March S&P 500 E-Mini futures (ESH24) are up +0.08%, and March Nasdaq 100 E-Mini futures (NQH24) are up +0.30% this morning as market participants looked ahead to a key U.S. consumer inflation report that will provide insights into the Federal Reserve’s policy trajectory.
In Wednesday’s trading session, the benchmark S&P 500 and tech-heavy Nasdaq 100 notched 1-1/2 week highs, and the blue-chip Dow rose to a 1-week high. Intuitive Surgical Inc (ISRG) gained over +10% and was the top percentage gainer on the S&P 500 and Nasdaq 100 after the medical device maker issued better-than-expected preliminary Q4 and FY23 revenue figures. Also, Palo Alto Networks (PANW) climbed more than +5% after Morgan Stanley raised its price target on the stock to $375 from $304. In addition, Lennar Corporation (LEN) rose over +3% after the homebuilder increased its quarterly cash dividend to 50 cents per share and raised its stock repurchase program by up to $5 billion. On the bearish side, Aehr Test Systems (AEHR) tumbled more than -16% after the chip equipment tester lowered its annual revenue outlook.
New York Fed President John Williams stated Wednesday that monetary policy is now tight enough to steer inflation back to the target. At the same time, he suggested that policymakers require more evidence of a slowdown in inflation before cutting interest rates. “I expect that we will need to maintain a restrictive stance of policy for some time to fully achieve our goals, and it will only be appropriate to dial back the degree of policy restraint when we are confident that inflation is moving toward 2% on a sustained basis,” Williams said.
Meanwhile, U.S. rate futures have priced in a 2.6% probability of a 25 basis point rate cut at the January FOMC meeting and a 67.1% probability of a 25 basis point rate cut at the March FOMC meeting.
In other news, the U.S. Securities and Exchange Commission late Wednesday approved the first U.S.-listed exchange-traded funds to track bitcoin, marking a significant development for the world’s largest cryptocurrency, with most of the products anticipated to commence trading on Thursday. The U.S. securities regulator said that it had approved 11 applications, including from BlackRock, Ark Investments/21Shares, Fidelity, Invesco, and VanEck.
Today, all eyes are focused on the U.S. consumer inflation report in a couple of hours. Economists, on average, forecast that December U.S. CPI will come in at +0.2% m/m and +3.2% y/y, compared to the previous values of +0.1% m/m and +3.1% y/y.
Also, investors will likely focus on U.S. Core CPI data. Economists anticipate Core CPI to be +0.3% m/m and +3.8% y/y in December, compared to the previous figures of +0.3% m/m and +4.0% y/y.
U.S. Initial Jobless Claims data will be reported today as well. Economists estimate this figure to be 210K, compared to last week’s value of 202K.
In the bond markets, United States 10-year rates are at 3.993%, down -0.90%.
The Euro Stoxx 50 futures are up +0.47% this morning, buoyed by overnight gains on Wall Street, with investors eagerly awaiting U.S. inflation data that could offer more clues on the Federal Reserve’s interest rate trajectory. Gains in automobile and technology stocks are leading the overall market higher. Meanwhile, the ECB’s Francois Villeroy de Galhau reiterated the earlier projection of 0.9% economic growth for France in 2024 and dismissed the likelihood of a recession in 2024. In corporate news, Marks and Spencer Group Plc (MKS.LN) slid over -5% following the announcement of robust Christmas sales but lackluster performances in its international business and the joint venture with Ocado Group Plc.
Italy’s Industrial Production data was released today.
The Italian November Industrial Production stood at -1.5% m/m, weaker than expectations of -0.2% m/m.
Asian stock markets today settled in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.31%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +1.77%.
China’s Shanghai Composite Index closed slightly higher today, yet sentiment towards the country remained fragile as investors awaited the release of trade and inflation data on Friday. Artificial intelligence, defense security, and new energy stocks outperformed on Thursday. Tech giants and mainland developers listed in Hong Kong also advanced. Meanwhile, the People’s Bank of China bolstered the yuan by upwardly adjusting its fixing to 7.1087 per U.S. dollar, the largest since November 2023. Global fund giant Loomis Sayles & Co. has become more optimistic about China’s beleaguered real estate sector, noting that recent debt restructuring arrangements are bearing fruit and improved sentiment could lead to a faster-than-anticipated recovery. In other news, foreign investors bought a net 4.2 billion yuan ($586.60 million) worth of Chinese stocks through the Stock Connect on Thursday, the biggest daily inflow in two weeks. In corporate news, Meituan climbed over +5% after the food delivery firm completed its first share buyback. Investor attention is currently focused on Chinese inflation and trade data set to be released on Friday to assess the strength of the recovery.
Japan’s Nikkei 225 Stock Index closed sharply higher today, breaching the 35,000 level for the first time since February 1990. All sectors of the Nikkei 225 ended in the green, with consumer cyclical and real estate stocks experiencing the largest gains. Export-heavy automobile stocks also advanced as the yen weakened against the dollar overnight, prompted by data revealing a 20th consecutive monthly decline in workers’ real wages in November. On the ground of this, Toyota Motor Corp climbed over +3%, and Honda Motor Co Ltd rose more than +2%. Meanwhile, the Bank of Japan raised its economic assessment for two out of nine regions on Thursday. In its quarterly regional economic report, the Japanese central bank noted that all nine regions exhibited some recovery despite the impact of rising prices and slowing overseas economies. “However, one region reported that its economy had seen a slowdown in the pace of its pick-up due to weakness in exports,” the bank said, referring to the western region, including Osaka. It downgraded its assessment for that specific area while keeping its outlook unchanged for the remaining six regions. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +7.44% to 21.08.
Pre-Market U.S. Stock Movers
Cryptocurrency-exposed stocks are moving higher in pre-market trading following the approval of 11 spot Bitcoin exchange-traded funds by the the U.S. Securities and Exchange Commission. Marathon Digital (MARA) is up more than +3%. Also, Hut 8 Mining (HUT) is up more than +4%, and Coinbase Global (COIN) is up more than +3%.
KB Home (KBH) fell over -3% in pre-market trading despite the company reporting better-than-expected Q4 results, as its FY24 guidance failed to impress investors. Also, Seaport Research downgraded the stock to Neutral from Buy.
Richardson Electronics Ltd (RELL) plunged more than -13% in pre-market trading after the company reported downbeat Q2 results.
LYFT Inc (LYFT) dropped over -1% in pre-market trading after Goldman Sachs downgraded the stock to Neutral from Buy with a price target of $15.
Chewy Inc (CHWY) climbed more than +3% in pre-market trading after Barclays upgraded the stock to Overweight from Equal Weight with a price target of $30.
Salesforce Inc (CRM) rose over +1% in pre-market trading after Baird upgraded the stock to Outperform from Neutral with a price target of $300.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Thursday - January 11th
WaFd Inc (WAFD), Concrete Pumping A (BBCP), Lifecore Biomedical (LFCR), Loop Industries (LOOP), Anixa Biosciences (ANIX), Platinum Group Metals (PLG), Northern Technologies (NTIC).
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