Get all your news in one place.
100’s of premium titles.
One app.
Start reading
Barchart
Barchart
Oleksandr Pylypenko

S&P Futures Tick Higher as Investors Await U.S. PMI Data, Rate Worries Persist

December S&P 500 futures (ESZ23) are trending up +0.22% this morning after three major U.S. benchmark indices finished the regular session in the red as the latest data on the labor market reinforced the case for the Fed’s stance of holding rates higher for longer.

In Thursday’s trading session, the benchmark S&P 500 and tech-heavy Nasdaq 100 dropped to 1-month lows, and the blue-chip Dow fell to a 3-1/2 week low. Cisco Systems Inc (CSCO) slid over -3% after the tech giant agreed to acquire cybersecurity company Splunk for $28B. Also, rate-sensitive megacap stocks retreated after the 10-year T-note yield climbed to a 16-year high, with Amazon.com Inc (AMZN) falling more than -4% and NVIDIA Corporation (NVDA) slumping over -2%. On the bullish side, FedEx Corporation (FDX) rose more than +4% after the company reported better-than-expected Q1 earnings and lifted the lower end of its annual outlook for EPS.

“The lesson for the markets is that a lot of investors had been second-guessing the Fed. They’re committed to keeping inflation down, and part of that, I think, is to keep rates higher for longer - and markets are finally coming to grips with that,” said Chris Gaffney, president of world markets at EverBank. 

Economic data on Thursday showed the U.S. Philly Fed business outlook survey came in at -13.5 in September, weaker than expectations of -0.7. Also, U.S. August existing home sales fell to a 7-month low of 4.04M, weaker than expectations of 4.10M. In addition, the number of Americans filing for jobless claims the past week unexpectedly fell -20K to a 7-1/2 month low of 201K, stronger than expectations of 225K, suggesting continued resilience in the labor market.

Former St. Louis Fed President James Bullard said Thursday the central bank might need to raise interest rates further and maintain them at elevated levels to mitigate the potential risk of a reacceleration of inflation.

Meanwhile, U.S. rate futures have priced in a 26.3% probability of a 25 basis point rate increase at the November FOMC meeting and a 38.4% chance of a 25 basis point rate hike at the December FOMC meeting. 

Today, all eyes are focused on the U.S. S&P Global Manufacturing PMI preliminary reading in a couple of hours. Economists, on average, forecast that the September Manufacturing PMI will stand at 48.0, compared to the previous value of 47.9.

U.S. S&P Global Services PMI preliminary reading will be reported today as well. Economists foresee this figure to stand at 50.6 in September, compared to the previous number of 50.5.

In the bond markets, United States 10-year rates are at 4.481%, down -0.02%.

The Euro Stoxx 50 futures are down -0.42% this morning as concerns over higher-for-longer interest rates weighed on risk appetite. Construction and automobile stocks led the decline on Friday, while mining stocks outperformed. A survey released on Friday indicated that the Eurozone economy is expected to decline in the third quarter and may not rebound anytime soon, despite a downturn in the region’s business activity eased slightly in September. In corporate news, Adevinta ASA (ADE.O.DX) surged over +22% after the Norwegian company said it had received a takeover proposal from a private equity consortium that includes Blackstone Inc. and Permira.

U.K.’s Retail Sales, Spain’s GDP, France’s Manufacturing PMI (preliminary), France’s Composite PMI (preliminary), France’s Services PMI (preliminary), Germany’s Composite PMI (preliminary), Germany’s Manufacturing PMI (preliminary), Germany’s Services PMI (preliminary), Eurozone’s Manufacturing PMI (preliminary), Eurozone’s Composite PMI (preliminary), Eurozone’s Services PMI (preliminary), U.K.’s Composite PMI (preliminary), U.K.’s Manufacturing PMI (preliminary), and U.K.’s Services PMI data were released today.

U.K. August Retail Sales stood at +0.4% m/m and -1.4% y/y, weaker than expectations of +0.5% m/m and -1.2% y/y.

The Spanish GDP came in at +0.5% q/q and +2.2% y/y in the second quarter, stronger than expectations of +0.4% q/q and +1.8% y/y.

The French September Manufacturing PMI has been reported at 43.6, weaker than expectations of 46.0.

The French September Composite PMI was at 43.5, weaker than expectations of 46.0.

The French September Services PMI arrived at 43.9, weaker than expectations of 46.0.

The German September Composite PMI came in at 46.2, stronger than expectations of 44.8.

The German September Manufacturing PMI stood at 39.8, stronger than expectations of 39.5.

The German September Services PMI was at 49.8, stronger than expectations of 47.2.

Eurozone September Manufacturing PMI came in at 43.4, weaker than expectations of 44.0.

Eurozone September Composite PMI arrived at 47.1, stronger than expectations of 46.5.

Eurozone September Services PMI was at 48.4, stronger than expectations of 47.7.

U.K. September Composite PMI has been reported at 46.8, weaker than expectations of 48.7.

U.K. September Manufacturing PMI stood at 44.2, stronger than expectations of 43.0.

U.K. September Services PMI came in at 47.2, weaker than expectations of 49.2.

Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed up +1.55%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.52%.

China’s Shanghai Composite today closed sharply higher, rebounding from a 4-week low on hopes of improving growth, but the ongoing trend of foreign capital outflows for seven consecutive weeks underscored lingering economic and geopolitical apprehensions related to the country. Most sectors in China climbed on Friday. Hong Kong-listed mainland property developers and technology firms also gained ground. Goldman Sachs said in a note Friday that the largely positive August data offered initial indications of a potential bottoming out for both growth and inflation but also highlighted concerns related to the property sector. “We continue to expect that sequential growth will improve from Q2 to H2,” the bank said. At the same time, money has been flowing out of mainland China stocks through the Connect scheme for seven consecutive weeks, reflecting enduring apprehensions about China’s economic health and Beijing’s geopolitical tensions with the West.

“The advance for Chinese stocks likely reflects short covering on expectations of more policy support measures over the weekend, just like the government’s moves in every weekend this month,” said Steven Leung, an executive director at Uob Kay Hian Hong Kong Limited.

Japan’s Nikkei 225 Stock Index closed lower today, trimming some early losses following the Bank of Japan’s decision to maintain its ultra-dovish policy without making any alterations. The BOJ held interest rates, its 10-year yield target, and forward guidance unchanged while repeating a pledge to keep ultra-loose monetary policy “as long as necessary to maintain the target in a stable manner.” Government data showed on Friday that core consumer prices in Japan rose 3.1% in August from a year earlier, remaining above the Bank of Japan’s 2% inflation target for a 17th straight month, with increasing food prices contributing to overall inflationary pressures. Separately, a survey revealed that Japan’s manufacturing sector contracted for the fourth consecutive month, while the growth in the service sector slowed to an 8-month low. Meanwhile, the yen weakened following the BOJ announcement. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -2.30% to 17.83.

The Japanese August National Core CPI has been reported at +3.1% y/y, stronger than expectations of +3.0% y/y.

The Japanese September Manufacturing PMI stood at 48.6, weaker than expectations of 49.9.

Pre-Market U.S. Stock Movers

Scholastic Corporation (SCHL) plunged about -16% in pre-market trading after the company reported weaker-than-expected Q1 results.

Alibaba Group Holdings Ltd ADR (BABA) soared over +4% in pre-market trading after Bloomberg News reported that the company’s logistics unit Cainiao Network Technology intends to file for a $1B Hong Kong IPO as soon as next week.

United States Steel Corporation (X) rose more than +1% in pre-market trading following a Bloomberg report that Canadian steelmaker Stelco is considering making a bid for the company.

Charter Communications Inc (CHTR) gained over +1% in pre-market trading after Wells Fargo upgraded the stock to Overweight from Equal Weight.

Wayfair Inc (W) climbed more than +2% in pre-market trading after Bernstein upgraded the stock to Market Perform from Underperform.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Friday - September 22nd

Lovesac (LOVE), Anixa Biosciences (ANIX), Bridgford (BRID), Tritium Dcfc (DCFC), NetSol (NTWK).

More Stock Market News from Barchart

On the date of publication, Oleksandr Pylypenko 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.
Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
One subscription that gives you access to news from hundreds of sites
Already a member? Sign in here
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.