December S&P 500 futures (ESZ23) are up +0.28%, and December Nasdaq 100 E-Mini futures (NQZ23) are up +0.06% this morning as U.S. Treasury yields continued to fall after this week’s soft U.S. inflation and jobs data spurred expectations among investors that interest rates have peaked.
In Thursday’s trading session, Wall Street’s major indexes closed mixed. Cisco Systems Inc (CSCO) slid over -9% after the networking giant cut its full-year revenue guidance. Also, Walmart Inc (WMT) plunged more than -8% after the retail giant struck a cautious tone regarding the outlook for U.S. shoppers. On the bullish side, Macy’s Inc (M) climbed over +5% after the department store operator reported better-than-expected Q3 results. In addition, Intel Corporation (INTC) gained more than +6% after Mizuho Securities upgraded the stock to Buy from Neutral with a price target of $50.
The Labor Department’s report on Thursday showed claims for state unemployment benefits rose +13K to a seasonally adjusted 231K last week, higher than the expected figure of 220K. Also, the U.S. Philly Fed’s gauge of manufacturing activity stood at -5.9 in November, stronger than expectations of -9.0. In addition, U.S. October Industrial Production fell -0.6% m/m, compared with the -0.3% m/m consensus and +0.1% m/m in September.
Cleveland Fed President Loretta Mester stated Thursday that she has not yet determined if another interest-rate hike is necessary, emphasizing that officials have the time to observe how the economy evolves. “We’re at a more balanced place, but I don’t think we can say right now what necessarily the next policy meeting will be,” Mester said.
Meanwhile, U.S. rate futures have priced in a 99.7% probability of no hike at the next central bank meeting in December and a 95.6% chance of no hike at January’s monetary policy meeting. Also, U.S. rate futures have priced in a 34.3% probability of a 25 basis point rate cut at the March FOMC meeting.
In other news, U.S. President Joe Biden signed on Thursday a stopgap spending bill to prevent a government shutdown, following its approval by the Senate a day earlier, the White House said.
Today, all eyes are focused on the U.S. Building Permits preliminary data in a couple of hours. Economists, on average, forecast that October Building Permits will stand at 1.450M, compared to the previous value of 1.471M.
U.S. Housing Starts data will be reported today as well. Economists foresee this figure to stand at 1.345M in October, compared to the previous figure of 1.358M.
In addition, investors will likely focus on speeches from Chicago Fed President Austan Goolsbee, Boston Fed President Susan Collins, and San Francisco Fed President Mary Daly.
In the bond markets, United States 10-year rates are at 4.390%, down -1.19%.
The Euro Stoxx 50 futures are up +0.72% this morning as investors increased their bets on interest-rate cuts next year in response to new indications of a global economic slowdown. Gains in real estate and healthcare stocks are leading the overall market higher. Eurostat confirmed on Friday that year-on-year headline inflation in the Eurozone reached its lowest point since July 2021. Separately, data revealed on Friday that retail sales in the U.K. unexpectedly declined in October, signaling a new warning for the economy. Meanwhile, money markets are currently pricing in a percentage point of rate cuts from the European Central Bank next year. In corporate news, Volvo Car Ab (VOLCB.S.DX) slumped over -10% after the majority shareholder China’s Geely sold a small part of its stake at a substantial discount to the previous day’s closing price.
U.K.’s Core Retail Sales, U.K.’s Retail Sales, Eurozone’s CPI, and Eurozone’s Core CPI data were released today.
U.K. October Core Retail Sales stood at -0.1% m/m and -2.4% y/y, weaker than expectations of +0.4% m/m and -1.5% y/y.
U.K. October Retail Sales came in at -0.3% m/m and -2.7% y/y, weaker than expectations of +0.3% m/m and -1.5% y/y.
Eurozone October CPI has been reported at +0.1% m/m and +2.9% y/y, in line with expectations.
Eurozone October Core CPI arrived at +0.2% m/m and +4.2% y/y, in line with expectations.
Asian stock markets today settled in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.11%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.48%.
China’s Shanghai Composite today closed slightly higher. Bloomberg reported on Friday that China’s central bank told several nationwide lenders to cap interest rates on an interbank debt instrument this month, highlighting the regulator’s latest efforts to stabilize financial markets by maintaining stable funding costs and mitigating volatility risks. Meanwhile, Hong Kong-listed tech stock slumped on Friday, with Alibaba Group plunging nearly -10% after the e-commerce giant abandoned plans to spin off its cloud business, citing uncertainties related to U.S. restrictions on chips used in artificial intelligence applications. Also, the company said in regulatory filings that the family trust of Chinese billionaire Jack Ma is set to sell 10 million American Depository Shares of Alibaba for approximately $871 million. In other news, China’s commerce minister expressed concern regarding U.S. semiconductor export controls, sanctions against China, and tariffs on Chinese imports during his meeting with U.S. Commerce Secretary Gina Raimondo on Thursday, as reported by his ministry on Friday.
Japan’s Nikkei 225 Stock Index closed higher today, marking its third consecutive winning week, supported by a robust domestic earnings season that just concluded. Utilities, healthcare, and materials stocks led the gains on Friday. Bank of Japan Governor Kazuo Ueda stated on Friday that the central bank will “patiently” uphold an ultra-loose monetary policy, as the sustained attainment of its 2% inflation target is not yet apparent. “Trend inflation is likely to gradually accelerate toward our 2% inflation target through fiscal 2025. But this needs to be accompanied by a positive wage-inflation cycle. Uncertainty on whether Japan will see such a positive wage-inflation cycle is high,” he told parliament. Meanwhile, Japan’s 10-year yield dropped to the lowest level since late September, driven by speculation of short covering and following a decline in Treasury yields on Thursday. In other news, Warren Buffett’s Berkshire Hathaway Inc. sold yen bonds at lower costs in its second Japan deal this year amid growing speculation that the billionaire investor might increase his investments in the nation’s stock market. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -2.51% to 18.28.
Pre-Market U.S. Stock Movers
Gap Inc (GPS) surged about +18% in pre-market trading after the retailer reported upbeat Q3 results.
ChargePoint Holdings Inc (CHPT) tanked over -24% in pre-market trading after the EV charging network operator cut its Q3 revenue guidance and announced a new CEO.
Applied Materials Inc (AMAT) plunged more than -7% in pre-market trading following a Reuters report stating that the Department of Justice is reviewing the company for allegedly sending “hundreds of millions” of dollars worth of equipment to Semiconductor Manufacturing International Corporation without the required export licenses.
Ross Stores Inc (ROST) climbed over +6% in pre-market trading after the off-price retailer posted stronger-than-expected Q3 results.
Analog Devices Inc (ADI) rose more than +2% in pre-market trading after Morgan Stanley upgraded the stock to Overweight from Equal Weight.
Expedia Inc (EXPE) gained over +3% in pre-market trading after Evercore ISI upgraded the stock to Outperform from In Line.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Friday - November 17th
BJs Wholesale Club (BJ), Spectrum Brands (SPB), Buckle (BKE), Twist Bioscience (TWST), Destination XL Group (DXLG), Huize (HUIZ).
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