Five things you need to know before the market opens on Monday November 14:
1. -- Stocks Futures Edge Lower After Best Week Since June
U.S. equity futures edged lower Monday, while the dollar arrested its decline against a basket of its global peers and Treasury yields bumped higher, as investors looked to regroup from last week's rally and into the final stretch of the trading year.
Stocks powered to their strongest five-day gain since June last week, amid the biggest pullback for the dollar in more than two years, following a softer-than-expected reading for October inflation that triggered a paring of bets on big Federal Reserve rate hikes in December and a softening of the central bank's inflation stance heading into the start of next year.
Morgan Stanley analysts, meanwhile, have forecast that headline inflation will fall below the Fed's 2% target by late next year amid weakening global demand and unstuck supply chains.
Fed officials, however, have cautioned that they'll need to see a series of data points that confirm an inflation retreat, with Fed Governor Christopher Waller telling a conference in Australia that the bank's endpoint on rate hikes is "a ways off".
Still, the CME Group's FedWatch suggests an 85.4% chance of a smaller 50 basis point rate hike in December, while 2-year Treasury notes yields are hovering at around 4.395% in overnight trading, down from around 4.7% early last week.
The U.S. dollar index, which tracks the greenback against a basket of six global currency peers, was marked 0.65% higher at 106.986, but is now some 7% south of the 22-year high it hit in late September.
Investors will also focus on the final throes of the third quarter earnings season this week, with updates from 15 S&P 500 companies between now and Friday. With around 460 reporting so far, collective profits are expected to rise 4.1% from last year to $462.8 billion, thanks in large part to forecast-busting gains from the energy sector.
Looking into the final months of the year, however, earnings are likely to fall 0.1% from their 2021 levels to a share-weighted $456.7 billion, according to data from Refinitiv.
Heading into the start of the trading day on Wall Street, futures tied to the S&P 500 are priced for a modest 18 point pullback while those linked to the Dow Jones Industrial Average are indicating an 82 point decline. Futures tied to the tech-focused Nasdaq are looking at a 75 point retreat.
2. -- Week Ahead: Retail Sales, Earnings, Housing in Focus
Consumer's ability to power-though inflation headwinds and increasing concerns over the fate of the broader economy will be in sharp focus this week with September quarter earnings updates expected from Walmart (WMT), Target (TGT) and Home Depot (HD) as well as official data on October retail sales.
Consumer strength, the most powerful driver of U.S. economic growth, has held up well amid the surge in inflation, which lifted consumer prices to their fastest pace in four decades over the summer, thanks in part to pandemic era stimulus and a robust jobs market.
However, with savings being run down, and inflation -- while easing -- holding at multi-decade highs, some analyst worry that holiday spending could suffer as Americans grapple with higher food, gas and energy prices while simultaneously paring back discretionary purchases.
Earnings from Walmart and Target, due Tuesday and Wednesday respectively, will provide key details as to the holiday season outlook from two of the world's biggest retailers, while Commerce Department data on Thursday will show how spending held up in the face of rising gasoline prices over the month of October.
Housing data will also be in focus with building permits and starts data on Thursday, as well as what could be a pullback in mortgage costs -- linked to the retreat in interest rates last week following softer-than-expected inflation data -- when the MBA updates on Wednesday morning.
Tech investors will also get a key glimpse into chip and gaming demand from Nvidia (NVDA), which publishes its September quarter earnings after the close of trading on Wednesday, alongside an update from Cisco Systems (CSCO) with Applied Materials (AMAT) and Palo Alto Networks (PANW) reporting on Thursday.
3. -- President Biden Meets President Xi At G20 Summit in Bali
President Joe Biden will hold his first face-to-face meeting with China's Xi Jinping since taking office nearly three years ago on the sidelines of this week's G20 Summit in Indonesia.
National Security adviser Jake Sullivan said Sunday the meeting will focus on ensuring that the world's two largest economies engage in what he called "stiff competition" that "should not tip over into conflict or confrontation."
The recent U.S. ban on high-tech exports to China, the ongoing trade war that has kept tariffs on goods from both countries in place since the administration of Donald Trump as well as the escalating military tension in North Korea are expected to dominate the talks, as is also Beijing's close relationship with Vladimr Putin and its support for Russia's ongoing invasion of Ukraine.
“We share a responsibility, in my view, to show China and the United States can manage our differences, prevent competition from coming anywhere near conflict, and find ways to work better together,” President Biden said as the two men shook hands in Bali.
Biden's position in the talks was boosted over the weekend by news suggesting Democrat Senator Catherine Cortez Masto was re-elected in Nevada, allowing his party to regain control of the upper Chamber while only conceding a small majority in the House of Representatives to his Republican rivals.
4. -- FTX Bankruptcy Raises Security Issues, Crypto Markets Steady
Bitcoin prices steadied in overnight trading, while a host of digital coins and blockchain-related tokens shed billions of value alongside it, as the cryptocurrency word continues to pick through the wreckage of FTX's spectacular collapse from late last week.
Bloomberg reported that Sam Bankman-Fried, the 30-year old founder of the FTX exchange, was questioned by Bahamian authorities over the weekend as regulators and law enforcement from around the world seek an answer into the group's rapid spiral, which took it from the world's second-largest crypto exchange with an estimated value of around $32 billion to essentially worthless in less than five days.
Adding to the collapse were reports that nearly $500 million went missing from FTX's accounts on Saturday -- a day after it filed for Chapter 11 bankruptcy protection in Delaware -- with authorities unsure if the funds were stolen by hackers or misappropriated by FTX executives.
Bitcoin, the world's biggest cryptocurrency, was marked 2.74% higher Monday and changing hands at $16,747.70 each. Serum, the digital token created by FTX and Bankman-Fried -- and allegedly the largest asset on its balance sheet and valued at $2.2 billion -- was marked 5.3% lower at $25 cents each representing a market cap of just $65 million.
5. -- Disney Slips Lower Amid Reports of Job, Spending Cuts
Disney (DIS) shares slipped lower in pre-market trading amid reports that the media and entertainment giant will freeze hiring, and unveil targeted job cuts, as it looks to manage costs following a disappointing fourth quarter earnings report that revealed deeper losses in its streaming division.
Disney CEO Bob Chapek, who stuck to his view that the group's Direct-to-Consumer business would turn a profit in its next fiscal year, told employees that "meeting these goals requires all of us to continue doing our part to manage the things we can control - most notably, our costs," according to a memo viewed by multiple media organizations.
Disney added 14.6 million subscribers over the three months ending in September, its fiscal fourth quarter, with ESPN+ totaling 24.3 million paid subscribers and Hulu rising to 47.2 million. Disney's total subs of 235.7 million are now firmly ahead of the 223.1 million last tallied by Netflix
The direct-to-consumer business division, however, posted a loss of $1.5 billion for the quarter, Disney said, although it expects to be consistently in the green by the start of the next fiscal year as it raises price, cuts costs and "optimizes" its content slate.
Disney shares were marked 0.25% lower in pre-market trading to indicate an opening bell price of $94.77 each.
