December S&P 500 futures (ESZ23) are up +0.07%, and December Nasdaq 100 E-Mini futures (NQZ23) are down -0.05% this morning as investors looked ahead to comments from Fed Chair Jerome Powell for more clues about the path of interest rates.
In Thursday’s trading session, the blue-chip Dow outperformed major benchmarks, underpinned by an over +9% surge in Salesforce Inc (CRM) after the cloud-computing giant reported solid Q3 results and raised its full-year profit forecast. Also, Snowflake Inc (SNOW) gained more than +7% after the data warehousing giant posted upbeat Q3 results and lifted its annual product revenue guidance. On the bearish side, Pure Storage Inc (PSTG) plunged over -12% after the maker of flash array storage products provided below-consensus Q4 and FY24 revenue guidance. In addition, Ford Motor Company (F) fell more than -3% after cutting its full-year adjusted EBIT guidance due to rising labor costs from its new contract with UAW.
Data from the U.S. Department of Commerce on Thursday showed that the U.S. core PCE price index, a key inflation gauge monitored by the Federal Reserve, stood at +0.2% m/m and +3.5% y/y in October, in line with expectations. Also, the U.S. November Chicago PMI rose to a 1-1/2 year high of 55.8, stronger than expectations of 45.4. In addition, U.S. personal spending came in at +0.2% m/m in October, right on expectations. Finally, the number of Americans filing for jobless claims the past week rose +7K to 218K, just below the consensus estimate of 220K.
New York Fed President John Williams reiterated Thursday that the Fed’s benchmark lending rate is at or near its peak level and said that monetary policy is “quite restrictive.” “I expect it will be appropriate to maintain a restrictive stance for quite some time to fully restore balance and to bring inflation back to our 2% longer-run goal on a sustained basis,” Williams said. Also, San Francisco Fed President Mary Daly said interest rates are in a “very good place” to control inflation, although she is not considering cuts, and that it was too early to determine if hikes are finished.
U.S. rate futures have priced in a 99.4% chance of no hike at the Fed’s monetary policy committee meeting later this month and a 91.2% probability of no hike at January’s monetary policy meeting. Also, U.S. rate futures have priced in a 50.0% chance of a 25 basis point rate cut at the March meeting.
Meanwhile, Federal Reserve Chair Jerome Powell is set to participate in a “fireside chat” at Spelman College in Atlanta later in the day.
“We expect Powell to reiterate the possibility of further tightening and dampen expectations of rate cuts. Further loosening of financial conditions may undermine the FOMC’s efforts to tame inflation pressures. That said, we do not expect the FOMC to tighten policy again,” said Carol Kong, currency strategist at Commonwealth Bank of Australia.
On the economic data front, investors will likely focus on the U.S. ISM manufacturing PMI, due later in the day. Economists, on average, forecast that the ISM manufacturing PMI will stand at 47.6 in November, compared to the previous value of 46.7.
The U.S. S&P Global manufacturing PMI will be reported today. Economists foresee this figure to come in at 49.4 in November, compared to October’s number of 50.0.
U.S. construction spending data will come in today as well. Economists expect October’s figure to be +0.4% m/m, compared to the previous number of +0.4% m/m.
In the bond markets, United States 10-year rates are at 4.312%, down -0.86%.
The Euro Stoxx 50 futures are up +0.68% this morning as investors digested the Eurozone’s factory activity data while awaiting comments from Fed’s Powell later in the day. Gains in mining stocks are leading the overall market higher. A survey showed on Friday that the widespread downturn in Eurozone manufacturing activity moderated slightly last month, but the sector continued to experience significant contraction, leading factories to reduce staffing levels for a sixth consecutive month. Meanwhile, Goldman Sachs has revised its projection for the European Central Bank’s first rate cut, now anticipating it to occur in the second quarter of 2024 instead of the previously forecasted third quarter of next year. In corporate news, Viaplay Group Ab (VPLAB.S.DX) tumbled over -75% following the Swedish streaming company’s announcement of intentions to raise new equity and restructure its debt. Also, Bechtle Ag (BC8.D.DX) slid over -4% after the company announced a convertible bond offering.
U.K.’s Nationwide HPI, Spain’s Manufacturing PMI, Italy’s Manufacturing PMI, France’s Manufacturing PMI, Germany’s Manufacturing PMI, Eurozone’s Manufacturing PMI, and U.K.’s Manufacturing PMI were released today.
U.K. November Nationwide HPI has been reported at +0.2% m/m and -2.0% y/y, stronger than expectations of -0.4% m/m and -2.3% y/y.
The Spanish November Manufacturing PMI came in at 46.3, stronger than expectations of 45.5.
The Italian November Manufacturing PMI stood at 44.4, weaker than expectations of 45.3.
The French November Manufacturing PMI was at 42.9, stronger than expectations of 42.6.
The German November Manufacturing PMI has been reported at 42.6, stronger than expectations of 42.3.
Eurozone November Manufacturing PMI came in at 44.2, stronger than expectations of 43.8.
U.K. November Manufacturing PMI arrived at 47.2, stronger than expectations of 46.7.
Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.06%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.17%.
China’s Shanghai Composite today closed just above the flatline, paring earlier losses following a report that an unidentified state institution bought exchange-traded funds. China Securities Journal reported on Friday that an institution purchased ETFs whose underlying assets are A-shares issued by central state-owned enterprises. Meanwhile, a private survey showed on Friday that China’s factory activity unexpectedly expanded in November, fueled by increased orders, but this may not be sufficient to alleviate concerns about the economy’s ability to build momentum as it heads into the next year. Also, a private survey indicated on Friday that new home prices in China experienced a modest increase for a third straight month in November. In other news, China equities experienced a fourth consecutive month of selling by foreign investors in November, the longest selling streak, amid lingering concerns about the nation’s economic recovery.
The Chinese November Caixin Manufacturing PMI came in at 50.7, stronger than expectations of 49.3.
Japan’s Nikkei 225 Stock Index closed slightly lower today, posting its first weekly drop after four consecutive weeks of gains. Losses in technology stocks led the overall market lower. A private-sector survey showed on Friday that Japan’s factory activity contracted at the fastest rate in nine months in November, driven by sluggish domestic and international demand that squeezed firms’ order books. Separately, data on Friday indicated that Japanese companies increased capital expenditure in the July-September quarter. Meanwhile, Japan’s 10-year government bond yield climbed on Friday, tracking U.S. Treasury yields higher, as investors geared up for auctions of 10- and 30-year bonds scheduled for the next week. In corporate news, Seven & I Holdings Co Ltd gained over +5% after the nation’s largest retailer announced that it would repurchase up to 110 billion yen ($748 million) worth of shares and implement a 3-for-1 stock split. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -1.75% to 16.28.
The Japanese November Manufacturing PMI stood at 48.3, stronger than expectations of 48.1.
The Japanese Capital Spending arrived at +3.4% y/y in the third quarter, in line with expectations.
The Japanese October Unemployment Rate was at 2.5%, stronger than expectations of 2.6%.
Pre-Market U.S. Stock Movers
Altimmune Inc (ALT) surged about +37% in pre-market trading after announcing positive topline results from its 48-week MOMENTUM Phase 2 obesity trial of pemvidutide.
Elastic NV (ESTC) soared over +17% in pre-market trading after the company reported upbeat Q2 results and raised its FY24 guidance.
UiPath Inc (PATH) climbed more than +13% in pre-market trading after reporting better-than-expected Q3 results and issuing a solid Q4 revenue forecast.
Ulta Beauty Inc (ULTA) gained over +10% in pre-market trading after the company posted upbeat Q3 results.
Marvell Technology Inc (MRVL) slid more than -4% in pre-market trading after the semiconductor company offered a weak Q4 outlook.
Johnson & Johnson (JNJ) rose about +1% in pre-market trading after UBS upgraded the stock to Buy from Neutral.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Friday - December 1st
Bank of Montreal (BMO), National Bank of Canada (NTIOF), Mueller Water Products (MWA), Genesco (GCO).
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.
