December S&P 500 futures (ESZ23) are up +0.12%, and December Nasdaq 100 E-Mini futures (NQZ23) are up +0.14% this morning as investors looked ahead to the Federal Reserve’s interest rate decision later this week.
In Friday’s trading session, Wall Street’s major indexes closed sharply lower, with the benchmark S&P 500 and tech-heavy Nasdaq 100 notching 1-week lows. Adobe Systems Incorporated (ADBE) slid over -4% after the Photoshop software maker delivered a sales outlook that matched analysts’ projections but left investors disappointed, as they had anticipated that demand for the company’s artificial intelligence tools would drive higher revenue. Also, chip stocks retreated after Reuters reported that Taiwan Semiconductor Manufacturing Co. had told major suppliers to delay chip equipment deliveries, with Lam Research Corp (LRCX) plunging more than -5% and Applied Materials Inc (AMAT) dropping over -4%. In addition, Nucor Corp (NUE) tumbled more than -6% and was the top percentage loser on the S&P 500 after issuing below-consensus Q3 earnings guidance. On the bullish side, Walt Disney Company (DIS) rose over +1% after Bloomberg reported that the company had engaged in preliminary discussions regarding the potential sale of its ABC network and TV stations to Nexstar Media Group.
Data on Friday showed that the University of Michigan U.S. consumer sentiment fell to 67.7 in September, weaker than expectations of 69.1. At the same time, the University of Michigan’s September year-ahead inflation expectations unexpectedly eased to a 2-1/2 year low of 3.1%, better than the expected 3.5% figure. Also, the U.S. NY Empire State manufacturing index came in at +1.90 in September, stronger than expectations of -10.00. In addition, U.S. August industrial production stood at +0.4% m/m, stronger than expectations of +0.1% m/m.
“We really continue to see that growth resilience story, and I think that’s difficult for the market simply because there’s concern about what that could mean both for rates and inflation,” said Lisa Erickson, a head of public markets at U.S. Bank Wealth Management.
The U.S. Federal Reserve interest rate decision and Fed Chair Jerome Powell’s post-policy meeting press conference will take center stage in the coming week. Also, investors’ focus will be on the Fed’s quarterly dot plot in its Summary of Economic Projections. U.S. rate futures have priced in a 99.0% chance of no hike on Wednesday and a 30.7% probability of a 25 basis point rate increase at the November FOMC meeting.
In addition, market participants will be eyeing a spate of economic data this week, including the U.S. Building Permits (preliminary), Housing Starts, Crude Oil Inventories, Current Account, Initial Jobless Claims, Philadelphia Fed Manufacturing Index, Existing Home Sales, S&P Global Manufacturing PMI (preliminary), S&P Global Composite PMI (preliminary), and S&P Global Services PMI (preliminary).
The U.S. economic data slate is mainly empty on Monday.
In the bond markets, United States 10-year rates are at 4.346%, up +0.56%.
The Euro Stoxx 50 futures are down -0.65% this morning as investors braced for a week filled with central bank meetings, including interest rate decisions from Norway, Sweden, Switzerland, the U.K., the United States, and Japan. Losses in tech and consumer product stocks are leading the overall market lower. Meanwhile, European Central Bank’s Governing Council member Martins Kazaks cautioned against anticipating an interest rate reduction by the central bank in the first half of next year, stating that it would be a mistake. In corporate news, Societe Generale (GLE.FP) plunged over -7% after the Paris-based lender’s strategic plan disappointed investors. Also, Nordic Semiconductor ASA (NOD.O.DX) slumped more than -11% after the chipmaker cut its revenue and margin guidance for the third quarter.
The European economic data slate is empty on Monday.
China’s Shanghai Composite Index (SHCOMP) closed up +0.26%, while the Japanese market was closed for a holiday.
China’s Shanghai Composite today closed slightly higher as investors drew support from last week’s economic data that pointed to signs of stabilization in the world’s second-largest economy. Data released on Friday indicated that China’s factory output and retail sales grew at a faster pace in August, while the downturn in the property sector intensified despite a recent flurry of support measures. After data showed some signs of stabilization in the economic recovery, J.P. Morgan and ANZ increased their economic growth projections for China in 2023 by 20 basis points each to 5% and 5.1%, respectively. Meanwhile, consumer discretionary, healthcare, tourism, and automobile stocks outperformed on Monday. On the negative side, Chinese property developers and tech firms listed in Hong Kong retreated. According to a survey conducted by JPMorgan among Chinese and international investors, the most challenging phase of China’s property crisis has not yet passed.
“Multiple indicators show China’s growth momentum stabilized or improved in August after the sharp deterioration in Q2, suggesting that the worst of the latest deflationary shock to the economy is now past,” Gavekal Dragonomics analysts said in a note.
Pre-Market U.S. Stock Movers
CCC Intelligent Solutions Holdings Inc (CCCS) climbed over +5% in pre-market trading following a Reuters report indicating that private equity firm Advent International is considering a sale of the company.
Dropbox Inc (DBX) fell more than -2% in pre-market trading after William Blair downgraded the stock to Market Perform from Outperform.
KKR & Co LP (KKR) rose about +1% in pre-market trading after the private equity firm agreed to buy a 20% stake in the regional data center business of Singapore Telecommunications for about $800M.
ZIM Integrated Shipping Services Ltd (ZIM) soared more than +3% in pre-market trading after JPMorgan upgraded the stock to Overweight from Neutral.
Micron Technology Inc (MU) gained over +2% in pre-market trading after Deutsche Bank upgraded the stock to Buy from Hold.
DoorDash Inc (DASH) rose more than +2% in pre-market trading after Mizuho upgraded the stock to Buy from Neutral.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Monday - September 18th
Stitch Fix (SFIX), Lovesac (LOVE), Anixa Biosciences (ANIX), Investcorp Credit Management BDC (ICMB).
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