Stock Index Futures Plunge as Fed Rate Cut Bets Wane, U.S. Retail Sales Data in Focus

December S&P 500 E-Mini futures (ESZ24) are down -0.58%, and December Nasdaq 100 E-Mini futures (NQZ24) are down -0.90% this morning after Federal Reserve Chair Jerome Powell indicated the central bank was in no rush to lower interest rates, while investors geared up for a flurry of U.S. economic data, with a particular focus on the retail sales report.

In yesterday’s trading session, Wall Street’s major indices ended in the red. Super Micro Computer (SMCI) slumped over -11% and was the top percentage loser on the Nasdaq 100 after the embattled AI server maker delayed another quarterly 10-Q filing. Also, Cisco Systems (CSCO) fell more than -2% as the networking giant’s conservative full-year sales forecast overshadowed better-than-expected FQ1 results and upbeat FQ2 guidance. In addition, Tetra Tech (TTEK) plunged over -13% after the company provided weak full-year guidance. On the bullish side, Tapestry (TPR) climbed more than +12% and was the top percentage gainer on the S&P 500 after announcing the termination of an $8.5 billion merger deal with Capri Holdings. Also, Walt Disney (DIS) rose over +6% and was the top percentage gainer on the Dow after the entertainment giant posted upbeat FQ4 results and projected high-single-digit adjusted EPS growth in FY25.

Economic data released on Thursday showed that the U.S. producer price index for final demand came in at +0.2% m/m and +2.4% y/y in October, compared to expectations of +0.2% m/m and +2.3% y/y. Also, core PPI, which excludes volatile food and energy costs, rose +0.3% m/m and +3.1% y/y in October, compared to expectations of +0.3% m/m and +3.0% y/y. In addition, the number of Americans filing for initial jobless claims in the past week fell by -4K to a 5-1/2 month low of 217K, compared with the 224K expected. 

“PPI shows inflation is waning but coming down at a gradual pace, and consistent with what Powell mentioned earlier in the month that risks to inflation and the labor market are balanced,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management.

Fed Chair Jerome Powell said Thursday that the U.S. economy’s recent performance has been “remarkably good” and “is not sending any signal that we need to be in a hurry to lower interest rates.” Also, Richmond Fed President Thomas Barkin stated that the central bank has made “great progress” but stressed that officials cannot yet declare victory. In addition, Fed Governor Adriana Kugler said that policymakers must maintain their focus on both the Fed’s inflation and employment goals, highlighting a cooling labor market and slower progress toward the central bank’s 2% inflation target. “If any risks arise that stall progress or reaccelerate inflation, it would be appropriate to pause our policy rate cuts,” Kugler said. “But if the labor market slows down suddenly, it would be appropriate to continue to gradually reduce the policy rate.”

Meanwhile, U.S. rate futures have priced in a 62.4% chance of a 25 basis point rate cut and a 37.6% chance of no rate change at the December FOMC meeting.

Today, all eyes are focused on U.S. Retail Sales data, which is set to be released in a couple of hours. Economists, on average, forecast that October Retail Sales will stand at +0.3% m/m, compared to the September figure of +0.4% m/m.

Also, investors will focus on U.S. Core Retail Sales data, which came in at +0.5% m/m in September. Economists foresee the October figure to be +0.3% m/m.

The NY Empire State Manufacturing Index will be reported today. Economists foresee this figure to stand at -0.30 in November, compared to last month’s value of -11.90. 

U.S. Industrial Production and Manufacturing Production data will be closely monitored today. Economists forecast October Industrial Production at -0.3% m/m and Manufacturing Production at -0.5% m/m, compared to September’s figures of -0.3% m/m and -0.4% m/m, respectively.

U.S. Export and Import Price Indexes for October will come in today. Economists anticipate the export price index to be -0.1% m/m and the import price index to be -0.1% m/m, compared to the previous figures of -0.7% m/m and -0.4% m/m, respectively.

In addition, market participants are anticipating speeches from Boston Fed President Susan Collins and New York Fed President John Williams.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.431%, up +0.20%.

The Euro Stoxx 50 futures are down -0.08% this morning as sentiment turned cautious following hawkish comments from Fed Chair Jerome Powell. Healthcare stocks tumbled on Friday as investors weighed U.S. President-elect Donald Trump’s appointment of Robert F. Kennedy Jr., a prominent vaccine skeptic, to lead the Department of Health and Human Services. Technology stocks also lost ground. The Office for National Statistics reported Friday that the U.K. economy slowed more than expected in the third quarter. Separately, final data confirmed that the October annual inflation rate in France and Italy stood at 1.2% and 0.9%, respectively. In corporate news, Aegon (AGN.NA) rose over +1% after the Dutch insurer reported better-than-expected Q3 operating capital generation, excluding allowances, and lifted its full-year capital generation target. 

U.K.’s GDP (preliminary), France’s CPI, and Italy’s CPI data were released today.

U.K. GDP has been reported at +0.1% q/q in the third quarter, weaker than expectations of +0.2% q/q.

U.K. September GDP arrived at -0.1% m/m and +1.0% y/y, weaker than expectations of +0.2% m/m and +1.1% y/y.

The French October CPI came in at +0.3% m/m and +1.2% y/y, compared to expectations of +0.2% m/m and +1.2% y/y.

The Italian October CPI stood at 0.0% m/m and +0.9% y/y, in line with expectations.

Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed down -1.45% and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.28%.

China’s Shanghai Composite Index closed lower today as investors digested a mixed bag of economic data from the country. The benchmark index posted a weekly decline as sentiment weakened amid disappointing follow-up stimulus measures from Beijing and rising concerns over worsening Sino-U.S. relations following Donald Trump’s return to the White House. Semiconductor and lithium stocks led the declines on Friday. Data from the National Bureau of Statistics released on Friday showed that China’s retail sales grew at the fastest rate in eight months in October and the decline in property prices slowed. At the same time, China’s industrial production grew at a slower-than-expected pace in October due to challenges in the manufacturing sector, while real estate investment for the January-October period saw a sharp decline compared to the previous year, underscoring the deepening downturn in the property market. Meanwhile, Barclays economists stated that China’s economy appears on track for a mild recovery in the fourth quarter, though significant challenges lie ahead. In other news, on Friday, the People’s Bank of China conducted its largest daily cash injection in nearly five years through bond reverse repurchase agreements in open market operations. In corporate news, NetEase surged over +12% in Hong Kong despite reporting weaker-than-expected Q3 results, as investors remained confident that its robust lineup of new gaming titles would bolster gaming revenue in 2025.

The Chinese October Industrial Production came in at +5.3% y/y, weaker than expectations of +5.5% y/y.

The Chinese October Retail Sales arrived at +4.8% y/y, stronger than expectations of +3.8% y/y.

The Chinese Fixed Asset Investment stood at +3.4% y/y in the January-October period, weaker than expectations of +3.5% y/y.

The Chinese October Unemployment Rate was at 5.0%, stronger than expectations of 5.1%.

Japan’s Nikkei 225 Stock Index closed slightly higher today, supported by weakness in the yen. Automobile and financial stocks led the gains on Friday. However, the benchmark index posted a weekly decline. Preliminary data from the Cabinet Office released on Friday showed that Japan’s economic growth slowed slightly in the third quarter due to weak capital spending, although an unexpected rise in consumption provided a bright spot. Separately, final data from the Ministry of Economy, Trade, and Industry showed that industrial production in Japan rose more than initially estimated in September. Meanwhile, the Bank of Japan announced on Friday that BOJ Governor Kazuo Ueda will deliver a speech and hold a news conference in the central Japanese city of Nagoya on Monday, an event that market participants will scrutinize closely for indications of a potential interest rate hike next month. In corporate news, Mizuho Financial Group climbed over +6% after boosting its full-year profit guidance. Also, Nissan Motor gained more than +4% following a report from the Japanese publication Diamond stating that activist investor Oasis Management had taken a stake in the company. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -4.76% to 23.22.

The Japanese GDP has been reported at +0.2% q/q and +0.9% y/y in the third quarter, compared to expectations of +0.2% q/q and +0.7% y/y.

The Japanese September Industrial Production arrived at +1.6% m/m, stronger than expectations of +1.4% m/m.

Pre-Market U.S. Stock Movers

Applied Materials (AMAT) slumped over -7% in pre-market trading after the largest U.S. maker of chip-manufacturing equipment provided a disappointing FQ1 revenue forecast.

Domino’s Pizza (DPZ) surged more than +8% in pre-market trading after Warren Buffett’s investing behemoth Berkshire Hathaway disclosed in the latest 13F filing that it took a new $549 million stake in the company.

Palantir Technologies (PLTR) gained over +3% in pre-market trading after announcing that it will transfer its stock exchange listing from the New York Stock Exchange to the Nasdaq.

SolarEdge (SEDG) slid more than -5% in pre-market trading after Morgan Stanley downgraded the stock to Underweight from Equal Weight with a price target of $9.

AST SpaceMobile (ASTS) plunged over -10% in pre-market trading after reporting a wider-than-expected Q3 loss.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Friday - November 15th

Spectrum Brands (SPB), Milestone Scientific (MLSS), AIM ImmunoTech (AIM).