December S&P 500 E-Mini futures (ESZ25) are trending up +0.02% this morning, swinging between gains and losses as sentiment remains fragile after a tech-led selloff in the prior session.
Investor focus now turns to U.S. business activity data.
In yesterday’s trading session, Wall Street’s major indices ended in the red. The Magnificent Seven stocks fell, with Nvidia (NVDA) sliding over -3% and Tesla (TSLA) dropping more than -2%. Also, chip stocks plunged, with Micron Technology (MU) slumping over -10% to lead losers in the Nasdaq 100 and Advanced Micro Devices (AMD) falling more than -7%. In addition, Jacobs Solutions (J) sank over -10% and was the top percentage loser on the S&P 500 after the engineering and consulting firm posted disappointing FQ4 GAAP EPS. On the bullish side, Walmart (WMT) climbed more than +6% and was the top percentage gainer on the S&P 500 and Dow after the world’s largest retailer reported better-than-expected Q3 results and raised its full-year guidance.
The U.S. Labor Department’s report on Thursday showed that nonfarm payrolls rose by 119K in September, stronger than expectations of 53K. At the same time, the U.S. unemployment rate unexpectedly ticked up to a nearly 4-year high of 4.4% in September, weaker than expectations of no change at 4.3%. In addition, U.S. September average hourly earnings rose +0.2% m/m and +3.8% y/y, compared to expectations of +0.3% m/m and +3.7% y/y. Finally, the number of Americans filing for initial jobless claims in the past week fell by -8K to 220K, compared with the 227K expected.
“September’s payroll numbers may have surprised to the upside, but in terms of the Fed’s December interest rate decision, October is what mattered,” said Ellen Zentner at Morgan Stanley Wealth Management. “With that data now delayed until after the FOMC meeting, the Fed’s rate-cut path has more question marks.”
Cleveland Fed President Beth Hammack said on Thursday that cutting interest rates to support the labor market could prolong the period of above-target inflation and heighten financial stability risks. Also, Fed Governor Michael Barr said, “I am concerned that we’re seeing inflation still at around 3% and our target is 2% and we’re committed to getting to that 2% target,” adding that policymakers “need to be careful and cautious now about monetary policy, because we want to make sure that we’re achieving both sides of our mandate.” In addition, Chicago Fed President Austan Goolsbee indicated that he remains apprehensive about approving another rate cut next month. “In the near term, I’m a little uneasy front-loading too many rate cuts and counting on ‘this will be transitory and inflation will go back down,’” Goolsbee said.
Meanwhile, U.S. rate futures have priced in a 59.0% probability of no rate change and a 41.0% chance of a 25 basis point rate cut at the Fed’s monetary policy committee meeting next month.
In tariff news, U.S. President Donald Trump signed an executive order on Thursday to remove certain tariffs on specific agricultural products imported from Brazil after November 13th.
Today, investors will focus on preliminary U.S. purchasing managers’ surveys, set to be released in a couple of hours. Economists expect the November S&P Global Manufacturing PMI to be 52.0 and the S&P Global Services PMI to be 54.6, compared to the previous values of 52.5 and 54.8, respectively.
The University of Michigan’s U.S. Consumer Sentiment Index will also be released today. Economists anticipate that the final November figure will be revised higher to 50.6 from the preliminary reading of 50.3.
U.S. Wholesale Inventories data will be released today as well. Economists forecast that the final August figure will be unrevised at -0.2% m/m.
In addition, market participants will be looking toward speeches from Fed Vice Chair Philip Jefferson, Fed Governor Michael Barr, New York Fed President John Williams, and Dallas Fed President Lorie Logan.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.057%, down -1.17%.
The Euro Stoxx 50 Index is down -1.70% this morning, tracking steep declines in Asian and U.S. markets as the initial optimism over Nvidia’s strong earnings faded and AI bubble fears resurfaced. Technology stocks tumbled on Friday. Defense stocks also slumped after Ukrainian President Volodymyr Zelenskiy said he was prepared for “honest” work on a U.S.-backed plan to end the war. The benchmark index is on track to post its steepest weekly decline since April. A private survey released on Friday showed that Eurozone business activity grew steadily in November, with services expanding at the fastest pace in 1-1/2 years, while soft demand pushed manufacturing back into contraction territory. Separately, data showed that U.K. monthly retail sales fell far more than expected in October, signaling deteriorating consumer sentiment ahead of the November 26th budget. Meanwhile, European Central Bank President Christine Lagarde said on Friday that Europe must dismantle its internal barriers to shift away from a growth model reliant on exports. “Europe’s vulnerabilities stem from having a growth model geared towards a world that is gradually disappearing,” Lagarde said. In corporate news, Ubisoft (UBI.FP) surged over +10% after the French video game group posted strong FQ2 net bookings and announced plans to reduce its debt pile.
U.K. Retail Sales, U.K. Core Retail Sales, Eurozone’s Composite PMI (preliminary), Eurozone’s Manufacturing PMI (preliminary), and Eurozone’s Services PMI (preliminary) data were released today.
U.K. October Retail Sales fell -1.1% m/m and rose +0.2% y/y, weaker than expectations of -0.1% m/m and +1.5% y/y.
U.K. October Core Retail Sales fell -1.0% m/m and rose +1.2% y/y, weaker than expectations of -0.2% m/m and +2.5% y/y.
Eurozone’s November Composite PMI has been reported at 52.4, weaker than expectations of 52.5.
Eurozone’s November Manufacturing PMI came in at 49.7, weaker than expectations of 50.1.
Eurozone’s November Services PMI arrived at 53.1, stronger than expectations of 52.8.
Asian stock markets today closed in the red. China’s Shanghai Composite Index (SHCOMP) closed down -2.45%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -2.40%.
China’s Shanghai Composite Index closed sharply lower today, joining a broad global market sell-off. Technology stocks led the declines on Friday, mirroring their U.S. peers’ weak session on Wall Street overnight. Bank, liquor, and consumer stocks also retreated. Goldman Sachs analysts said, “The move looks more like risk-off sentiment in recent overheated outperforming sectors.” The analysts added that some investors may begin to rotate into some of this year’s underperforming sectors. The benchmark index notched its largest weekly drop since late December. Meanwhile, investors await the Politburo meeting and the Central Economic Work Conference in December for signals on next year’s policy agenda. China kept its benchmark lending rates steady on Thursday for the sixth straight month in November, with economists noting that the decision likely indicates that policymakers prefer to wait and retain policy room for next year. In other news, Chinese cruise operators are scrambling to steer clear of Japanese ports as Beijing and Tokyo remain locked in a diplomatic dispute triggered by recent comments from Japan’s Prime Minister Sanae Takaichi on Taiwan. In corporate news, NetEase slid over -3% in Hong Kong after the company reported weaker-than-expected Q3 results.
Japan’s Nikkei 225 Stock Index closed sharply lower today, dragged down by weakness in the technology sector. Semiconductor stocks plunged on Friday amid renewed fears of an AI bubble, mirroring the overnight decline in U.S. chip stocks. The benchmark index notched a weekly loss. Government data released on Friday showed that Japan’s core inflation accelerated in October, remaining above the Bank of Japan’s 2% target and sustaining expectations of a near-term interest rate hike. Separate data showed that Japan’s exports rose for a second consecutive month in October, supported by a softer decline in U.S.-bound shipments, resilient demand in other major markets, and a weaker yen. At the same time, a private-sector survey showed that Japan’s manufacturing activity shrank for a fifth month in November, though at a slower pace than the prior month, thanks to a milder drop in output. ING economists said the figures showing persistent inflationary pressures and tariff-resistant exports support the case for a rate hike. BOJ Governor Kazuo Ueda said on Friday that the central bank will discuss at upcoming policy meetings “the feasibility and timing” of a rate hike, with particular attention on next year’s wage-growth momentum. Meanwhile, Japanese Prime Minister Sanae Takaichi’s cabinet on Friday signed off on the biggest package of additional spending since the pandemic. The plan includes 17.7 trillion yen ($112 billion) in general account spending aimed at helping households cope with rising living costs and supporting economic growth. That followed Japan issuing its strongest warning yet over recent yen movements, with Finance Minister Satsuki Katayama explicitly citing intervention as a possible option. “We are alarmed by recent one-sided, sharp moves in the currency market,” Katayama said at a news conference. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +24.87% to 37.25.
The Japanese October National Core CPI rose +3.0% y/y, in line with expectations.
The Japanese November au Jibun Bank Manufacturing PMI (preliminary) stood at 48.8, in line with expectations.
The Japanese October Trade Balance stood at -231.8 billion yen, stronger than expectations of -280 billion yen.
The Japanese October Exports rose +3.6% y/y, stronger than expectations of +1.1% y/y.
The Japanese October Imports unexpectedly rose +0.7% y/y, stronger than expectations of -0.7% y/y.
Pre-Market U.S. Stock Movers
Intuit (INTU) rose over +3% in pre-market trading after the company posted stronger-than-expected FQ1 results.
The Gap (GAP) climbed more than +4% in pre-market trading after the retailer reported better-than-expected Q3 results and raised the lower end of its full-year net sales growth forecast.
Ross Stores (ROST) gained over +2% in pre-market trading after the off-price retailer posted upbeat Q3 results and raised its full-year earnings guidance.
Chip stocks are moving lower in pre-market trading, with Nvidia (NVDA) and Advanced Micro Devices (AMD) dropping over -1%.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Friday - November 21st
BJ’s Wholesale Club (BJ), IES Holdings (IESC), Moog (MOGa), Miniso (MNSO), Macy’s (M), Buckle (BKE), Buckle (BKE).
On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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