December S&P 500 futures (ESZ23) are down -0.34%, and December Nasdaq 100 E-Mini futures (NQZ23) are down -0.46% this morning as U.S. Treasury yields climbed at the start of a busy week of economic data, with all eyes on Friday’s nonfarm payrolls report that could influence the outlook for U.S. interest rates.
In Friday’s trading session, Wall Street’s major averages closed higher, with the benchmark S&P 500 posting a 4-month high and the blue-chip Dow notching a 1-3/4 year high. Ulta Beauty Inc (ULTA) soared over +10% after the company posted better-than-expected Q3 results. Also, real estate investment trusts gained ground, with Boston Properties Inc (BXP) climbing more than +11% and Alexandria Real Estate Equities Inc (ARE) rising about +8%. In addition, Paramount Global (PARA) gained over +9% following a Wall Street Journal report stating that the media company and Apple have discussed bundling their streaming services at a discount. On the bearish side, Pfizer Inc (PFE) fell more than -5% after the drugmaker abandoned plans to progress a twice-daily version of oral weight-loss drug danuglipron into late-stage studies, citing side effects related to the twice-daily formulation.
Economic data on Friday showed that the U.S. ISM manufacturing index came in at 46.7 in November, weaker than expectations of 47.6. Also, the U.S. November S&P Global manufacturing PMI stood at 49.4, in line with expectations. In addition, U.S. construction spending rose +0.6% m/m in October, stronger than expectations of +0.4% m/m.
Federal Reserve Chair Jerome Powell said Friday in a fireside chat at Spelman College that officials are prepared to raise rates further if needed. Also, Powell reiterated that the Fed is “moving forward carefully, as the risks of under- and over-tightening are becoming more balanced.” “It would be premature to conclude with confidence that we have achieved a sufficiently restrictive stance or to speculate on when policy might ease. We are prepared to tighten policy further if it becomes appropriate to do so,” Powell said in a prepared speech.
Meanwhile, U.S. rate futures have priced in a 97.5% chance of no hike at the upcoming monetary policy meeting and an 83.8% probability of no hike at January’s policy meeting. Also, U.S. rate futures have priced in a 51.7% chance of a 25 basis point rate cut at the March FOMC meeting.
The highlight of the upcoming week will be the U.S. Nonfarm Payrolls report for November. Also, investors will be monitoring a spate of economic data, including the U.S. S&P Global Composite PMI, S&P Global Services PMI, ISM Non-Manufacturing PMI, ISM Non-Manufacturing Prices, JOLTs Job Openings, ADP Nonfarm Employment Change, Exports, Imports, Nonfarm Productivity, Trade Balance, Unit Labor Costs, Crude Oil Inventories, Initial Jobless Claims, Wholesale Inventories, Average Hourly Earnings, Private Nonfarm Payrolls, Unemployment Rate, and Michigan Consumer Sentiment (preliminary).
On the earnings front, notable companies like Broadcom (AVGO), Lululemon Athletica (LULU), Dollar General (DG), AutoZone (AZO), MongoDB (MDB), Toll Brothers (TOL), Campbell Soup (CPB), and Chewy (CHWY) are slated to release their quarterly results this week.
Today, investors will likely focus on U.S. Factory Orders data. Economists, on average, forecast that October Factory Orders will stand at -2.6% m/m, compared to the previous value of +2.8% m/m.
In the bond markets, United States 10-year rates are at 4.254%, up +0.71%.
The Euro Stoxx 50 futures are down -0.14% this morning as investors digested German trade data and braced for a slew of U.S. employment data later in the week. Losses in mining and energy stocks are leading the overall market lower. Data from the Federal Statistics Office showed on Monday that German exports unexpectedly fell in October, attributed to a slump in demand within the European Union. Meanwhile, ECB Vice-President Luis de Guindos remarked on Monday that recent inflation data was “good news” and “a positive surprise,” yet emphasized that any forthcoming decisions regarding monetary policy would be contingent on the reality on the ground. In corporate news, Roche Holding Ag (ROG.Z.IX) rose over +2% following its decision to acquire obesity drug developer Carmot Therapeutics for $2.7 billion. Also, Rolls-Royce Holdings Plc (RR-.LN) gained more than +2% after JPMorgan upgraded the stock to Overweight from Neutral.
Germany’s Trade Balance, Germany’s Exports, Germany’s Imports, and Eurozone’s Sentix Investor Confidence data were released today.
The German October Trade Balance has been reported at 17.8B, stronger than expectations of 17.1B.
The German October Exports stood at -0.2% m/m, weaker than expectations of +1.1% m/m.
The German October Imports came in at -1.2% m/m, weaker than expectations of +0.8% m/m.
Eurozone December Sentix Investor Confidence arrived at -16.8, weaker than expectations of -15.0.
Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.29%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.60%.
China’s Shanghai Composite today closed lower as investor sentiment remained dampened by the challenging growth environment in the country reflected in the recent economic data. Healthcare stocks tumbled on Monday, with WuXi Biologics plunging over -23% after the company said it expects to see lower revenue growth from development, attributed to an overtly bullish 2023 goal of adding 120 projects despite the downturn, coupled with a faster-than-anticipated decline in COVID-related revenue. Also, tech giants listed in Hong Kong experienced a decline for a fifth consecutive session. Meanwhile, China Evergrande Group climbed over +9% following another postponement by a Hong Kong court in deciding whether the world’s most-indebted property developer should be wound up. In other news, Goldman Sachs’ prime services team said in a report on Monday that Chinese equities saw net outflow from long/short fund managers for a fourth consecutive month, primarily attributable to a reduction in long bets. Investor attention is now firmly directed toward the Chinese trade data for November, due on Thursday.
Japan’s Nikkei 225 Stock Index fell to a nearly 3-week low today as a stronger yen weighed on export-oriented stocks. Automobile stocks lost ground on Monday as the Japanese yen strengthened against the greenback, with Mazda Motor Corp slumping over -3%, Nissan Motor Co Ltd dropping more than -3%, and Toyota Motor Corp falling over -2%. Meanwhile, Bank of Japan board member Asahi Noguchi said on Saturday that the country has not yet experienced price gains propelled by higher wages despite the recent inflationary uptick driven by cost-push factors, indicating that it might be premature to step back from ultra-loose monetary policy. “To achieve our 2% inflation target, we must see price rises backed by sustained wage increases,” Noguchi said. In other news, the Bank of Japan Monday reduced its offer for bonds with maturities ranging from 10 to 25 years at its regular bond-buying operation. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +4.79% to 17.06.
Pre-Market U.S. Stock Movers
Hawaiian Holdings Inc (HA) surged about +170% in pre-market trading after Alaska Air Group Inc agreed to buy the company in a deal valued at $1.9 billion.
Cryptocurrency-exposed stocks are moving higher in pre-market trading, with the price of Bitcoin reaching its highest level since April 2022. Marathon Digital (MARA) is up more than +13%, and Riot Blockchain (RIOT) is up more than +10%
Uber Technologies Inc (UBER) climbed over +4% in pre-market trading after S&P Dow Jones Indices announced that the company would join the S&P 500 index as part of a quarterly rebalance, effective before the start of trading on December 18th.
Carvana Co (CVNA) rose more than +4% in pre-market trading after JPMorgan upgraded the stock to Neutral from Underweight.
General Motors Company (GM) gained about +0.7% 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 - December 4th
Gitlab (GTLB), Science Applications (SAIC), Mueller Water Products (MWA), IDT (IDT).
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