Five things you need to know before the market opens on Thursday January 12:
1. -- Stock Futures Slip Ahead of Key Inflation Data
U.S. equity futures edged lower Thursday, while Treasury yields and the dollar slipped, as investors braced for a crucial December inflation report that could define the Federal Reserve's near-term rate path.
Stocks booked solid gains Wednesday, extending the S&P 500's 2023 gain to around 2.1% and lifting the benchmark closer to its 200-day moving average, an important technical trading level that it hasn't met since the market sold-off in mid December, powered in part by fading inflation forecasts and easing rate bets.
A better-than-expected auction of $32 billion in 10-year Treasury notes, which saw the strongest demand since August a big increase in foreign buying interest, helped push bond yields lower across the curve, boosting tech stocks and adding to the session's optimism.
Analysts are looking for a headline reading of 6.5% for the December CPI release, expected at 8:30 am EST, with core prices falling to around 5.7% on an annualized basis.
Benchmark 10-year note yields fell 4 basis points overnight to 3.534%, while 2-year notes were pegged at 4.23% heading into the CPI reading. The U.S. dollar index, which tracks the greenback against a basket of its global currency peers, was marked 0.12% lower at 103.061.
Stocks are holding firm heading into the data release, with futures contracts tied to the the S&P 500 are priced for a 5 point opening bell decline while those linked to the Dow Jones Industrial Average are set for a 20 point dip. The tech-focused Nasdaq, which is on its best four-day run since November, is looking at an 18 point pullback.
In overseas markets, the the region-wide MSCI ex-Japan index rose 0.19% to a seven-month high into the close of trading, boosted by an in-line reading for China inflation over the month of December and ongoing bets that its re-opening momentum will boost broader economic growth.
Europe's Stoxx 600 was marked 0.59% higher in early Frankfurt dealing, while London's FTSE 100 was up 0.55%.
2. -- Core Prices In Focus As December CPI May Show Headline Decline
Investors are likely to focus on the core reading of the Commerce Department's December CPI report Thursday, as market look for definitive signals that inflation pressures are easing in the world's biggest economy.
Headline inflation, on a month-to-month basis, may actually decline in December, with recent forecasts looking for a -0.1% reading following last week's 'Goldilocks' jobs report that showed moderating wage growth, and data from the Atlanta Fed that indicted business inflation expectations have fallen to the lowest levels since the summer of 2021.
The so-called core inflation reading, which strips out volatile food and energy costs, is likely to bump 0.3% higher in December, but could also extend its recent run of three consecutive monthly declines. Rents and used car prices comprise the bulk of the core reading, and while the former is more difficult to predict, the latter has been trending sharply lower for several month.
"The main upside risk to core inflation comes from the ex-shelter services components," said Vanguard senior economist Andrew Patterson. "Persistent wage growth could keep services inflation running hot in 2023. Recent slowing in wages while welcome, does not yet suggest a broader slowing of labor market."
3. -- Disney Shares Jump As Nelson Peltz Pushes For Board Seat
Walt Disney (DIS) shares moved higher in pre-market trading after the media and entertainment group named former Nike NKE CEO Mark Parker to head its board of directors while revealing a push for changes from activist Nelson Peltz.
Parker, who will succeed the outgoing Sue Arnold, is also tasked with chairing a committee within the board that will plan for the ultimate departure of CEO Bob Iger, who returned to the group on a temporary basis last year.
He'll face an immediate challenge from Peltz, however, as the billionaire activist, through his Trian Fund Management, is seeking a board seat to address what he called "a company in crisis". Trian, which owns a 0.5% stake in Disney, plans to formally nominate Peltz for a board seat later this week, setting off a proxy fight with Disney's senior management heading into its annual general meeting in early March.
Disney shares were marked 1.32% higher in pre-market trading to indicate an opening bell price of $97.60 each.
4. -- TSMC Higher On Record Q4 Profits, Muted Chip Sector Forecast
Taiwan Semiconductor Manufacturing Co. TSM moved firmly higher Thursday after the world's biggest contract chipmaker and a lead supplier for Apple Inc. AAPL iPhones posted record December quarter profits, but lowered its capital spending plans amid a pullback in global demand.
TSMC said profits for the three months ending in December came in at T$295.9 billion ($9.72 billion), up 78% from the same period last year, as revenues rose 26.7% to $19.93 billion, a figure it expects to ease to between $16.7 billion and $17.5billion over the first three months of the year.
As a result, TSMC trimmed its 2023 capital spending plans to a range of between $32 billion and $36 billion, down by around $36.3 billion over the whole of 2022.
TSMC's U.S.-listed shares were marked 2.1% higher in pre-market trading to indicate an opening bell price of $83.75 each. Apple shares, meanwhile, were up 0.19% at $133.75 each.
5. -- KB Home Shares Slide After Q4 Profit Miss, Uncertain 2023 Outlook
KB Home (KBH) shares slumped lower in pre-market trading after the single-family homebuilder posted weaker-than-expected fourth quarter earnings and a muted 2023 forecast amid what it called "significant uncertainty and limited forward visibility" in the U.S. housing market.
KB Home said earnings for the three months ending in December were pegged at $2.47 per share, well shy of Street forecasts, with revenues rising 16% to $1.94 billion. Looking into the current year, KB Home said it sees margins of around 20.5% and housing revenues in the range of between $5 billion and $6 billion, a 12.7% decline from 2022 levels.
"High mortgage rates and persistent inflation, together with an uncertain economy, have made homebuyers more cautious since the middle of last year,' said CEO Jeffrey Mezger. "
KB Home shares were marked 2.6% lower in pre-market trading to indicate an opening bell price of $34.38each.
