December S&P 500 futures (ESZ23) are up +0.02%, and December Nasdaq 100 E-Mini futures (NQZ23) are down -0.09% this morning as market participants looked ahead to a new round of U.S. economic data and speeches from Fed officials.
In Wednesday’s trading session, Wall Street’s major averages ended higher, with the benchmark S&P 500 and blue-chip Dow posting 2-1/2 month highs and the tech-heavy Nasdaq 100 notching a 3-3/4 month high. Target Corporation (TGT) surged over +17% and was the top percentage gainer on the S&P 500 after the big-box retailer reported upbeat Q3 results. Also, Sirius XM Holding Inc (SIRI) climbed more than +6% after Warren Buffett’s Berkshire Hathaway disclosed a stake in the audio entertainment company. In addition, VF Corporation (VFC) soared over +14% after JPMorgan Chase upgraded the stock to Neutral from Underweight. On the bearish side, TJX Companies Inc (TJX) fell more than -3% after the company offered disappointing guidance for the all-important holiday quarter.
Economic data on Wednesday showed the U.S. October producer price index came in at -0.5% m/m and +1.3% y/y, weaker than expectations of +0.1% m/m and +1.9% y/y. Also, U.S. core PPI eased to +2.4% y/y in October from +2.7% y/y in September, weaker than expectations of +2.7% y/y. In addition, U.S. October retail sales fell -0.1% m/m, a smaller decline than expectations of -0.3% m/m. Finally, the U.S. NY Empire State manufacturing index, a gauge of manufacturing activity in New York State on current business conditions, rose to a 7-month high of 9.10 in November, stronger than expectations of -2.80.
“Given the strong consumer - which isn’t surprising given the employment picture - it is only reasonable to assume that corporate profits will continue to grow, and this should only add fuel to the fire for the year-end rally. Inflation, for now, is coming back down, and the economy, for now, continues to grow at a robust pace, so the only logical direction for stocks is higher,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.
Meanwhile, Richmond Fed President Thomas Barkin stated Wednesday that he remains unconvinced that inflation is unequivocally heading toward the central bank’s 2% target despite acknowledging “real progress” in curbing price pressures in recent months. “I’m just not convinced that inflation is on some smooth glide path down to 2%,” Barkin said.
U.S. rate futures have priced in a 100% probability of no hike at December’s monetary policy meeting and a 100% chance of no hike at the January FOMC meeting.
On the earnings front, notable companies like Walmart (WMT), Applied Materials (AMAT), Copart (CPRT), and Ross Stores (ROST) are set to report their quarterly earnings today.
Today, all eyes are focused on the U.S. Philadelphia Fed manufacturing index in a couple of hours. Economists, on average, forecast that the November Philadelphia Fed manufacturing index will come in at -9.0, compared to the previous value of -9.0.
U.S. Export and Import Price Indexes for October will also be in focus today. Economists anticipate the export price index to be at -0.5% m/m and the import price index to stand at -0.3% m/m.
U.S. Industrial Production data will be reported today. Economists foresee this figure to stand at -0.3% m/m in October, compared to the previous number of +0.3% m/m.
U.S. Manufacturing Production data will come in today. Economists expect October’s figure to be -0.3% m/m, compared to the previous value of +0.4% m/m.
U.S. Initial Jobless Claims data will be reported today as well. Economists estimate this figure to be 220K, compared to last week’s value of 217K.
In addition, market participants will be looking toward a batch of speeches from Fed officials Cook, Williams, Waller, and Mester.
In the bond markets, United States 10-year rates are at 4.502%, down -0.75%.
The Euro Stoxx 50 futures are down -0.14% this morning as the enthusiasm regarding a potential dovish pivot by central banks diminished, with investor focus shifting to the Eurozone’s inflation print scheduled for release on Friday. Utilities stocks outperformed on Thursday while energy stocks lost ground. Meanwhile, European Central Bank President Christine Lagarde is scheduled to deliver a speech later in the session. In corporate news, Burberry Group Plc (BRBY.LN) plunged over -8% following its warning that this year’s revenue target may be unattainable. Also, Hellofresh Se (HFG.D.DX) tumbled more than -22% after the German meal-kit maker slashed its full-year core profit guidance and narrowed down its revenue growth forecast. At the same time, Hotel Chocolat Group Plc (HOTC.LN) spiked about +164% after Mars Inc. agreed to buy the company for 534 million pounds ($662 million).
The European economic data slate is empty on Thursday.
Asian stock markets today closed in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.71%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.28%.
China’s Shanghai Composite today closed lower as market participants remained unimpressed by the results of the Xi-Biden summit, and investor sentiment was further dampened by data revealing prolonged weakness in the property sector. Official data showed on Thursday that new home prices in China experienced a fourth consecutive monthly decline in October, indicating persistent weakness in the country’s real estate sector. On the ground of this, Hong Kong-listed property stocks plunged on Thursday. Tech giants listed in Hong Kong also slumped. Meanwhile, U.S. President Joe Biden and Chinese leader Xi Jinping agreed on Wednesday to open a presidential hotline, resume military-to-military communications, and curb the production of fentanyl. On the positive side, China’s state planner announced on Thursday its intention to intensify efforts to attract foreign investment and enhance domestic consumption among low and mid-level income groups, signaling increased support from Beijing for the economy.
Japan’s Nikkei 225 Stock Index closed lower today, snapping a three-day winning streak as investors decided to lock in profits following a significant rally in the previous session. Losses in non-cyclical consumer, healthcare, and technology stocks led the overall market lower. Data from the Ministry of Finance showed on Thursday that Japanese exports experienced growth for the second consecutive month in October. However, the pace of growth significantly slowed down, primarily attributed to the decline in shipments of chips and steel to China, as the trade-reliant economy grapples with the impact of weakening external demand. In corporate news, Recruit Holdings Co Ltd surged over +9% after ValueAct Capital Management bought a stake in the company. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +0.97% to 18.75.
The Japanese October Trade Balance has been reported at -662.5B, stronger than expectations of -735.7B.
The Japanese October Exports stood at +1.6% y/y, stronger than expectations of +1.2% y/y.
The Japanese October Imports came in at -12.5% y/y, weaker than expectations of -12.2% y/y.
The Japanese September Core Machinery Orders arrived at +1.4% m/m and -2.2% y/y, stronger than expectations of +0.9% m/m and -3.6% y/y.
Pre-Market U.S. Stock Movers
Cisco Systems Inc (CSCO) plunged over -10% in pre-market trading after the networking giant cut its full-year revenue guidance.
Palo Alto Networks Inc (PANW) slid more than -5% in pre-market trading after the company cut its FY24 billings forecast.
Advance Auto Parts Inc (AAP) fell over -2% in pre-market trading after BofA downgraded the stock to Underperform from Neutral.
Maxeon Solar Technologies Ltd (MAXN) tumbled more than -5% in pre-market trading after the company reported a larger-than-expected Q3 loss and lowered its FY23 revenue guidance.
Plug Power Inc (PLUG) dropped over -3% in pre-market trading after Citi downgraded the stock to Neutral from Buy.
StoneCo Ltd (STNE) gained more than +1% in pre-market trading after BofA upgraded the stock to Buy from Neutral.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Thursday - November 16th
Walmart (WMT), Applied Materials (AMAT), Copart (CPRT), Ross Stores (ROST), ZTO Express Cayman (ZTO), Warner Music (WMG), Williams-Sonoma (WSM), Dolby Labs (DLB), Woodward (WWD), Globant SA (GLOB), Bath & Body Works (BBWI), Berry Global (BERY), Post (POST), Gap (GPS), UGI (UGI), Macy’s Inc (M), Spire (SR), PagSeguro Digital (PAGS), ESCO Technologies (ESE), Brady (BRC), Arcos Dorados (ARCO), Borr Drilling (BORR), Matthews (MATW), Dole (DOLE), Beazer Homes USA (BZH), Stratasys Ltd (SSYS), BrightView Holdings (BV), Shoe Carnival (SCVL), Gogoro (GGR), Haynes (HAYN).
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