December S&P 500 futures (ESZ23) are down -0.15%, and December Nasdaq 100 E-Mini futures (NQZ23) are down -0.27% this morning as market participants braced for the release of U.S. inflation data and looked ahead to the Federal Reserve’s last monetary policy committee meeting of the year due later in the week.
In Friday’s trading session, Wall Street’s major averages ended higher, with the benchmark S&P 500 rising to a 4-1/4 month high, the blue-chip Dow notching a 1-3/4 year high, and the tech-heavy Nasdaq 100 posting a 1-week high. Paramount Global (PARA) surged over +12% and was the top percentage gainer on the S&P 500 following a Deadline report indicating interest from David Ellison and RedBird Capital in acquiring the company. Also, Lululemon Athletica Inc (LULU) climbed more than +5% after the company reported upbeat Q3 results. In addition, Carrier Global Corp (CARR) rose over +4% after Honeywell International agreed to buy the company’s security business for $4.95 billion in cash. On the bearish side, RH (RH) tumbled -14% after the trendy home goods retailer reported downbeat Q3 results and cut its full-year adjusted operating margin forecast.
The U.S. Labor Department’s report on Friday showed that nonfarm payrolls rose by 199K jobs last month, higher than the consensus figure of 180K and accelerating from the 150K reading in October. Also, the U.S. November unemployment rate fell to a 4-month low of 3.7%, stronger than expectations of 3.9%. In addition, U.S. average hourly earnings came in at +0.4% m/m and +4.0% y/y in November, compared to expectations of +0.3% m/m and +4.0% y/y. Finally, the University of Michigan’s gauge of consumer sentiment rose to a 4-month high of 69.4 in December, stronger than expectations of 62.0.
“The U.S. economy continues to perform well. The aggressive decline in U.S. Treasury yields we saw last month, which already looked a little overdone, is going into reverse, with bond yields jumping. With markets pricing out rate cuts next year, higher-for-longer is back in vogue,” said John Leiper at Titan Asset Management.
The U.S. Federal Reserve interest rate decision and Fed Chair Jerome Powell’s post-policy meeting press conference will take center stage in the coming week. Also, investors’ focus will be on the Fed’s quarterly dot plot in its Summary of Economic Projections. U.S. rate futures have priced in a 98.4% probability of no hike on Wednesday and a 98.5% chance of no hike at January’s monetary policy meeting. In addition, U.S. rate futures have priced in a 40.2% probability of a 25 basis point rate cut at the March FOMC meeting.
On the economic data front, U.S. CPI data for November will be the main highlight. Also, investors will be monitoring a spate of economic data this week, including the U.S. Core CPI, PPI, Core PPI, Crude Oil Inventories, Initial Jobless Claims, Export Price Index, Import Price Index, Retail Sales, Core Retail Sales, Business Inventories, NY Empire State Manufacturing Index, Industrial Production, Manufacturing Production, S&P Global Composite PMI (preliminary), S&P Global Manufacturing PMI (preliminary), and S&P Global Services PMI (preliminary).
On the earnings front, notable companies like Oracle (ORCL), Adobe (ADBE), and Costco (COST) are scheduled to release their quarterly results this week.
The U.S. economic data slate is mainly empty on Monday.
In the bond markets, United States 10-year rates are at 4.257%, up +0.24%.
The Euro Stoxx 50 futures are up +0.11% this morning as market participants braced for a week packed with interest-rate decisions from major central banks. Mining stocks are under pressure today as iron ore fell following disappointing economic data from China. Meanwhile, investors will be closely monitoring policy decisions from the Federal Reserve on Wednesday and the European Central Bank and Bank of England on Thursday. In other news, Goldman Sachs has raised its 12-month projection for the pan-European STOXX 600 index to 500, suggesting an approximate 6% increase by the end of 2024, driven by anticipated lower interest rates. In corporate news, Morphosys Ag (MOR.D.DX) soared over +10% following positive results from a drug study. Also, Schibsted ASA (SCHA.O.DX) climbed more than +13% after the Norwegian media group announced a non-binding agreement to sell its news media operations to Tinius Trust.
The European economic data slate is empty on Monday.
Asian stock markets today settled in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.74%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +1.50%.
China’s Shanghai Composite erased early losses to end higher today, accompanied by a spike in volumes for an exchange-traded fund that tracks state-owned shares, prompting speculation about potential purchases by state funds. Sentiment may have also received a lift following a report in local media stating that a Chinese macro hedge fund said the nation’s stock market is now offering a “once-in-20-year opportunity.” China’s stocks had dropped earlier after data from the National Bureau of Statistics showed over the weekend that China’s consumer prices experienced the sharpest decline in three years in November, accompanied by a deepening factory-gate deflation. Meanwhile, the country will persist in carrying out an active fiscal policy, which will be moderately strengthened, and implement a prudent monetary policy characterized by being “flexible, moderate, precise, and effective,” as stated by the Politburo, a key decision-making body of the ruling Communist Party, on Friday. Investor focus is now squarely on Chinese fixed asset investment, unemployment, industrial production, and retail sales data for November, due on Friday.
The Chinese November CPI has been reported at -0.5% m/m and -0.5% y/y, weaker than expectations of -0.1% m/m and -0.1% y/y.
The Chinese November PPI arrived at -3.0% y/y, weaker than expectations of -2.8% y/y.
Japan’s Nikkei 225 Stock Index closed higher today, tracking Wall Street’s gains on Friday as optimism grew about a soft landing for the U.S. economy. All sectors of the Nikkei 225 ended in the green, with utilities and energy stocks experiencing the largest gains. Export-oriented stocks also gained ground on Monday as the yen pulled back from a 4-month high, with Nissan Motor Co Ltd rising over +2% and Sony Group Corp climbing nearly +2%. Meanwhile, the yen extended its losses following a Bloomberg News report stating that Bank of Japan officials perceive little urgency to swiftly abandon the world’s last negative interest-rate regime, citing insufficient evidence of wage growth to sustain inflation. In corporate news, Tokyo Electric Power Co Holdings Inc surged over +14%, extending its multi-day climb amid optimism for an early restart of the Kashiwazaki-Kariwa nuclear power plant. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -7.66% to 18.21.
The Japanese BSI Large Manufacturing Conditions Index stood at 5.7 in the fourth quarter, stronger than expectations of 5.6.
Pre-Market U.S. Stock Movers
Macy’s Inc (M) surged about +19% in pre-market trading following a report from the Wall Street Journal indicating that the department store operator received a $5.8 billion buyout offer from Arkhouse Management and Brigade Capital Management.
Jasper Therapeutics Inc (JSPR) soared over +11% in pre-market trading after presenting positive final results from the Phase 1 study of briquilimab.
Cigna Corp (CI) climbed more than +12% in pre-market trading after abandoning plans to merge with Humana, citing a failure to reach an agreement on financial terms, including pricing.
HP Inc (HPQ) gained over +1% in pre-market trading after Evercore ISI upgraded the stock to Outperform from In Line with a price target of $40.
Pinterest Inc (PINS) rose more than +3% in pre-market trading after RBC Capital upgraded the stock to Outperform from Sector Perform with a price target of $46.
Nike Inc (NKE) climbed over +1% in pre-market trading after Citi upgraded the stock to Buy from Neutral with a price target of $135.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Monday - December 11th
Oracle (ORCL), Caseys (CASY), Mueller Water Products (MWA), Oil-Dri Of America (ODC), Inotiv (NOTV).
More Stock Market News from Barchart
- Want a White Christmas? Buy Sugar
- CPI, Rate Announcement and Other Key Thing to Watch This Week
- Nvidia Stock Is Off Its Highs but Has Huge Upside - Ideal for Option Put Short Sellers
- What Mark Zuckerberg's Massive Meta Stock Dump Means for Investors
