December S&P 500 E-Mini futures (ESZ24) are up +0.18%, and December Nasdaq 100 E-Mini futures (NQZ24) are up +0.30% this morning as market participants looked ahead to the Federal Reserve’s final monetary policy committee meeting of the year as well as the release of the Fed’s favorite inflation gauge and other key economic data later in the week.
In Friday’s trading session, Wall Street’s major equity averages ended mixed, with the tech-heavy Nasdaq 100 notching a new all-time high and the blue-chip Dow posting a 3-week low. Broadcom (AVGO) soared over +24% and was the top percentage gainer on the S&P 500 and Nasdaq 100 after the chipmaker reported better-than-expected FQ4 adjusted EPS and provided upbeat FQ1 revenue guidance. Also, RH (RH) surged more than +16% after raising its full-year revenue growth forecast. In addition, Tesla (TSLA) gained over +4% after Reuters reported that the Trump transition team intends to cancel an order mandating carmakers to report crashes involving self-driving systems. On the bearish side, Toll Brothers (TOL) slid more than -3% after JPMorgan Chase downgraded the stock to Neutral from Overweight.
Economic data released on Friday showed that the U.S. import price index unexpectedly rose +0.1% m/m in November, stronger than expectations of -0.2% m/m, while the export price index was unchanged m/m in November, stronger than expectations of -0.2% m/m.
The U.S. Federal Reserve’s interest rate decision and Chair Jerome Powell’s post-policy meeting press conference will take center stage this week. With Fed officials widely expected to cut interest rates by a quarter percentage point on Wednesday, investors are shifting their focus to any indications of how much more rates might be reduced in 2025. Market watchers will closely follow the central bank’s quarterly “dot plot” in its Summary of Economic Projections, which shows FOMC member forecasts regarding the path of interest rates.
On the economic data front, the November reading of the U.S. core personal consumption expenditures price index, the Fed’s preferred inflation gauge, will be the main highlight this week. Investors will also be monitoring a spate of other economic data releases, including U.S. Retail Sales, Core Retail Sales, GDP (third estimate), Industrial Production, Manufacturing Production, Business Inventories, Building Permits (preliminary), Housing Starts, Crude Oil Inventories, Initial Jobless Claims, Philadelphia Fed Manufacturing Index, Existing Home Sales, Leading Index, Personal Income, Personal Spending, and the University of Michigan’s Consumer Sentiment Index.
In addition, several notable companies like Nike (NKE), Micron Technology (MU), FedEx (FDX), Lennar (LEN), Accenture (ACN), and Carnival Corp (CCL) are slated to release their quarterly results this week.
Today, all eyes are focused on the U.S. S&P Global Manufacturing PMI preliminary reading, which is set to be released in a couple of hours. Economists, on average, forecast that the December Manufacturing PMI will come in at 49.4, compared to last month’s value of 49.7.
Also, investors will focus on the U.S. S&P Global Services PMI, which arrived at 56.1 in November. Economists foresee the preliminary December figure to be 55.7.
The NY Empire State Manufacturing Index will be released today as well. Economists expect this figure to stand at 6.40 in December, compared to last month’s value of 31.20.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.373%, down -0.59%.
The Euro Stoxx 50 futures are down -0.22% this morning as investors digested business activity data from the region and braced for a series of central bank meetings, including the Fed, Bank of Japan, and Bank of England. Food and automobile stocks led the declines on Monday. A survey released on Monday showed that the downturn in Eurozone business activity moderated in December as the bloc’s dominant services sector unexpectedly returned to growth. Separately, data from Eurostat showed that wage growth in the Eurozone slowed in the third quarter, indicating a further easing of inflation pressures which could support additional interest rate cuts. Meanwhile, Moody’s unexpectedly downgraded France’s credit rating to Aa3 from Aa2 late Friday, pointing to concerns over deteriorating public finances amid ongoing political instability. In other news, German Chancellor Olaf Scholz is set to face a confidence vote on Monday, with expectations of a loss that could lead to snap elections early next year.
European Central Bank President Christine Lagarde said Monday, “If the incoming data continue to confirm our baseline, the direction of travel is clear and we expect to lower interest rates further.”
Eurozone’s Manufacturing PMI (preliminary), Eurozone’s Services PMI (preliminary), Italy’s CPI, and Eurozone’s Labor Cost Index were released today.
Eurozone December Manufacturing PMI came in at 45.2, weaker than expectations of 45.3.
Eurozone December Services PMI arrived at 51.4, stronger than expectations of 49.5.
The Italian November CPI stood at -0.1% m/m and +1.3% y/y, better than expectations of 0.0% m/m and +1.4% y/y.
Eurozone Labor Cost Index has been reported at +4.60% y/y in the third quarter, in line with expectations.
Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.16% and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.03%.
China’s Shanghai Composite Index closed slightly lower today as investors digested a mixed batch of economic data from the country. Semiconductor and consumer durable stocks led the declines on Monday. Data from the National Bureau of Statistics showed Monday that retail sales, a key indicator of consumption in China, grew at the slowest rate in three months in November, falling short of even the lowest forecasts. Also, data showed that new home prices in China fell for the 17th consecutive month, indicating persistent struggles in the property sector. At the same time, industrial output growth exceeded forecasts in November. The latest data suggest that while Beijing’s recent stimulus efforts have helped stabilize growth, they have not yet persuaded consumers to increase their spending. Economists believe that the speed and rollout of the stimulus measures will be crucial for ensuring a sustained economic recovery. Meanwhile, an official from the People’s Bank of China signaled over the weekend that the central bank intends to lower interest rates and reserve requirements next year. In corporate news, Mabwell Shanghai Bioscience slid over -6% after its directors approved a secondary listing on the Hong Kong exchange. Investors now await the PBOC’s loan prime rate decisions later this week.
The Chinese November Industrial Production came in at +5.4% y/y, stronger than expectations of +5.3% y/y.
The Chinese November Retail Sales arrived at +3.0% y/y, weaker than expectations of +4.7% y/y.
The Chinese Fixed Asset Investment stood at +3.3% y/y in the January-November period, weaker than expectations of +3.4% y/y.
The Chinese November Unemployment Rate was 5.0%, in line with expectations.
Japan’s Nikkei 225 Stock Index closed just below the flatline today as caution prevailed ahead of major central bank meetings this week. Losses in railway and insurance stocks offset gains in machinery and brokerage stocks on Monday. Business surveys released on Monday showed that Japan’s factory activity contracted for the sixth consecutive month due to subdued demand, while the service sector continued to expand in December, underscoring the economy’s growing dependence on services. Separately, data showed that Japan’s core machinery orders, excluding those for ships and electric power companies, rose more than expected in October, indicating a positive outlook for capital spending in the months ahead. Meanwhile, market participants are looking forward to the Bank of Japan’s monetary policy decision on Thursday. Reuters and other media outlets reported last week that the BOJ is inclined to maintain rates steady. At the same time, JPMorgan’s Japan Economic Research team stated in a note on Monday that the BOJ is likely to raise its policy rate by 25 basis points this week, noting that the balance of recent data seems to fulfill conditions for a rate hike. In corporate news, Sumida slumped over -8% after lowering its 2024 guidance due to reduced demand for xEV, solar power, and industrial products. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -7.72% to 19.96.
The Japanese October Core Machinery Orders came in at +2.1% m/m and +5.6% y/y, stronger than expectations of +1.2% m/m and +0.7% y/y.
The Japanese December au Jibun Bank Japan Manufacturing PMI (preliminary) stood at 49.5, stronger than expectations of 49.2.
Pre-Market U.S. Stock Movers
Super Micro Computer (SMCI) plunged over -12% in pre-market trading following a Bloomberg report that the company reached out to Evercore to assist in raising capital. Also, Nasdaq said late Friday that the company will be removed from the Nasdaq 100 index later this month.
Ford (F) fell more than -2% in pre-market trading after Jefferies downgraded the stock to Underperform from Hold with a price target of $9.
Netflix (NFLX) dropped about -0.6% in pre-market trading after Loop Capital downgraded the stock to Hold from Buy.
MicroStrategy (MSTR) gained over +3% in pre-market trading after Nasdaq announced that the company would be added to the Nasdaq 100 index later this month.
Keysight Technologies (KEYS) rose more than +3% in pre-market trading after JPMorgan upgraded the stock to Overweight from Neutral with a $200 price target.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Monday - December 16th
Red Cat Holdings (RCAT), Compass Minerals (CMP), RCI Hospitality (RICK), Mitek (MITK), Mama’s Creations (MAMA), Quipt Home Medical (QIPT), Zedge (ZDGE).
