narrowing gross margin of around 42%.
Bath & Body Works shares, which have fallen nearly 40% so far this year, were marked 4.4% higher in pre-market trading to indicate an opening bell price of $44.01 each.
