Markets Today: Stocks Slightly Higher after Positive U.S. Inflation News

Morning Markets

March S&P 500 futures (ESH23) this morning are up +0.07%, and March Nasdaq 100 E-Mini futures (NQH23) are up +0.05%. 

Stock indexes this morning are trading slightly higher after today’s Nov U.S. deflator figures eased, although the core deflator was a bit stronger than expected.  Today’s Nov personal income and spending reports were also weak and were dovish for Fed policy.

On the negative side, the 10-year T-note yield this morning is up +4.4 bp at 3.723%.

U.S. stocks are being undercut as the Covid pandemic is exploding in China, with the potential for new variants to develop and affect the rest of the world.  Bloomberg reported today that the minutes from an internal meeting of China’s National Health Commission held on Wednesday showed that nearly 37 million people may have contracted Covid on a single day earlier this week and that nearly 18% of the population (248 million people) likely contracted Covid in the first 20 days of December.  The commission estimates that more than half of the residents in the Sichuan province and the capital of Beijing may have been infected.  China, several weeks ago, abruptly dropped its Covid zero policy due to public protests.  Covid cases are reportedly deluging China’s hospitals and crematoriums. 

North Korea today fired two short-range ballistic missiles 250-350 kilometers into the waters off North Korea’s east coast.  The missile launches follow a drill earlier this week where the U.S. sent a bomber and F-22 stealth fighters to the Korean peninsula for joint drills with South Korea.  North Korean leader Kim Jong Un called for a meeting in late December of his ruling Workers’ Party to review economic and political policies and set goals for next year.

The Nov U.S. PCE deflator, the Fed’s preferred inflation measure, eased to +0.1% m/m and +5.5% y/y from Oct’s revised +0.4% m/m and +6.1% y/y and was in line with market expectations.  The Nov core PCE deflator of +0.2% m/m was in line with market expectations and was down slightly from Oct’s revised +0.3% m/m.  On a year-on-year basis, the Nov core deflator eased to +4.7% from Oct’s +5.0% but was slightly above expectations of +4.6%.

Nov real personal spending was unchanged m/m, slightly weaker than expectations of +0.1% and down from Oct’s +0.5%.  Nov personal income fell to +0.1% m/m from Oct’s revised +0.9% and was slightly weaker than expectations of +0.2%.

Today’s Nov durable goods orders report of -2.1% m/m was weaker than expectations of -1.0%, and Oct was revised lower to +0.7% from +1.1%. The Nov core capital goods orders report (ex defense and aircraft) of +0.2% m/m was slightly stronger than expectations of unchanged, but Oct was revised lower to +0.3% m/m from +0.6%. 

The consensus is for today’s (10 am ET) final-Dec University of Michigan consumer sentiment to be unchanged at 59.1 from the preliminary-December figure.  Today’s (10 am ET) Nov new home sales report is expected to show a -5.1% decline to 600,000 units following Oct’s report of +7.5% to 632,000 units.

The Euro Stoxx 50 index today is up +0.21%.  However, the Shanghai Composite index today fell by -0.28% for the seventh consecutive decline and the 11th decline in the last 13 sessions. The Nikkei index today fell by -1.03%.

Pre-Market U.S. Stock Movers

Tesla (TSLA) is up +1.3% in pre-opening trading on a small recovery after Thursday’s -8.88% plunge to a new 2-year low, which was sparked by Musk stock sales and news that U.S. safety investigators are investigating a multi-vehicle crash on the San Francisco Bay Bridge involving a Tesla Model S that may have been guided by its automated systems.  CEO Musk, in a Twitter Spaces live-audio conversation late Thursday lasting more than an hour, promised not to sell any more stock for some two years after his recent $40 billion worth of Tesla stock sales.  In response to the view that he is ignoring Tesla due to his Twitter obsession, he claimed he has not missed a single important Tesla meeting. However, he voiced a downbeat outlook for Tesla sales next year, given his view that the U.S. is already in a recession and that the recession will be “comparable to 2009.”

Energy stocks and energy service providers are climbing in pre-market trading, with WTI crude oil up more than +2% after Russia said it would cut production in response to the European embargo that has slashed demand for its oil.  Exxon Mobil (XOM) is up +0.8% in pre-market trading, Haliburton (HAL) is up +1.2%,  and Valero Energy (VLO) is up +0.7%. 

Bitcoin (^BTCUSD)  is up +0.58% today.  However, key crypto stocks are lagging, with Coinbase (COIN) down -0.52% in pre-market trading, and Marathon Digital (MARA) down -0.3%.

Today’s U.S. Earnings Reports (12/23/2022)

Hyzon Motors Inc (HYZN).

• Puts for Luminar Technologies (LAZR) Tops Unusual Options Screener
• Microsoft Put Option Premiums Are at High Levels, Worth Shorting for Income
• Unusual Options Activity For December 23rd
• Pre-Market Brief: Stocks Mixed As Strong Economic Data Fuel Rate Hike Worries