Pre-Market Brief: Stocks Fall As Weakness In Retailers and Chip Stocks Weigh On Sentiment

December S&P 500 futures (ESZ22) are trending down -0.12% after three major US benchmark indices finished the regular session in the red, pressured by a Micron-fueled drop in tech and substantial losses in retailer Target just as better-than-anticipated retail sales data renewed fears of more aggressive Federal Reserve monetary policy tightening. Three major U.S. stock indexes were weighted down primarily by losses in the Oil & Gas, Technology, and Basic Materials sectors

Micron Technology plunged over -6% after the chipmaker warned that it would reduce memory chip supply as the market outlook for 2023 "has weakened," while Target tumbled more than -13% after a grim outlook spurred fresh concerns about retailers heading into the crucial holiday season.

The Commerce Department reported that retail sales advanced 1.3% last month, surpassing expectations of a 1.0% increase as households stepped up purchases of motor vehicles.

The strong retail sales data is a "decent indication that nominal demand remains fairly robust...suggesting that the Fed still has more work to do to bring it in line with aggregate supply," Jefferies said in a note.

Goldman Sachs said it was adding another 25 basis point increase by the Fed to its 2023 outlook and boosted its projections for the peak fed funds rate to 5.0%-5.25%. Meanwhile, U.S. rate futures have priced in an 85.4% chance of a 50 basis point rate increase and a 14.6% chance of a 75 basis point hike at December's monetary policy meeting. 

Today, all eyes are focused on the U.S. Building Permits data in a couple of hours. Economists, on average, forecast that October Building Permits will stand at 1.512M, compared to the previous value of 1.564M.

Also, investors are likely to focus on the U.S. Philadelphia Fed Manufacturing Index, which was at -8.7 in October. Economists foresee the November figure to be -6.2.

U.S. October Housing Starts data will be reported today. Economists foresee this figure to stand at 1.410M, compared to the previous number of 1.439M.

U.S. Initial Jobless Claims data will be reported today as well. Economists estimate this figure to be 225K, compared to the last week’s value of 225K.

In the bond markets, United States 10-Year rates are at 3.727%, up +0.89%.

The Euro Stoxx 50 futures are down -0.18% this morning, retreating as European equities received a negative handover from Wall Street and Asia. At the same time, political tensions over a missile strike on Poland eased ahead of the latest U.K. fiscal statement. The circumstances surrounding the missile blast affecting a village in Poland close to the border with Ukraine remained uncertain, but NATO officials appear to have cleared Russia from immediate blame. 

Also, global investors are likely to focus on U.K. Chancellor's Autumn Statement, with hefty tax increases and spending cuts on the agenda as the government tries to plug a significant fiscal 'black hole.'

Eurozone CPI, Eurozone Core CPI, and Eurozone HICP ex Energy & Food data were released today.

Eurozone October CPI has been reported at +1.5% m/m and +10.6% y/y, compared to expectations of +1.5% m/m and +10.7% y/y.

Eurozone October Core CPI came in at +0.6% m/m and +5.0% y/y, in line with expectations.

Eurozone October HICP ex Energy & Food stood at +0.7% m/m, in line with expectations.

Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.15%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.35%.

China’s Shanghai Composite today closed lower as losses in technology stocks dragged Asian markets lower. In addition, concerns over more aggressive moves by the Federal Reserve and rising COVID-19 cases in China also weighed on sentiment, especially as the country notched its highest daily rise in COVID-19 cases since mid-April. Also, weak economic data released this week showed that Chinese economic activity had been hit hard by Covid-related curbs.

At the same time, Japan’s Nikkei 225 Stock Index closed lower today amid new data that showed Japan’s trade deficit widened more than expected in October. The index's downward momentum was fueled by losses in the Insurance, Real Estate, and Precision Instruments sectors. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up 1.54% to 19.16.

Pre-Market U.S. Stock Movers

Cisco Systems Inc (CSCO) gained about +4% in pre-market trading after the company reported upbeat Q1 results and raised full-year guidance.

NVIDIA Corporation (NVDA) rose over +2% in pre-market trading after the company reported mixed Q3 results but provided a favorable Q4 sales outlook.

Kulicke and Soffa Industries Inc (KLIC) dropped about -1% in pre-market trading after the company reported upbeat Q4 results but issued a weak Q1 outlook. 

Sonos Inc (SONO) climbed over +2% in pre-market trading after the company reported a smaller-than-expected loss per share and topped revenue estimates in Q3.

Bath & Body Works Inc. (BBWI) jumped more than +22% in pre-market trading after the company announced stronger-than-expected Q3 numbers.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Thursday - November 17th

Alibaba ADR (BABA), Siemens ADR (SIEGY), Applied Materials (AMAT), Palo Alto Networks (PANW), NetEase (NTES), Ross Stores (ROST), Keysight Technologies (KEYS), Bouygues ADR (BOUYY), BJs Wholesale Club (BJ), Burberry Group Plc (BURBY), Williams-Sonoma (WSM), Globant SA (GLOB), UGI (UGI), Dolby Labs (DLB), Woodward (WWD), Helmerich Payne (HP), Macy’s Inc (M), Post (POST), Gap (GPS), NewJersey Resources (NJR), Thyssenkrupp ADR (TKAMY), Farfetch A (FTCH), Kohl’s Corp (KSS), Bellring (BRBR), StoneCo (STNE), Weibo Corp (WB), Subsea 7 ADR (SUBCY), Flughafen Wien ADR (VIAAY), Brady (BRC), ESCO Technologies (ESE), Harmony Gold Mining (HMY), Manchester United (MANU), Corporacion America Airports (CAAP), Dada Nexus (DADA), Clearfield (CLFD), Formula Systems ADR (FORTY), Borr Drilling (BORR), Teekay Tankers (TNK), Camtek (CAMT), Cellebrite (CLBT), Dole (DOLE).

More Stock Market News from Barchart

• Stocks Close Lower on Weakness in Retailers and Hawkish Fed Comments
• Tesla Sees Challenges as Musk Focuses on Twitter
• Stocks Decline on Weakness in Retailers and Chip Stocks
• Unusual Activity in Tesla Put Options Signals Bullish Institutional Investors