What you need to know…
The S&P 500 Index ($SPX) (SPY) today is down -0.12%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.14%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.07%.
Stocks this morning are mixed. The broader market is under pressure on concern that economic weakness in China will weigh on global economic prospects after China’s industrial profits in October rose at the slowest pace in three months. However, today’s weaker-than-expected U.S. economic news pushed T-note yields lower and limited losses in the stock market.
On the positive side for stocks, Crown Castle Inc. is up more than +4% after activist investor Elliot Investment Management, which has acquired a more than $2 billion stake in the company, said it plans to push for changes in the company that will help boost its shares. Also, Shopify is up more than +3% after it said merchants set a Black Friday record with a combined $4.1 billion in sales.
Adobe Analytics raised its estimate for Cyber Monday sales to $12.4 billion from an initial forecast of $12 billion after reporting U.S. shoppers spent a record $9.8 billion online on Black Friday. Also, data from Salesforce Inc. showed U.S. online sales rose +9% year-on-year on Black Friday.
U.S. Oct new home sales fell -5.6% m/m to 679,000, weaker than expectations of 721,000.
The U.S. Nov Dallas Fed manufacturing outlook level of general business activity unexpectedly fell -0.7 to a 4-month low of -19.9, weaker than expectations of an increase to -16.0.
The markets are discounting a 6% chance for a +25 bp rate hike at the next FOMC meeting on Dec 12-13 FOMC and a 12% chance for that +25 bp rate hike at the following FOMC meeting on Jan 30-31, 2024. The markets are then discounting a 15% chance for a -25 bp rate cut at the March 19-20, 2024, FOMC meeting and a 57% chance for that same -25 bp rate cut at the Apr 30-May 1, 2024, FOMC meeting.
U.S. and European government bond yields today are lower. The 10-year T-note yield fell back from a 1-week high of 4.512% and is down -3.5 bp at 4.431%. The 10-year German bund yield is down -8.2 bp at 2.561%. The 10-year UK gilt yield is down -5.6 bp at 4.227%.
China Oct industrial profits rose +2.7% y/y, the smallest increase in 3 months.
Overseas stock markets are lower. The Euro Stoxx 50 is down -0.14%. China’s Shanghai Composite Index closed down -0.30%. Japan’s Nikkei Stock Index closed down -0.53%.
Today’s stock movers…
GE Healthcare Technologies (GEHC) is down more than -4% to lead losers in the Nasdaq 100 after UBS downgraded the stock to sell from neutral with a price target of $66.
Old Dominion Freight Line (ODFL) is down more than -2% after Deutsche Bank downgraded the stock to hold from buy.
Walt Disney (DIS) is down more than -1% to lead losers in the Dow Jones Industrials on mediocre move attendance over the Thanksgiving holiday weekend, with box office attendance grossing $172 million, below expectations of $177 million and down -34.7% from 2019 levels, according to Boxoffice Pro.
Foot Locker (FL) is down more than -3% after Citigroup downgraded the stock to sell from neutral with a price target of $18.
Southern Copper (SCCO) is down more than -2% after Morgan Stanley downgraded the stock to underweight from equal weight.
Lucid Group (LCID) is down more than -2% after Needham downgraded the stock to hold from buy.
Okta (OKTA) is down more than -1% after JMP Securities downgraded the stock to market perform from outperform.
Crown Castle (CCI) is up more than +4% to lead gainers in the S&P 500 after activist investor Elliot Investment Management, which has acquired a more than $2 billion stake in the company, said it plans to push for changes in the company that will help boost its shares.
Shopify (SHOP) is up more than +3% after it said merchants set a Black Friday record with a combined $4.1 billion in sales. Other online retailers and payment companies are also up on the news, with Etsy (ETSY) up more than +4%, and Amazon.com (AMZN), and PayPal Holdings (PYPL) up more than +1%.
MercadoLibre (MELI) is up more than +3% to lead gainers in the Nasdaq 100 after reporting that its gross merchandise volume in Brazil surged 80% between Nov 23-24 from last year.
Mondelez International (MDLZ) is up more than +1% after RBC Capital Markets upgraded the stock to outperform from sector perform.
Pinterest (PINS) is up more than +1% after New Street Research initiated coverage on the stock with a buy rating and a price target of $48.
Roku (ROKU) is up more than +1% after Cannonball Research upgraded the stock to buy from neutral with a price target of $116.
Across the markets…
December 10-year T-notes (ZNZ23) this morning are up +12 ticks, and the 10-year T-note yield is down -3.5 bp at 4.431%. Dec T-note prices this morning recovered from a 1-week low and moved higher, and the 10-year T-note yield fell back from a 1-week high of 4.512%. Weakness in stocks today boosted the safe-haven demand for T-notes. Also, today’s U.S. economic news was bullish for T-notes after Oct new home sales and the Nov Dallas Fed manufacturing outlook fell more than expected. In addition, a decline in inflation expectations supported T-notes after the 10-year breakeven inflation rate today fell to a 2-3/4 month low of 2.234%.
The dollar index (DXY00) today is down by -0.02%. The dollar today gave up an early advance and is slightly lower. Today’s weak U.S. economic news weighed on the dollar. Weakness in stocks today is boosting the liquidity demand for the dollar and is limiting losses in the dollar.
EUR/USD (^EURUSD) today is down by -0.02%. The euro this morning is slightly lower. Losses in the euro are limited by hawkish comments from ECB President Lagarde, who said inflation remains too high and has been high for too long, and the ECB is keeping a close eye on the exchange rate.
USD/JPY (^USDJPY) today is down by -0.43%. The yen today is moderately higher against the dollar. Stronger than expected Japanese October producer services prices may prompt the BOJ to tighten monetary policy after Japan Oct PPI services prices rose +2.3% y/y, stronger than expectations of +2.1%. Gain in the yen accelerated today when T-note yields declined.
Japan Oct PPI services prices rose +2.3% y/y, stronger than expectations of +2.1% and the largest increase in 3-3/4 years.
December gold (GCZ3) today is up +11.3 (+0.56%), and Dec silver (SIZ23) is up +0.504 (+2.07%). Precious metals prices today are moderately higher, with gold climbing to a 1-month high and silver posting a 3-month high. A weaker dollar today is supportive of metals prices. Also, lower global bond yields are bullish for precious metals. In addition, strength in Japanese producer service prices is boosting demand for gold as an inflation hedge after Japan Oct PPI services prices rose +2.3% y/y, stronger than expectations of +2.1% and the most robust increase in 3-3/4 years.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
