March S&P 500 futures (ESH23) are trending up +0.08% this morning after three major U.S. benchmark indices closed mixed in the first day of a holiday-shortened last trading week of the year as higher bond yields pressured interest rate sensitive growth stocks. The NASDAQ Composite and S&P 500 indexes were weighed down primarily by losses in the Technology, Consumer Services, and Consumer Goods sectors, while the Dow Jones Industrial Average index ended in the green mainly due to gains in the Telecoms, Oil & Gas, and Utilities sectors.
In Tuesday’s trading session, Tesla Inc (TSLA) plunged over -11%, closing at its lowest level in more than two years, after Reuters reported that the company would run a reduced production schedule at its Shanghai plant in January, sparking worries of a drop in demand in the world’s biggest car market.
“Higher yields are pressuring growth stocks, and on the other hand industrials, utilities and energy are outperforming. Money’s flowing out of the growth areas and working its way to the value side of things, which is a microcosm of what we’ve seen all year,” said Ryan Detrick, chief market strategist at Carson Group in Omaha, Nebraska.
On the economic front, U.S. goods trade balance preliminary data showed the deficit narrowing by 15.6% to -83.35B in November, while the S&P Case-Shiller Home Price Index Composite-20 n.s.a. cooled to +8.6% y/y in October, the lowest figure since November 2020.
Today, all eyes are focused on the U.S. Pending Home Sales data in a couple of hours. Economists, on average, forecast that November Pending Home Sales will stand at -0.8% m/m, compared to the previous value of -4.6% m/m.
Also, investors are likely to focus on the U.S. Richmond Manufacturing Index, which was at -9 in November. Economists foresee the new figure to be -10.
In the bond markets, United States 10-Year rates are at 3.830%, down -0.73%.
The Euro Stoxx 50 futures are down -0.18% this morning as investors assess the various economic headwinds coming down the pike in 2023. European stocks have received a negative handover from Wall Street and Asia after main indexes closed mixed as investors evaluated Beijing’s steps towards reopening its COVID-battered economy. Market participants are now wary of the prospect of a threatening recession and a potentially durable period of slow economic growth.
The European economic data slate is largely empty on Wednesday.
Asian stock markets today settled in the red as traders look to close out a dismal year. China’s Shanghai Composite Index (SHCOMP) closed down -0.26%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.41%.
China’s Shanghai Composite closed lower today, failing to capitalize on bold steps from China for reopening the economy. China’s National Health Commission on Monday announced it would stop requiring inbound travelers to go into quarantine starting from Jan. 8th. A faster-than-expected peak of infection has stoked expectations that a quick economic recovery is on the horizon. However, this move also spooked sentiment as global investors focused on the potential for higher inflation spurred by China’s reopening.
The latest policy announcements are “a catalyst for the market rally as the reopening theme enhances growth momentum and positions China for an economic rebound in 2023,” said Banny Lam, a head of research at CEB International Investment Corp Ltd.
At the same time, Japan’s Nikkei 225 Stock Index closed lower, giving up some of the gains in the previous two sessions. The index’s downward momentum was fueled by losses in the Shipbuilding, Textile, and Power sectors. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down 4.21% to 19.35.
The Bank of Japan’s summary of opinions showed that policymakers discussed growing prospects that higher wages could finally eliminate the risk of a return to deflation. At the December meeting, the BOJ kept its ultra-easy policy but tweaked its bond yield control policy, allowing long-term interest rates to rise more.
Pre-Market U.S. Stock Movers
Jounce Therapeutics Inc (JNCE) spiked over +79% in pre-market trading after the company announced that Gilead would acquire the remaining rights for GS-1811 for $67M.
Kala Pharmaceuticals Inc (KALA) climbed about +36% in pre-market trading after the company announced that the FDA accepted an IND application for the company's lead product candidate, KPI-012.
Minerva Surgical Inc (UTRS) jumped over +140% in pre-market trading after the company announced a $30M private placement of common stock.
Tesla Inc (TSLA) slid over -3% in pre-market trading, continuing to fall after reports of suspended Shanghai output.
Maris Tech Ltd (MTEK) gained more than +15% in pre-market trading after the company received a $1.1M purchase order from an Israeli defense company.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Wednesday - December 28th
Cal-Maine (CALM), Micro Focus ADR (MFGP), Pathfinder Acquisition (PFDR), Vizsla (VZLA), Anixa Biosciences (ANIX), Coda Octopus (CODA), Golden Matrix (GMGI), Kaival Brands Innovations Group (KAVL), Flanigans Enterprises Inc (BDL), Taylor Devices (TAYD), CanAlaska Uranium (CVVUF).
More Stock Market News from Barchart
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- Short Positions on Tesla Stocks Remain Profitable
- Corning Inc Trades Below Its Historic Value Metrics Attracting Value Buyers
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.
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