December S&P 500 E-Mini futures (ESZ24) are up +0.14%, and December Nasdaq 100 E-Mini futures (NQZ24) are up +0.01% this morning as investors awaited crucial U.S. producer inflation data, remarks from Federal Reserve Chair Jerome Powell, and an earnings report from entertainment giant Disney.
In yesterday’s trading session, Wall Street’s major indexes closed mixed. Rivian Automotive (RIVN) climbed over +13% after Volkswagen AG raised its investment in the electric vehicle maker by 16% to $5.8 billion. Also, Spotify Technology (SPOT) surged more than +11% after offering above-consensus Q4 guidance for operating income and monthly active users. In addition, Charter Communications (CHTR) gained over +3% after agreeing to buy Liberty Broadband in an all-stock transaction. On the bearish side, Super Micro Computer (SMCI) slid more than -6% and was the top percentage loser on the Nasdaq 100 after announcing that it cannot file its quarterly report on Form 10-Q for the period ended September, as it requires time to appoint a new auditor.
The U.S. Bureau of Labor Statistics report released on Wednesday showed that consumer prices rose +0.2% m/m in October, in line with expectations. On an annual basis, headline inflation accelerated to +2.6% in October from +2.4% in September, in line with expectations. Also, the October core CPI, which excludes volatile food and fuel prices, remained unchanged from September at +3.3% y/y, right on expectations.
“A hotter-than-expected inflation number could have convinced the Fed to stand pat at its next meeting,” said Seema Shah at Principal Asset Management. “A December cut is still in the cards.”
Minneapolis Fed President Neel Kashkari stated that, given the headline numbers from the recent consumer price report, he feels assured that inflation “is headed in the right direction.” Also, Dallas Fed President Lorie Logan said that although further interest rate cuts are likely needed, policymakers should proceed cautiously, given uncertainties about the restrictiveness of current monetary policy. In addition, St. Louis Fed President Alberto Musalem remarked that the central bank is close to achieving its inflation and employment goals, but he emphasized that officials should maintain a “moderately restrictive” policy stance as long as price growth exceeds the Fed’s 2% target. Finally, Kansas City Fed President Jeff Schmid said, “While now is the time to begin dialing back the restrictiveness of monetary policy, it remains to be seen how much further interest rates will decline or where they might eventually settle.”
U.S. rate futures have priced in a 79.1% chance of a 25 basis point rate cut and a 20.9% chance of no rate change at the December FOMC meeting.
Meanwhile, Fed Chair Jerome Powell is set to deliver a speech about the economy at an event hosted by the Dallas Regional Chamber later today. Also, Fed Governor Adriana Kugler, Richmond Fed President Thomas Barkin, and New York Fed President John Williams will speak today.
On the earnings front, notable companies like Disney (DIS), Applied Materials (AMAT), and Brookfield (BN) are slated to release their quarterly results today.
On the economic data front, all eyes are focused on the U.S. Producer Price Index, which is set to be released in a couple of hours. Economists, on average, forecast that the U.S. October PPI will come in at +0.2% m/m and +2.3% y/y, compared to the previous figures of 0.0% m/m and +1.8% y/y.
The U.S. Core PPI will also be closely watched today. Economists expect October figures to be +0.3% m/m and +3.0% y/y, compared to the previous numbers of +0.2% m/m and +2.8% y/y.
U.S. Initial Jobless Claims data will come in today. Economists forecast this figure to stand at 224K, up from last week’s 221K.
U.S. Crude Oil Inventories data will be reported today as well. Economists estimate this figure to be 0.400M, compared to last week’s value of 2.149M.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.475%, up +0.49%.
The Euro Stoxx 50 futures are up +1.39% this morning as investors digested regional growth and employment data as well as positive corporate earnings reports. Gains in energy and technology stocks are leading the overall market higher. Data from Eurostat released on Thursday showed that Eurozone employment increased slightly more than anticipated last quarter, and the economy grew at a solid rate. Separately, data showed that Eurozone industrial output fell more than expected in September. Meanwhile, market participants are also awaiting the release of the European Central Bank’s October policy meeting minutes due later in the session. In corporate news, Asml Holding (ASML.NA) gained over +4% after Europe’s largest tech firm reaffirmed its bullish long-term revenue outlook. Also, Siemens Ag (SIE.D.DX) climbed more than +7% after the German engineering group posted a better-than-expected Q4 profit. In addition, Burberry Group Plc (BRBY.LN) surged over +14% after the company’s new CEO, Joshua Schulman, unveiled a turnaround strategy.
Spain’s CPI, Eurozone’s GDP (preliminary), Eurozone’s Employment Change (preliminary), and Eurozone’s Industrial Production data were released today.
The Spanish October CPI came in at +0.6% m/m and +1.8% y/y, in line with expectations.
Eurozone GDP has been reported at +0.4% q/q and +0.9% y/y in the third quarter, in line with expectations.
Eurozone Employment Change arrived at +0.2% q/q in the third quarter, stronger than expectations of +0.1% q/q.
Eurozone September Industrial Production stood at -2.0% m/m and -2.8% y/y, weaker than expectations of -1.3% m/m and -2.0% y/y.
Asian stock markets today closed in the red. China’s Shanghai Composite Index (SHCOMP) closed down -1.73% and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.48%.
China’s Shanghai Composite Index closed lower today as Beijing’s latest efforts to revive the struggling property sector failed to impress investors. Lithium and hardware stocks led the declines on Thursday. Sentiment remained downbeat as investors continued to assess the potential effects of U.S. President-elect Donald Trump’s trade policies on the nation’s economy and markets, following reports that his party will control both houses of Congress. Meanwhile, China introduced tax incentives on home and land transactions on Wednesday, targeting support for the struggling property market by stimulating demand and alleviating financial pressures on developers. According to the statement, the finance ministry will expand eligibility for the 1% deed tax to cover apartments up to 140 square meters, an increase from the previous 90 square meters, effective December 1st. The statement also said that the minimum pre-collection rate for land value-added tax will be lowered by 0.5 percentage points. In corporate news, Lingyi iTech Guangdong dropped over -6% after issuing convertible bonds totaling 2.14 billion yuan. Investor attention is currently centered on the next batch of Chinese data for October, including fixed asset investment, unemployment, industrial production, and retail sales, scheduled for Friday.
Japan’s Nikkei 225 Stock Index gave up early gains and closed lower today. Infrastructure and technology stocks weighed on the index on Thursday. Investors also continued to evaluate the potential effects of U.S. President-elect Donald Trump’s policies on Japan’s economy, especially on export-oriented industries. Meanwhile, the yen weakened further against the dollar on Thursday to its lowest level since July, bringing it close to the levels that previously prompted Japanese authorities to intervene in support of the currency. In other news, the Sankei newspaper reported late on Wednesday that the Japanese government is arranging to compile a supplementary budget of about 13.5 trillion yen ($87 billion) to finance a stimulus package aimed at assisting low-income households and mitigating the impact of rising prices. In corporate news, Kansai Electric tumbled over -18% after the utility announced on Wednesday that it intends to raise 504.9 billion yen ($3.3 billion), including a public offering of approximately 148 million new shares. Investor focus is now shifting to Japanese third-quarter GDP data, scheduled for release on Friday, which could offer additional insights into the nation’s economic outlook. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -1.65% to 24.38.
Pre-Market U.S. Stock Movers
Cisco Systems (CSCO) fell over -3% in pre-market trading as the networking giant’s conservative full-year sales forecast overshadowed better-than-expected FQ1 results and upbeat FQ2 guidance.
Tetra Tech (TTEK) plunged more than -10% in pre-market trading after the company issued weak full-year EPS guidance.
CNH Industrial (CNH) climbed about +4% in pre-market trading after Greenlight Capital’s David Einhorn revealed a “medium-sized” long position in the company.
Doximity (DOCS) rose over +1% in pre-market trading after Morgan Stanley upgraded the stock to Equal Weight from Underweight.
American Airlines (AAL) gained more than +2% in pre-market trading after Barclays upgraded the stock to Equal Weight from Underweight with a $16 price target.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Thursday - November 14th
Walt Disney (DIS), Applied Materials (AMAT), Brookfield (BN), NetEase (NTES), Globant SA (GLOB), Ast Spacemobile (ASTS), Bilibili (BILI), Ascendis Pharma AS (ASND), Post (POST), ESCO Technologies (ESE), Oklo Inc (OKLO), Inter and Co A (INTR), Nomad Foods (NOMD), Advance Auto Parts (AAP), Intuitive Machines (LUNR), Sally Beauty (SBH), Suburban Propane Partners LP (SPH), Despegar.com (DESP), Enerflex (EFXT), Eagle Point Cred (ECC), Digimarc (DMRC), Telesat (TSAT), Youdao (DAO), Celcuity (CELC), European Wax Center (EWCZ), Hyliion Holdings (HYLN).
