Five things you need to know before the market opens on Monday December 19:
1. -- Stock Futures Edge Higher After Brutal Week
U.S. equity futures futures bumped higher Monday, while the dollar eased modestly against its global peers and Treasury bond yields steadied, as investors looked to clawback loses from the worst week for domestic stocks in more than three months and over the final full trading days of the biggest market declines since 2008.
A combination of weaker-than-expected economic activity data, alongside a surprisingly hawkish rate decision from the Federal Reserve, pummeled U.S. stocks last week, with the S&P 500 falling some 2% to close at 3,852.36 points, extending its year-to-date decline to just over 19%.
Similar sentiment is likely to grip markets this week, with volumes expected to be light ahead of the traditional holiday slowdown and an absence of major economic data releases outside of the housing sector.
Bond markets, meanwhile, continue to express recession concerns, as well as doubts over the Fed's projection of a 5.1% Fed Funds rate in early spring. Benchmark 2-year note yields were marked modestly lower at 2.184% in overnight trading, while 10-year paper held at 3.526%/
The U.S. dollar index, which tracks the greenback against a basket of its global peers, slipped 0.48% to 104.201, powered in part by a firmer Japanese yen and reports of a potential rate hike from the Bank of Japan sometime in early 2023.
Markets were also tracking developments overnight in China, where authorities recorded their first Covid fatalities in several weeks amid the slow re-opening of the world's second-largest economy following nearly three years of aggressive lockdowns.
Heath officials elsewhere remain worried that a rapid change in China's Covid rules could result in a wave of infections and a surge in deaths, particularly given its poor record on vaccinations.
China's edge towards reopening has added a bid to oil prices, however, which edged modestly in overnight trading, supported as well by reports that the U.S. government is looking to begin replenishing the Strategic Petroleum Reserve with a fixed price purchase of 3 million barrels.
WTI contracts for January delivery were marked 49 cents higher at $74.78 per barrel while Brent contracts for February, the global pricing benchmark, added 98 cents to trade at $80.01 per barrel.
Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500 are indicating a 10 point opening bell gain while those linked to the Dow Jones Industrial Average are priced for a 78 point bump. The tech-focused Nasdaq Composite is looking at a 33 point advance.
Global stocks were mixed, with Japan's Nikkei 225 falling 1.05% to close at a six week low of 27,237.64 points amid the BoJ rate talk, while the region-wide MSCI ex-Japan index fell 0.06%.
In Europe the Stoxx 600 was marked 0.53% higher following its worst week since September, while the FTSE 100 was up 0.51% in London.
2. -- Week Ahead: Housing Data, Nike, FedEx In Focus
Housing and mortgage data will likely be in focus this week as investors track the impact of the Fed's renewed hawkish rate signaling and the ongoing pullback in consumer and construction demand.
The National Association of Homebuilders will published their benchmark sentiment survey Monday, with Housings starts and building permits data from the Census Bureau following on Tuesday.
The Mortgage Bankers' Association will update on benchmark mortgage rates, new applications and financing demand Wednesday, followed later that day with existing home sales for the month of December. New home sales data is expected on Friday.
The Commerce Department will publish its final estimate of third quarter GDP on Thursday, in parallel with weekly jobless claims.
Three key earnings reports to flag over what is effectively the final trading week of the year include updates from Nike (NKE), FedEx (FDX) and General Mills (GIS) on Tuesday and Micron Technology (MU) after the closing bell on Wednesday.
3. -- Tesla Jumps As Musk Says He May Step Down As Twitter CEO
Elon Musk asked his 122.1 million Twitter followers late Sunday if he should stepdown as CEO of the micro-blogging website following a weekend of criticism over its terms of use policies and the suspension of several prominent journalists.
Musk said he would abide by the poll results -- although he said there was no succession plan in place -- which currently suggest around 57.5% of the 16.36 million 'votes' cast would like the Tesla (TSLA) CEO to hand over control of the group to someone else.
Over the weekend, Leo KoGuan, a Singapore-based billionaire and one of the largest single investors in Tesla, renewed his call for Musk to step down as Twitter CEO after accusing him of "abandoning" the clean-energy carmaker following his $44 billion purchase of the micro-blogging website earlier this fall.
"As his fanboy, I invested bc of Elon. Of course, I prefer Elon to be CEO but he abandoned Tesla” To be clear like (Tesla investor and Musk Supporter Gary Black), I wish Elon quickly finds new CEO of Twitter Gary and I want Elon to be the CEO and Technoking of Tesla full time," KoGuan said.
Tesla shares were marked 4.5% higher in pre-market trading to indicate an opening bell price of $156.93 each.
4. -- Sam Bankman-Fried Reportedly Won't Fight Extradition To the United States
Sam Bankman-Fried, the disgraced founder and former CEO of the failed crypto trading platform FTX, will agree to be extradited to the United States to face a series of fraud and other criminal charges, according to multiple media reports.
Bankman-Fried, 30, is currently being held by Bahamian authorities in Nassau at the country's notorious Fox Hill prison and was denied bail last week, just hours after his arrest by requested by prosecutors in the Southern District of New York.
Reports now suggest Bankman-Fried will drop his extradition fight and return to the U.S., where he faces an eight-count indictment that could see him imprisoned for more than 100 years if convicted on all charges.
FTX, at one time the second largest crypto platform in the worlds with a market value of around $32 billion, filed for Chapter 11 bankruptcy protection in early November amid a liquidity crisis that multiple media reports have suggested was linked to the use of customer deposits to back risky trades made by the group's wholly-owned hedge fund known as Alameda Research.
John Ray, a corporate restructuring expert brought in to manage FTX's bankruptcy proceedings, said that a small group of inexperienced, unsophisticated and potentially compromised individuals" was key to the group's ultimate failure.
5. -- Aerojet Rocketdyne Agrees $4.7 Billion Takeover By L3Harris
Aerojet Rocketdyne (AJRD) shares jumped higher in pre-market trading after agreeing to a $4.7 billion takeover by defense contractor L3Harris Technologies (LHX).
L3Harris, looking to expand its operations amid a surge in missile demand from defense forces in the Ukraine, will pay $58 per share, in cash, for El Segundo, California-based Aerojet, a small 6.5% premium to the group's Friday closing price. Both groups said the deal is expected to close next year, subject to regulatory approvals.
“We’ve heard the DoD leadership loud and clear: they want high-quality, innovative and cost-effective solutions to meet both current and emerging threats, and they’re relying upon a strong, competitive industrial base to deliver those solutions,” said L3Harris CEO Christopher Kubasik. “With this acquisition, we will use the combined talents of more than 50,000 employees to drive continuous process improvement, enhance business operations and elevate the performance of this crucial national asset."
Aerojet shares were marked 2% higher in pre-market trading to indicate an opening bell price of $56.01 each. L3Harris shares were little-changed from their Friday close at $213.27 each.
