What you need to know…
The S&P 500 Index ($SPX) (SPY) today is down -0.02%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.31%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.30%.
Stocks this morning are mixed, with the Dow Jones Industrials posting a 3-1/2 month high. Weakness in technology stocks is weighing on the broader market, with Nvidia down more than -1% in pre-market trading after Reuters reported that the company told customers in China it is delaying the launch of a new artificial intelligence chip into Q1 of next year. Also, Apple is down nearly 1% after Counterpoint Research data showed iPhone sales in China fell 4% y/y from Oct 30 to Nov 12. An increase in the 10-year T-note yield to a 1-week high today also weighs on stock index futures. U.S. equity markets will close early today at 1300 EST for the Thanksgiving holiday.
Today’s U.S. economic news was mixed for stocks after S&P reported U.S. manufacturing activity in November contracted more than expected, but services activity in November expanded more than expected.
On the positive side, U.S. stock index futures have carryover support from today’s rally in the Euro Stoxx 50 to a 3-1/2 month high after ECB President Lagarde said ECB policymakers are in a position to pause their tightening campaign.
The U.S. Nov S&P manufacturing PMI fell -0.6 to 49.4, weaker than expectations of 49.9. However, the Nov S&P services PMI unexpectedly rose +0.2 to a 4-month high of 50.8, stronger than expectations of a decline to 50.3.
Bank of America said EPFR Global data showed global stock funds saw inflows of about $49 billion in the two weeks through Nov 21, the most in 1-3/4 years.
According to Investment Company Institute data, about $29.1 billion flowed into U.S. money-market funds in the week through Nov 21. Total assets in money-market funds increased to a record $5.763 trillion from $5.734 trillion the week prior.
The markets are discounting a 5% chance for a +25 bp rate hike at the next FOMC meeting on Dec 12-13 FOMC and a 13% chance for that +25 bp rate hike at the following FOMC meeting on Jan 30-31, 2024. The markets are then discounting a 14% chance for a -25 bp rate cut at the March 19-20, 2024, FOMC meeting and a 55% 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 higher. The 10-year T-note yield rose to a 1-week high of 4.490% and is up +7.4 bp at 4.478%. The 10-year German bund yield rose to a 1-1/2 week high of 2.663% and is up +2.9 bp at 2.647%. The 10-year UK gilt yield rose to a 1-1/2 week high of 4.323% and is up +4.5 bp at 4.301%.
Overseas stock markets are mixed. The Euro Stoxx 50 is up +0.24%. China’s Shanghai Composite Index closed down -0.68%. Japan’s Nikkei Stock Index closed up +0.52%.
Today’s stock movers…
Eli Lilly (LLY) is up more than +2% after data compiled by Symphony Health Solutions showed U.S. retail sales of branded drugs used for psoriasis and psoriatic arthritis rose 4.4% in the week ended Nov 17, with Eli Lilly’s Taltz drug sales up +4.6%.
iRobot (IRBT) is up more than +30% after Reuters reported that Amazon.com is set to win unconditional EU antitrust approval for its acquisition of the company.
Visa Outdoor (VSTO) is up more than +4% after the company received an unsolicited proposal from Colt CZ.
Crypto currency-related stocks are climbing today, with the price of Bitcoin up more than +1% at a 5-1/2 month high. As a result, CleanSpark (CLSK) is up more than +4%, and Marathon Digital (MARA) is up more than +3%. Also, Coinbase Global (COIN), MicroStrategy (MSTR), and Riot Platforms (RIOT) are up more than +1%.
Nvidia (NVDA) is down more than -1% after Reuters reported that the company told customers in China it is delaying the launch of a new artificial intelligence chip into Q1 of next year.
Apple (AAPL) is down nearly 1% to lead losers in the Dow Jones Industrials after Counterpoint Research data showed iPhone sales in China fell 4% y/y from Oct 30 to Nov 12.
Palantir (PLTR) is down more than -2% on signs of insider selling after an SEC filing showed President and co-founder Cohen sold $7.11 million of shares on Monday and Tuesday.
Gilead Sciences (GILD) is down -0.79% after data compiled by Symphony Health Solutions showed U.S. retail sales of branded drugs used for HIV treatment fell -1.3% in the week ended Nov 17, with sales of Gilead’s Genvoya falling -5.5%.
Across the markets…
December 10-year T-notes (ZNZ23) this morning are down -12 ticks, and the 10-year T-note yield is up +6.4 bp at 4.469%. Dec T-note prices this morning fell to a 1-week low, and the 10-year T-note tiled rose to a 1-week high of 4.490%. T-notes retreated on negative carryover from a decline in 10-year German bunds to a 1-1/2 week low. T-notes recovered from their worst levels after today’s news showed the U.S. Nov S&P manufacturing PMI fell more than expected, a dovish factor for Fed policy.
The dollar index (DXY00) today is down by -0.52%. The dollar today is posting moderate losses after today’s economic news showed the U.S. Nov S&P manufacturing PMI fell more than expected. Also, strength in the euro today weighed on the dollar after the German Nov IFO business climate rose more than expected to a 4-month high.
EUR/USD (^EURUSD) today is up by +0.28%. Dollar weakness today is supporting moderate gains in the euro. Also, an increase in the German Nov IFO business climate to a 4-month high supports EUR/USD. In addition, today’s jump in the 10-year German bund yield to a 1-1/2 week high is strengthening the euro’s interest rate differentials. Strength in the euro is limited by dovish comments today from ECB President Lagarde, who signaled she supports a rate hike pause by the ECB.
The German Nov IFO business climate rose +0.4 to a 4-month high of 87.3, weaker than expectations of 87.5.
ECB President Lagarde said, "We have already done a lot on rates," and the ECB is now at a point where it can pause and assess the impact of its policy tightening.
ECB Governing Council member Villeroy de Galhau said, "Excluding surprises, I don't think the ECB will raise interest rates again."
ECB Governing Council member Holzmann said there's an "equal probability" of an ECB rate hike or cut in the second quarter of 2024.
USD/JPY (^USDJPY) today is down by -0.02%. The yen today is slightly higher against the dollar. Today’s Japanese consumer price news showed price pressures remain above the BOJ’s 2.0% target, which may prompt the central bank to exit its ultra-easy monetary policy sooner than expected. Gains in the yen are limited due to higher T-note yields and news that showed Japanese manufacturing activity this month contracted at the steepest pace in 9 months, a dovish factor for BOJ policy.
The Japan Sep leading index CI was revised upward by +0.2 to 108.9 from the previously reported 108.7.
Japan's national CPI rose +3.3% y/y, weaker than expectations of +3.4% y/y. Nov national CPI ex-fresh food and energy eased to +4.0 % y/y from +4.2% y/y in Oct, weaker than expectations of +4.1% y/y and the slowest pace of increase in 7 months.
The Japan Nov Jibun Bank manufacturing PMI fell -0.6 to 48.1, the steepest pace of contraction in 9 months.
December gold (GCZ3) today is up +8.0 (+0.40%), and Dec silver (SIZ23) is up +0.587 (+2.48%). Precious metals prices today are moderately higher, with silver posting a 2-1/2 month high. A weaker dollar today is supportive of metals prices. Also, dovish comments today from ECB President Lagarde, who said she favors a pause in ECB rate hikes, were bullish for precious metals. On the negative side for precious metals today are higher global bond yields.
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