Stocks Slip Before the Open With Focus on Key U.S. Inflation Data and Trump’s Picks

December S&P 500 E-Mini futures (ESZ24) are down -0.18%, and December Nasdaq 100 E-Mini futures (NQZ24) are down -0.33% this morning as investors digested Donald Trump’s latest cabinet appointments and awaited a flurry of pre-Thanksgiving holiday U.S. economic data.

Trump appointed Jamieson Greer as the U.S. Trade Representative and Kevin Hassett as director of the National Economic Council. Greer had been involved in shaping Trump’s trade policy decisions during his first term.

The minutes of the Federal Open Market Committee’s November 6-7 meeting, released Tuesday, revealed that officials broadly supported a careful approach to future interest rate cuts as the economy remains robust and inflation gradually eases. “Participants anticipated that if the data came in about as expected, with inflation continuing to move down sustainably to 2% and the economy remaining near maximum employment, it would likely be appropriate to move gradually toward a more neutral stance of policy over time,” according to the FOMC minutes. Also, the minutes showed that some participants suggested the Fed could pause rate cuts if inflation remains elevated, while others advocated for quicker rate reductions should the economy or labor market deteriorate. In addition, policymakers noted uncertainty around the so-called neutral rate, a level of policy that neither restricts nor stimulates economic growth, as a reason for caution. This uncertainty “complicated the assessment of the degree of restrictiveness of monetary policy and, in their view, made it appropriate to reduce policy restraint gradually.”

In yesterday’s trading session, Wall Street’s three main equity benchmarks ended higher. NRG Energy (NRG) climbed over +10% and was the top percentage gainer on the S&P 500 after Jeffries upgraded the stock to Buy from Hold with a price target of $113. Also, Eli Lilly (LLY) gained more than +4% after the Biden administration proposed a rule that would require the U.S. government to cover weight-loss drugs through the Medicare and Medicaid systems. In addition, Semtech (SMTC) surged over +18% after the company posted upbeat Q3 results and issued above-consensus Q4 guidance. On the bearish side, Amgen (AMGN) fell more than -4% and was the top percentage loser on the Dow after highly anticipated Phase 2 data on its experimental obesity drug, MariTide, showed that it failed to significantly outperform competitors.

Economic data released on Tuesday showed that the U.S. Conference Board’s consumer confidence index jumped to a 16-month high of 111.7, compared with the 111.8 consensus. Also, the U.S. September S&P/CS HPI Composite - 20 n.s.a. eased to +4.6% y/y from +5.2% y/y in August, weaker than expectations of +4.7% y/y and the smallest annual increase in a year. At the same time, U.S. new home sales plunged -17.3% m/m to a nearly 2-year low of 610K in October, weaker than expectations of 725K.

San Francisco Fed President Mary Daly stated on Tuesday that “inflation is still printing above our 2% target, so we need to continue to work to bring that down.”

U.S. rate futures have priced in a 66.3% probability of a 25 basis point rate cut and a 33.7% chance of no rate change at the next FOMC meeting in December.

Meanwhile, the U.S. stock markets will be closed on Thursday in observance of the Thanksgiving Day holiday.

Today, all eyes are focused on the U.S. core personal consumption expenditures price index, the Fed’s preferred price gauge, which is set to be released in a couple of hours. Economists, on average, forecast that the core PCE price index will stand at +0.3% m/m and +2.8% y/y in October, compared to the previous figures of +0.3% m/m and +2.7% y/y.

Also, investors will focus on the U.S. Commerce Department’s second estimate of gross domestic product. Economists expect the U.S. economy to expand at an annual rate of 2.8% in the third quarter, in line with initial estimates.

U.S. Personal Spending and Personal Income data will be closely monitored today. Economists anticipate October Personal Spending to be +0.4% m/m and Personal Income to be +0.3% m/m, compared to September’s figures of +0.5% m/m and +0.3% m/m, respectively.

U.S. Durable Goods Orders and Core Durable Goods Orders data will be released today. Economists forecast October Durable Goods Orders at -0.8% m/m and Core Durable Goods Orders at +0.2% m/m, compared to the prior figures of 0.0% m/m and +0.5% m/m, respectively.

U.S. Pending Home Sales data will come in today. Economists expect the October figure to be -2.1% m/m, compared to the previous figure of +7.4% m/m.

U.S. Initial Jobless Claims data will be reported today as well. Economists estimate this figure to be 215K, compared to last week’s number of 213K.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.262%, down -1.00%.

The Euro Stoxx 50 futures are down -0.82% this morning as investors continued to evaluate the potential effects of President-elect Donald Trump’s tariff hike plans. Automobile stocks slumped for the second consecutive day as Trump’s tariffs on Mexican imports to the U.S. are expected to hurt the bloc’s car manufacturers. Investors also remained cautious ahead of the crucial U.S. inflation report that could influence the Fed’s rate-cut plans. Meanwhile, a survey released on Wednesday showed that German consumer sentiment is expected to decline heading into December, ending a streak of increases as households grow more pessimistic about their income outlook amid reports of job cuts. In other news, a gauge of risk on France’s bonds climbed to levels not seen since the euro-area debt crisis, as a political standoff over the budget threatens to topple the government. In corporate news, Easyjet Plc (EZJ.LN) rose over +1% after the budget airline reported a 25% increase in its full-year operating profit. At the same time, Aston Martin Lagonda Global Holdings Plc (AML.LN) slid more than -3% after issuing another profit warning.

Germany’s GfK Consumer Climate Index was released today.

The German December GfK Consumer Climate Index arrived at -23.3, weaker than expectations of -18.8.

Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed up +1.53%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.80%.

China’s Shanghai Composite Index closed higher today, snapping a 4-day losing streak amid optimism that Beijing will roll out more stimulus measures to tackle ongoing economic challenges. Software stocks led the gains on Wednesday. Data from the National Bureau of Statistics released on Wednesday showed that China’s industrial profits demonstrated signs of improvement in October, with declines on a year-over-year basis narrowing as Beijing’s stimulus measures took effect. Industrial profits dropped 10% year-over-year in October, compared to a 27.1% decrease in September, while earnings declined 4.3% year-over-year in the first 10 months of the year compared to a 3.5% drop in the January-September period. Meanwhile, investors remained hopeful that Beijing would roll out stronger policy measures to mitigate the potential impact of new U.S. tariffs under the incoming Trump administration. In other news, the Chinese government approved a 500 billion yuan ($69 billion) bond quota, enabling two state-owned asset managers to issue notes to finance investments in projects designed to stimulate economic growth. In corporate news, Vitasoy International Holdings Ltd. soared over +19% in Hong Kong after one of its shareholders raised a stake in the company. Investor attention is now focused on China’s official PMI data for November, scheduled to be released on Saturday.

Japan’s Nikkei 225 Stock Index ended lower today, extending losses from the previous session as investors grew concerned about the impact of U.S. President-elect Donald Trump’s tariff pledges and a stronger yen. A stronger yen hurts the profit outlook for Japan’s export-driven industries and increases the cost of Japanese assets for foreign investors. Export-heavy automobile stocks led the declines on Wednesday. Meanwhile, the yen strengthened 1.1% against the dollar on Wednesday. Investors are currently focused on the latest Tokyo inflation data, set for release on Friday, after Bank of Japan Governor Kazuo Ueda last week signaled that the December policy meeting would include a live discussion on whether to raise interest rates. In corporate news, Sanrio tumbled over -14% after the owner of the Hello Kitty brand announced that holders, including its president, would sell shares. At the same time, Keisei Electric Railway climbed about +5% after the railway operator disclosed a sale of shares in Oriental Land worth 62 billion yen ($406.10 million). The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +10.50% to 22.95.

Pre-Market U.S. Stock Movers

Dell Technologies (DELL) plunged over -12% in pre-market trading after the IT giant reported weaker-than-expected Q3 revenue and issued soft Q4 guidance. 

HP Inc. (HPQ) slumped more than -9% in pre-market trading after the PC giant provided downbeat FQ1 adjusted EPS guidance.

CrowdStrike Holdings (CRWD) slid over -6% in pre-market trading after the cybersecurity company gave a weak Q4 adjusted EPS forecast.

Workday (WDAY) fell more than -10% in pre-market trading after the back-office software provider issued weaker-than-expected Q4 subscription revenue guidance.

Ambarella (AMBA) soared over +21% in pre-market trading after the edge AI semiconductor company posted upbeat Q3 results and provided above-consensus Q4 revenue guidance.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Wednesday - November 27th

Frontline (FRO), Hafnia (HAFN), Golden Ocean (GOGL), Arbe Robotics (ARBE), 111 Inc (YI).