December S&P 500 futures (ESZ22) are trending up +0.04% this morning after three major US benchmark indices took a breath and finished the regular session mixed as market participants digested mixed economic data emphasizing weak manufacturing activity and a still strong consumer ahead of a key nonfarm payrolls report. The Dow Jones Industrial Average and S&P 500 indexes were weighed down primarily by losses in the Telecoms, Oil & Gas, and Financials sectors, while the NASDAQ Composite index ended in the green mainly due to gains in the Healthcare, Consumer Goods, and Technology sectors.
U.S. manufacturing activity shrank in November for the first time in 2-1/2 years as higher borrowing costs weighed on demand for goods, indicating that the Fed's rate hikes have cooled the economy. At the same time, the personal consumption expenditures price index was in line with expectations in October, underpinned by lower fuel prices. Also, the Labor Department report on Thursday showed claims for state unemployment benefits dropped 16K to 225K, stronger than expectations of 235K.
“If inflation keeps coming down, then markets will keep running higher, as investors will conclude that the Fed won’t need to raise rates as high, or keep them high for as long, as previously expected,” wrote Chris Zaccarelli, a chief investment officer for Independent Advisor Alliance in Charlotte, North Carolina.
Meanwhile, U.S. rate futures have priced in a 79.4% chance of a 50 basis point rate increase and a 20.6% chance of a 75 basis point hike at December's monetary policy meeting.
Today, market participants will be closely monitoring the U.S. Nonfarm Payrolls data for clues about how the Fed's aggressive rate policy has affected the labor market. Economists, on average, forecast that November Nonfarm Payrolls will stand at 200K, compared to the previous value of 261K.
“Nonfarm payroll employment growth likely slowed to 180,000 in November from 261,000 in October as evidence continues to build that increasing uncertainty is affecting hiring activity,” Nomura said in a note.
Also, investors are likely to focus on the U.S. Unemployment Rate data, which was at 3.7% in October. Economists foresee the new figure to remain unchanged at 3.7%.
U.S. Average Hourly Earnings data will come in today. Economists expect November's figures to be +0.3% m/m and +4.6% y/y, compared to the previous numbers of +0.4% m/m and +4.7% y/y.
U.S. Private Nonfarm Payrolls data will be reported today as well. Economists estimate this figure to be 190K in November, compared to the previous value of 233K.
In the bond markets, United States 10-Year rates are at 3.524%, down -0.07%.
The Euro Stoxx 50 futures are up +0.18% this morning as investors cautiously anticipate the release of the key monthly U.S. jobs data, which could affect the path of Federal Reserve monetary policy. Meanwhile, Eurozone inflation dropped more than expected to 10% on an annual basis in November but remained well above the ECB medium-term target of 2%. ECB President Christine Lagarde on Friday warned that some European governments' fiscal policies could lead to excess demand, prompting the central bank “to tighten monetary policy more than would otherwise be necessary.”
Germany’s Import Price Index, Germany’s Trade Balance, France’s Industrial Production, Spain’s Unemployment Change, and Eurozone’s PPI data were released today.
The German October Import Price Index has been reported at -1.2% m/m and +23.5% y/y, stronger than expectations of -1.7% m/m and +23.3% y/y.
The German October Trade Balance was at 6.9B, stronger than expectations of 5.2B.
The French October Industrial Production stood at -2.6% m/m, weaker than expectations of 0.0% m/m.
The Spanish Unemployment Change came in at -33.5K, stronger than expectations of -20.3K.
Eurozone October PPI stood at -2.9% m/m and +30.8% y/y, weaker than expectations of -2.0% m/m and +31.5% y/y.
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 -1.59%.
China’s Shanghai Composite today closed lower as investors awaited crucial U.S. payrolls data, but the report that revealed the country's plans to remove some of its severe anti-COVID measures helped limit losses. Sources told Reuters that China is set to declare an easing of its COVID quarantine protocols and a reduction in mass testing in the coming days, indicating a shift in policy after anger over the world's roughest restrictions fuelled unprecedented country-wide protests. A reopening would enable China to contribute more to global growth next year amid a looming global recession.
At the same time, Japan’s Nikkei 225 Stock Index closed lower today. The index's downward momentum was fueled by losses in the Banking, Insurance, and Power sectors. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down 0.48% to 18.84.
Pre-Market U.S. Stock Movers
Rigel Pharmaceuticals Inc (RIGL) jumped over +49% in pre-market trading after the company announced that it had received FDA approval for REZLIDHIA.
Asana Inc (ASAN) plunged about -18% in pre-market trading after the company reported upbeat Q3 results but issued weak Q4 and FY23 guidance.
Marvell Technology Group Ltd (MRVL) dropped about -7% in pre-market trading after the company reported weaker-than-anticipated Q3 earnings and provided a weak Q4 outlook.
Uipath Inc (PATH) climbed more than +9% in pre-market trading after the company delivered stronger-than-expected Q3 numbers and provided favorable Q4 revenue guidance.
Samsara Inc (IOT) rose about +20% in pre-market trading after the company reported upbeat Q3 results and provided solid Q4 guidance.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Friday - December 2nd
Siemens Gamesa ADR (GCTAY), DocuSign (DOCU), Cracker Barrel Old (CBRL), GMS Inc (GMS), Tiger Brands Ltd PK (TBLMY), C3 Ai (AI), Zuora (ZUO), Genesco (GCO), Domo (DOMO), Mitek (MITK), Oramed (ORMP), Ehang (EH), Joann (JOAN), Malvern (MLVF), Avaya (AVYA), AstroNova (ALOT), Kirklands (KIRK), Jianpu Tech (JT), Elbit Imaging (EMITF).
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