December S&P 500 E-Mini futures (ESZ24) are up +0.22%, and December Nasdaq 100 E-Mini futures (NQZ24) are up +0.26% this morning as investors looked ahead to the Federal Reserve’s final policy decision of the year.
In yesterday’s trading session, Wall Street’s three main equity benchmarks ended in the red. Managed care stocks came under pressure after Pfizer CEO Albert Bourla said U.S. President-elect Donald Trump is “very committed” to reforming the pharmacy benefit manager industry, with Humana (HUM) plunging over -10% to lead losers in the S&P 500 and CVS Health (CVS) falling more than -5%. Also, chip stocks lost ground, with Marvell Technology (MRVL) slumping over -10% to lead losers in the Nasdaq 100 and Broadcom (AVGO) sliding nearly -4%. In addition, Red Cat Holdings (RCAT) dropped over -7% after reporting weaker-than-expected FQ2 results. On the bullish side, Pfizer (PFE) climbed more than +4% and was the top percentage gainer on the S&P 500 after the drugmaker reaffirmed its 2024 guidance and provided a better-than-expected 2025 adjusted EPS forecast. Also, Tesla (TSLA) gained over +3% and was the top percentage gainer on the Nasdaq 100 after Mizuho upgraded the stock to Outperform from Neutral with a $515 price target.
Economic data released on Tuesday showed that U.S. retail sales climbed +0.7% m/m in November, beating the +0.6% m/m consensus. Also, U.S. November core retail sales, which exclude motor vehicles and parts, edged up +0.2% m/m, weaker than expectations of +0.4% m/m. In addition, U.S. industrial production unexpectedly fell -0.1% m/m in November, weaker than expectations of +0.3% m/m, while manufacturing production rose +0.2% m/m, weaker than expectations of +0.5% m/m.
Today, all eyes are focused on the Federal Reserve’s monetary policy decision later in the day. Fed officials are widely expected to lower interest rates by a quarter percentage point, but the trajectory for the following months is less clear. While the U.S. economy remains resilient, the prospect of inflationary import tariffs proposed by the incoming Donald Trump administration may cause policymakers to reconsider the pace of future interest rate cuts. Market watchers will closely follow the central bank’s quarterly “dot plot” in its Summary of Economic Projections and Chair Jerome Powell’s post-decision press conference.
“Whether [today’s] Fed decision is positive, negative or neutral for stocks and bonds likely won’t be determined by any actual rate cut, but instead by what the FOMC says about cuts in 2025,” wrote Tom Essaye, president and founder of Sevens Report and a former Merrill Lynch trader.
On the earnings front, notable companies like Micron Technology (MU), Lennar (LEN), General Mills (GIS), and Jabil Circuit (JBL) are scheduled to report their quarterly figures today.
On the economic data front, investors will focus on U.S. Building Permits (preliminary) and Housing Starts data, set to be released in a couple of hours. Economists forecast November Building Permits to be 1.430M and Housing Starts to be 1.350M, compared to the prior figures of 1.419M and 1.311M, respectively.
U.S. Crude Oil Inventories data will be released today as well. Economists estimate this figure to be -1.600M, compared to last week’s value of -1.425M.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.407%, up +0.50%.
The Euro Stoxx 50 futures are up +0.24% this morning as investors digested inflation data from the region and cautiously awaited the Fed’s monetary policy decision. Automobile stocks outperformed on Wednesday, while food & beverage and healthcare stocks lost ground. Data from the Office for National Statistics released Wednesday showed that the U.K. annual inflation rate climbed to an 8-month high in November, moving further above the Bank of England’s 2% target and bolstering expectations that it will hold interest rates at its final meeting of the year despite a faltering economy. Separately, final data from Eurostat showed that the Eurozone’s annual inflation rate was revised slightly lower to 2.2% in November. Meanwhile, European Central Bank Chief Economist Philip Lane said Wednesday that higher U.S. tariffs on imports from Europe would dampen economic growth in the Eurozone, though the impact on inflation remains unclear. In corporate news, Renault (RNO.FP) climbed more than +6% following reports that Nissan and Honda plan to merge. Renault owns a 36% stake in Nissan. Also, Commerzbank Ag (CBK.D.DX) gained over +2% after UniCredit SpA said it had raised its stake in the German lender.
U.K.’s CPI, U.K.’s Core CPI, Eurozone’s CPI, and Eurozone’s Core CPI data were released today.
U.K. November CPI arrived at +0.1% m/m and +2.6% y/y, in line with expectations.
U.K. November Core CPI came in at +3.5% y/y, better than expectations of +3.6% y/y.
Eurozone November CPI has been reported at -0.3% m/m and +2.2% y/y, compared to expectations of -0.3% m/m and +2.3% y/y.
Eurozone November Core CPI stood at -0.6% m/m and +2.7% y/y, in line with expectations.
Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.62%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.72%.
China’s Shanghai Composite Index closed higher today, snapping a three-day losing streak on optimism about increased policy support next year. Semiconductor and software stocks led the gains on Wednesday. Investors increased wagers on more aggressive fiscal stimulus next year following a Reuters report on Tuesday that Beijing intends to set an annual growth target of about 5% for 2025 and increase the budget deficit to 4% of gross domestic product. Fitch Ratings said in a note that fiscal support will be crucial in tackling China’s weak domestic demand and partially mitigating external headwinds. Meanwhile, Chinese President Xi Jinping called on officials to “scientifically” plan economic and social development work for 2025 and aim for a good start to the new year. In other news, the State-owned Assets Supervision and Administration Commission issued guidelines late on Tuesday, urging state-owned enterprises to enhance market value management of listed companies. In corporate news, Harbin Jiuzhou Group climbed over +11% after its Daqing wind power project was added to the 2024 subsidy list for renewable energy power generation.
Japan’s Nikkei 225 Stock Index ended lower today, tracking overnight losses on Wall Street as investors braced for the Fed’s rate decision later in the day. Technology stocks led the declines on Wednesday. Ministry of Finance data released on Wednesday showed that Japan’s exports continued to recover in November, driven by robust demand for chip-making machines and nonferrous metals. At the same time, data showed that imports unexpectedly fell in November, marking the first decline since March. Meanwhile, investor attention is also shifting to the Bank of Japan’s monetary policy decision. Governor Kazuo Ueda’s board is anticipated to maintain its benchmark rate at 0.25% at the end of a two-day meeting on Thursday, with over half of economists now forecasting a rate hike in January. In corporate news, Nissan Motor surged over +23%, the most since 1974, after the struggling carmaker confirmed reports that it was exploring a potential merger with Honda Motor. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +7.92% to 21.12.
The Japanese November Trade Balance has been reported at -117.6B yen, stronger than expectations of -688.9B yen.
The Japanese November Exports stood at +3.8% y/y, stronger than expectations of +2.8% y/y.
The Japanese November Imports came in at -3.8% y/y, weaker than expectations of +1.0% y/y.
Pre-Market U.S. Stock Movers
Worthington Enterprises (WOR) climbed over +10% in pre-market trading after the company posted better-than-expected FQ2 results.
Heico Corporation (HEI) slid more than -6% in pre-market trading after reporting weaker-than-expected FQ4 revenue.
Packaging Corp. of America (PKG) gained over +3% in pre-market trading after Jefferies upgraded the stock to Buy from Hold with a price target of $280.
Expedia (EXPE) rose more than +2% in pre-market trading after BofA upgraded the stock to Buy from Neutral with a price target of $221.
BILL Holdings (BILL) advanced over +2% in pre-market trading after KeyBanc upgraded the stock to Overweight from Sector Weight with a $115 price target.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Wednesday - December 18th
Micron (MU), Lennar (LEN), General Mills (GIS), Jabil Circuit (JBL), Birkenstock Holding Ltd (BIRK), Toro (TTC), ABM Industries (ABM), Enerpac Tool Group (EPAC), Worthington Steel (WS), MillerKnoll (MLKN), Steelcase (SCS), Dmg Blockchain (DMGGF).
