December S&P 500 E-Mini futures (ESZ24) are up +0.01%, and December Nasdaq 100 E-Mini futures (NQZ24) are down -0.01% this morning as market participants braced for the latest reading on U.S. job openings while also awaiting comments from Federal Reserve officials.
In yesterday’s trading session, Wall Street’s main stock indexes closed mixed, with the benchmark S&P 500 and tech-heavy Nasdaq 100 notching new all-time highs. Super Micro Computer (SMCI) soared over +28% and was the top percentage gainer on the S&P 500 and Nasdaq 100 after the server maker said that a review by a special committee found “no evidence of misconduct on the part of management or the board of directors and that the audit committee acted independently.” Also, Tesla (TSLA) advanced more than +3% after Roth Capital Partners upgraded the stock to Buy from Neutral with a price target of $380. In addition, The Gap (GAP) climbed over +6% after JPMorgan Chase upgraded the stock to Overweight from Neutral with a price target of $30. On the bearish side, PG&E (PCG) slid about -5% after launching concurrent public offerings of $1.2 billion of common stock and $1.2 billion of mandatory convertible preferred stock.
Economic data released on Monday showed that the U.S. ISM manufacturing index rose to a 5-month high of 48.4 in November, stronger than expectations of 47.7. Also, the U.S. November S&P Global manufacturing PMI was revised upward to 49.7, beating the consensus of 48.8. In addition, U.S. construction spending rose +0.4% m/m in October, stronger than expectations of +0.2% m/m.
“This week is the last truly important economic data week of 2024,” said Tom Essaye at The Sevens Report. “If results are Goldilocks, then investors will expect a soft landing and a December rate cut. That will keep positive seasonals in place for a year-end grind higher.”
Atlanta Fed President Raphael Bostic stated Monday that he is uncertain about the need for an interest rate cut this month but believes policymakers should continue reducing rates in the coming months. Also, New York Fed President John Williams said, “I expect it will be appropriate to continue to move to a more neutral policy setting over time,” adding that “the path for the policy will depend on the data.” At the same time, Fed Governor Christopher Waller expressed his inclination to support another rate cut at the December meeting. However, he noted that data to be released before then might justify keeping interest rates unchanged.
Meanwhile, U.S. rate futures have priced in a 72.5% probability of a 25 basis point rate cut and a 27.5% chance of no rate change at the December FOMC meeting.
On the earnings front, notable companies like Salesforce (CRM), Marvell (MRVL), and Okta Inc. (OKTA) are set to report their quarterly figures today.
Today, all eyes are on the U.S. JOLTs Job Openings data, which is set to be released in a couple of hours. Economists, on average, forecast that the October JOLTs Job Openings will arrive at 7.510M, compared to the September figure of 7.443M.
Market participants will also focus on speeches from Fed Governor Adriana Kugler and Chicago Fed President Austan Goolsbee.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.217%, up +0.57%.
The Euro Stoxx 50 futures are up +0.91% this morning as fresh U.S. restrictions on Chinese access to critical chip and AI components turned out to be less severe than initially expected. Gains in technology and mining stocks are leading the overall market higher. Investors are also closely monitoring the political turmoil in France. France’s Prime Minister Michel Barnier used special constitutional powers to pass a contentious budget bill without a parliamentary vote. Both far-right and left-wing parties have filed no-confidence motions against Barnier, with the vote potentially taking place as early as tomorrow. Meanwhile, European Central Bank Executive Board member Piero Cipollone stated on Tuesday that import tariffs anticipated under the administration of U.S. President-elect Donald Trump could reduce economic growth and inflation in Europe. In corporate news, Asml Holding (ASML.NA) gained more than +1% after the Dutch producer of advanced chip-making machines maintained its sales guidance. At the same time, Mercedes-Benz Group Ag (MBG.D.DX) fell over -1% after Barclays downgraded the stock to Underweight from Equal Weight.
The European economic data slate is mainly empty on Tuesday.
Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.44%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +1.91%.
China’s Shanghai Composite Index closed higher today. The benchmark index rebounded from earlier losses after Bloomberg News reported that the nation’s top leaders are scheduled to begin a key annual economic work conference next Wednesday to outline economic priorities for 2025. Investor attention will center on any announcements of fiscal stimulus and signals on next year’s growth target. Automobile and bank stocks outperformed on Tuesday. Meanwhile, the United States launched its third crackdown in three years on China’s semiconductor industry on Monday, restricting exports to 140 companies to hinder China’s ability to access and manufacture high-end chips. However, those curbs were less severe than earlier proposals that would have targeted more major Chinese firms, providing some relief to investors. “It was not a blanket ban, or as stringent as people first feared. So that, to me, is a positive,” said Tai Hui, Asia chief market strategist at JPMorgan Asset Management in Hong Kong. In other news, China’s Politburo skipped a readout of its regular November meeting, sparking speculation that further stimulus measures could be on the way. In corporate news, Guangzhou Automobile jumped about +10%, building on yesterday’s gains following the announcement of an EV partnership with Huawei over the weekend.
Japan’s Nikkei 225 Stock Index ended higher today, hitting a 3-week high. Chip stocks led the gains on Tuesday, fueled by a strong overnight performance by their U.S. counterparts on Wall Street. Machinery stocks also advanced. Meanwhile, local media over the weekend quoted Bank of Japan Governor Kazuo Ueda as saying that the next interest rate hike was “approaching,” as the economy was progressing in line with the central bank’s forecasts, leaving the door open for a December rate increase. In other news, the U.S. imposed new limitations on China’s access to critical chip and AI components but exempted Japan from expanded restrictions on chipmaking equipment following negotiations. In corporate news, Japan Display climbed +5% after partnering with Innolux and CarUX Technology to advance OLED displays with its eLEAP technology. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +22.01% to 22.84.
Pre-Market U.S. Stock Movers
Credo Technology (CRDO) soared about +31% in pre-market trading after the technology company posted upbeat FQ2 results and issued above-consensus FQ3 revenue guidance.
CVS Health Corp. (CVS) gained nearly +2% in pre-market trading after Deutsche Bank upgraded the stock to Buy from Hold with a $66 price target.
Tesla (TSLA) slid more than -1% in pre-market trading after a Delaware judge rejected Elon Musk’s supersized compensation package for a second time.
Zscaler (ZS) slumped over -7% in pre-market trading after the cloud-based cybersecurity platform provided a soft FQ2 forecast.
Microchip Technology (MCHP) fell more than -1% in pre-market trading after lowering its FQ3 revenue guidance.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Tuesday - December 3rd
Salesforce (CRM), Marvell (MRVL), Bank of Nova Scotia (BNS), Okta (OKTA), Descartes Systems (DSGX), Core Main (CNM), Donaldson (DCI), Box (BOX), Couchbase (BASE), REX American Resources (REX), Torrid Holdings (CURV), Citi Trends (CTRN), Inotiv (NOTV).
