March S&P 500 E-Mini futures (ESH25) are down -0.22%, and March Nasdaq 100 E-Mini futures (NQH25) are down -0.20% this morning, adding to Friday’s declines on Wall Street, as market participants reduced positions amid uncertainty heading into year-end.
In Friday’s trading session, Wall Street’s major equity averages closed in the red. Mega-cap technology stocks slumped, with Tesla (TSLA) sliding nearly -5% to lead losers in the Nasdaq 100 and Nvidia (NVDA) dropping over -2% to lead losers in the Dow. Also, Netflix (NFLX) fell more than -2% after receiving mixed reviews for its new release, “Squid Game Season 2,” which debuted on Thursday. In addition, Viracta Therapeutics (VIRX) tumbled over -32% after announcing the termination of its ongoing Nana-val trial and that its board has begun a process to explore strategic options. On the bullish side, Lamb Weston Holdings (LW) rose over +2% and was the top percentage gainer on the S&P 500 after a filing showed that activist investor Jana Partners is working with a sixth executive to advocate for changes at the French fry maker.
“[It] feels like there is quite a bit of profit-taking across the board. We are more than two years into a pretty strong bull market ... so it’s really not surprising to see some people taking their profits and rebalancing their portfolios ahead of the new year,” said Michael Reynolds, vice president of investment strategy at Glenmede.
Economic data released on Friday showed that the U.S. November trade deficit widened to -$102.86B from -$98.26B in October, a larger deficit than expectations of -$101.30B. Also, U.S. wholesale inventories unexpectedly fell -0.2% m/m in November, compared to expectations of a +0.1% m/m increase.
Meanwhile, U.S. rate futures have priced in an 88.8% chance of no rate change and an 11.2% chance of a 25 basis point rate cut at the next central bank meeting in January.
The U.S. stock and bond markets will be closed on Wednesday for the New Year’s Day holiday. Also, the U.S. bond market will close early at 2 p.m. Eastern Time on Tuesday for New Year’s Eve.
In this holiday-shortened week, investors will be eyeing several economic data releases, including the U.S. S&P/CS HPI Composite - 20 n.s.a., Initial Jobless Claims, the S&P Global Manufacturing PMI, Construction Spending, Crude Oil Inventories, and the ISM Manufacturing PMI.
Market participants will also focus on remarks from Richmond Fed President Tom Barkin on Friday.
Today, all eyes are on the U.S. Chicago PMI, which is set to be released in a couple of hours. Economists forecast that the Chicago PMI will stand at 42.7 in December, compared to last month’s value of 40.2.
U.S. Pending Home Sales data will be released today as well. Economists expect the November figure to be +0.9% m/m, compared to the previous figure of +2.0% m/m.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.596%, down -0.50%.
The Euro Stoxx 50 futures are down -0.10% this morning, tracking earlier losses in Asia as well as Friday’s declines on Wall Street. Industrial, media, and technology stocks led the declines on Monday. Trading in Europe is expected to be subdued on Monday as markets approach the New Year holiday. Meanwhile, German bonds erased earlier gains after data showed that Spanish inflation accelerated more than expected in December, bolstering the argument for gradual interest rate cuts by the European Central Bank. The update came after ECB Governing Council member Robert Holzmann told the Austrian newspaper Kurier over the weekend that the central bank could slow down its rate-cutting campaign due to sticky inflation. “It could be the case that we take more time before lowering rates again,” he said. In corporate news, Baywa Ag (BYW6.D.DX) climbed over +9% after announcing it had reached a restructuring agreement with its principal shareholders and financiers.
Spain’s CPI (preliminary) data was released today.
The Spanish December CPI came in at +0.4% m/m and +2.8% y/y, stronger than expectations of +0.3% m/m and +2.6% y/y.
Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.21%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.96%.
China’s Shanghai Composite Index closed slightly higher today, with investors awaiting fresh PMI data from the country later this week. Bank stocks were among the top gainers on Monday. Energy stocks also advanced. For 2024, onshore shares are on track to post gains for the first time after three consecutive years of losses, as various policy stimulus measures introduced since September have boosted market sentiment. Meanwhile, a strategist at Citic Securities noted that the market is likely to stay active in the first half of January, though external disruptions may increase in the latter half, resulting in a cooling of market sentiment. “Policy expectations are anticipated to heat up again after the Lunar New Year,” he said. In other news, the People’s Daily reported that China has room to lower the reserve requirement ratio for banks, as it remains higher than those in other major economies, citing People’s Bank of China governor Pan Gongsheng. In corporate news, Sichuan Chuanhuan Technology climbed about +9% after securing an order to provide 60,000 sets of liquid cooling piping systems to a server overall solution service provider. Investors are looking ahead to China’s December PMI data, set for release on Tuesday, to gain insights into the economy’s strength.
Japan’s Nikkei 225 Stock Index closed lower today, retreating from a 5-month high in thin year-end trading. Automobile and technology stocks led the declines on Monday. A private-sector survey released on Monday showed that Japan’s factory activity contracted at a slower rate in December as declines in production and new orders moderated. Meanwhile, Monday is the final trading day of the year for Japanese financial markets, with public holidays scheduled from Tuesday through January 6th. The benchmark index gained 19.22% this year, driven by strong corporate earnings and a weaker yen that lifted export-oriented sectors. In corporate news, Nissan Motor slid over -5% amid worries that the terms of the automaker’s planned deal with Honda Motor would result in investors receiving a smaller stake in the proposed joint holding company. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +4.76% to 21.79.
The Japanese December au Jibun Bank Japan Manufacturing PMI arrived at 49.6, stronger than expectations of 49.5.
Pre-Market U.S. Stock Movers
Boeing (BA) fell more than -4% in pre-market trading after South Korean authorities said they would inspect all Boeing 737-800 planes flown by domestic carriers following the crash that claimed 179 lives.
American Airlines (AAL) gained about +1% in pre-market trading after Raymond James upgraded the stock to Outperform from Market Perform with a $24 price target.
Rocket Pharmaceuticals (RCKT) climbed over +5% in pre-market trading after Wedbush initiated coverage of the stock with an Outperform rating and a $32 price target.
Artiva Biotherapeutics (ARTV) rose more than +5% in pre-market trading after H.C. Wainwright initiated coverage of the stock with a Buy rating and a $20 price target.
Nordstrom (JWN) dropped about -0.8% in pre-market trading after Argus downgraded the stock to Sell from Buy.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Monday - December 30th
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