December S&P 500 futures (ESZ23) are trending up +0.09% this morning as market participants refrained from big bets ahead of a key U.S. consumer inflation report later in the day and the Fed’s last interest rate decision of the year on Wednesday.
In Monday’s trading session, Wall Street’s major indexes closed higher, with the benchmark S&P 500 rising to a 20-month high and the blue-chip Dow and tech-heavy Nasdaq 100 climbing to 1-3/4 year highs. Cigna Corp (CI) surged over +16% and was the top percentage gainer on the S&P 500 after the health insurer ended talks on acquiring Humana and bumped up its share buyback by an additional $10 billion. Also, Macy’s Inc (M) soared more than +19% following a report from the Wall Street Journal indicating that the company received a $5.8 billion buyout offer from Arkhouse Management and Brigade Capital Management. In addition, Broadcom Inc (AVGO) climbed +9% after Citigroup restarted coverage of the stock with a Buy rating and a price target of $1,100. On the bearish side, Paramount Global (PARA) fell more than -3% after Loop Capital Markets downgraded the stock to Sell from Hold with a price target of $12.
The Federal Reserve kicks off its two-day meeting later in the day, with market participants widely expecting the U.S. central bank to keep rates on hold Wednesday. Also, investors will closely watch Fed Chair Jerome Powell’s post-decision press conference and the Fed’s quarterly dot plot in its Summary of Economic Projections.
“The Fed decision on Wednesday is unlikely to be controversial, but the forecasts, dot plot, and press conference that accompany it may well be,” said Craig Erlam at Oanda.
On the economic data front, all eyes are focused on the U.S. consumer inflation report in a couple of hours. Economists, on average, forecast that the November U.S. CPI will come in at 0.0% m/m and +3.1% y/y, compared to the previous values of 0.0% m/m and +3.2% y/y.
Also, investors will likely focus on the U.S. Core CPI data. Economists anticipate Core CPI to be +0.3% m/m and +4.0% y/y in November, compared to the previous figures of +0.2% m/m and +4.0% y/y.
In the bond markets, United States 10-year rates are at 4.199%, down -0.93%.
The Euro Stoxx 50 futures are up +0.33% this morning as investors digested softer-than-expected U.K. wage growth data and looked ahead to the latest U.S. inflation reading. Household and personal care stocks gained ground on Tuesday, while telecom stocks underperformed. The Office for National Statistics data showed Tuesday that British wage growth decelerated by the most in nearly two years in the three months to October. Also, the ZEW Economic Research Institute said on Tuesday that German investor morale improved in December. In corporate news, AstraZeneca Plc (AZN.L.EB) rose over +1% after the company agreed to acquire vaccine developer Icosavax Inc.
U.K.’s Average Earnings ex Bonus, U.K.’s Claimant Count Change, U.K.’s Unemployment Rate, Germany’s ZEW Economic Sentiment, and Eurozone’s ZEW Economic Sentiment data were released today.
U.K. October Average Earnings ex Bonus has been reported at 7.3%, weaker than expectations of 7.4%.
U.K. November Claimant Count Change came in at 16.0K, weaker than expectations of 15.0K.
U.K. October Unemployment Rate was at 4.2%, in line with expectations.
The German December ZEW Economic Sentiment arrived at 12.8, stronger than expectations of 8.8.
Eurozone December ZEW Economic Sentiment stood at 23.0, stronger than expectations of 11.2.
Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.40%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.16%.
China’s Shanghai Composite closed higher today as investors anticipated outcomes from a top economic meeting that could provide insights into the extent of stimulus measures expected in the coming year. Real estate and bank stocks outperformed on Tuesday. According to Reuters, China’s leaders started a closed-door meeting on Monday to deliberate economic targets and formulate stimulus plans for 2024. The 2023 Central Economic Work Conference, where President Xi Jinping and other top officials outline the direction for the world’s second-largest economy in the coming year, is anticipated to conclude on Tuesday. Investors are eagerly anticipating the meeting’s results to gain insights into the policy and reform agenda for the upcoming year, especially given recent economic data indicating a sluggish recovery. In corporate news, Poly Developments and Holdings climbed over +7% after the property developer announced its intention to repurchase shares worth 1-2 billion yuan within the next three months. Investor attention is also directed towards Chinese data releases, including fixed asset investment, unemployment, industrial production, and retail sales figures for November, due on Friday.
Japan’s Nikkei 225 Stock Index closed slightly higher today as speculation eased regarding the Bank of Japan’s potential exit from its negative interest-rate regime, while investors also exercised caution in anticipation of a crucial U.S. inflation report. Gains in technology stocks led the overall market higher. Data showed on Tuesday that Japan’s producer prices slowed sharply in November, aligning with the BOJ’s perspective that inflationary pressure is moderating. Meanwhile, the yen rebounded from its most significant decline in over a month on Monday, prompted by a Bloomberg report indicating that BOJ officials believe there is little urgency to swiftly abandon the world’s last negative interest-rate regime. In addition, Japanese government bond yields retreated on Tuesday as expectations for an immediate hawkish policy tweak by the BOJ diminished, with the declines accelerating after a smooth auction of five-year notes. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -0.66% to 18.09.
The Japanese November PPI stood at +0.2% m/m and +0.3% y/y, compared to expectations of +0.2% m/m and +0.1% y/y.
Pre-Market U.S. Stock Movers
Oracle Corporation (ORCL) plunged over -8% in pre-market trading after the company reported weaker-than-expected Q2 revenue.
Blue Bird Corp (BLBD) climbed more than +7% in pre-market trading after the company posted upbeat Q4 results and raised its FY24 guidance.
Lucid Group Inc (LCID) fell over -3% in pre-market trading following the announcement from the EV maker that Chief Financial Officer Sherry House has resigned, effective immediately, “to pursue other opportunities.”
Hasbro Inc (HAS) slid more than -3% in pre-market trading after the toymaker announced plans to eliminate 900 “incremental” positions as part of a cost-cutting plan.
Eagle Bulk Shipping Inc (EGLE) soared over +10% in pre-market trading after Star Bulk Carriers announced a merger with the company in an all-stock deal, creating a dry bulk shipping entity with a pro forma market capitalization of about $2.1 billion.
Airbnb Inc (ABNB) dropped more than -2% in pre-market trading after Barclays downgraded the stock to Underweight from Equal Weight with a price target of $100.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Tuesday - December 12th
Johnson Controls (JCI), Uranium Energy (UEC), Mama’s Creations (MAMA), Frequency Electronics (FEIM), Champions Oncology (CSBR), EMCORE (EMKR).
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