S&P Futures Gain With Focus on U.S. ADP Jobs Report and Powell’s Remarks

December S&P 500 E-Mini futures (ESZ24) are trending up +0.24% this morning as investors awaited a fresh batch of U.S. economic data and remarks from Federal Reserve Chair Jerome Powell.

In yesterday’s trading session, Wall Street’s major indexes ended mixed, with the tech-heavy Nasdaq 100 notching a new all-time high. Palantir Technologies (PLTR) climbed over +6% and was the top percentage gainer on the S&P 500 after announcing it was granted FedRAMP High Authorization for two of its cloud-based services. Also, AT&T (T) advanced more than +4% after unveiling its three-year strategy. In addition, Credo Technology (CRDO) jumped over +47% after the technology company posted upbeat FQ2 results and issued strong FQ3 revenue guidance. On the bearish side, Microchip Technology (MCHP) slumped -7% and was the top percentage loser on the S&P 500 and Nasdaq 100 after the company lowered its FQ3 revenue forecast and said it would close a plant in Arizona. Also, Zscaler (ZS) slid more than -4% after the cloud-based cybersecurity platform provided a soft FQ2 forecast.

A Labor Department report released on Tuesday showed that the U.S. JOLTs job openings increased to 7.744M in October, stronger than expectations of 7.510M. 

“In the context of a gradually cooling labor market on the cusp of a soft landing, [Tuesday’s] JOLTS report is about as good as can reasonably be expected. Layoffs remained low and openings ticked up alongside quits - signs that employer and job seeker confidence, respectively, are improving,” said Cory Stahle, an economist at Indeed Hiring Lab.

Fed Governor Adriana Kugler on Tuesday voiced confidence in the direction of inflation and broader economic conditions, while emphasizing that the Fed’s policy decisions remain data-dependent. “The labor market remains solid, and inflation appears to be on a sustainable path to our 2% goal, even if there have been some bumps along the way,” Kugler said. Also, San Francisco Fed President Mary Daly stated that an interest rate cut this month is not guaranteed but remains on the table. “Whether it’ll be in December or sometime later, that’s a question we’ll have a chance to debate and discuss in our next meeting, but the point is we have to keep policy moving down to accommodate the economy,” Daly said. In addition, Chicago Fed President Austan Goolsbee said, “Over the next year it feels to me like rates come down a fair amount from where they are now.” 

U.S. rate futures have priced in a 73.8% chance of a 25 basis point rate cut and a 26.2% chance of no rate change at the conclusion of the Fed’s December meeting.

Meanwhile, Fed Chair Jerome Powell is scheduled to participate in a moderated discussion at the New York Times DealBook Summit later in the day. Market participants will look for any hints about whether the central bank will cut rates in December. Also, St. Louis Fed President Alberto Musalem will speak today.

On the earnings front, notable companies like Chewy (CHWY), Campbell Soup (CPB), Dollar Tree (DLTR), Foot Locker (FL), Hormel Foods (HRL), Five Below (FIVE), and Synopsys (SNPS) are slated to release their quarterly results today. 

On the economic data front, all eyes are focused on the U.S. ADP Nonfarm Employment Change data, which is set to be released in a couple of hours. Economists, on average, forecast that the November ADP Nonfarm Employment Change will stand at 152K, compared to the October figure of 233K.

Investors will also focus on the U.S. ISM Non-Manufacturing PMI and the S&P Global Services PMI. Economists foresee the November ISM Non-Manufacturing PMI to arrive at 55.7 and the S&P Global Services PMI to be 57.0, compared to the previous values of 56.0 and 55.0, respectively.

U.S. Factory Orders data will come in today. Economists forecast this figure to be +0.2% m/m in October, compared to the previous number of -0.5% m/m.

U.S. Crude Oil Inventories data will be reported today as well. Economists estimate this figure to be -1.6M, compared to last week’s value of -1.8M.

Later today, the Federal Reserve will release its Beige Book survey of regional business contacts, which provides an update on economic conditions in each of the 12 Federal Reserve districts. The Beige Book is published two weeks before each meeting of the policy-setting Federal Open Market Committee.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.254%, up +0.74%.

The Euro Stoxx 50 futures are up +0.51% this morning, with investors bracing for a crucial no-confidence vote in the French parliament. Retail and technology stocks led the gains on Wednesday. French lawmakers are scheduled to vote this evening on no-confidence motions that are likely to topple the government, setting the stage for extended political uncertainty. The vote comes after Prime Minister Michel Barnier used special constitutional powers to pass a contentious budget bill without a parliamentary vote. Meanwhile, a survey released on Wednesday showed that business activity across the Eurozone declined sharply in November as the bloc’s dominant services sector joined manufacturing in experiencing contraction. European Central Bank Governing Council member Olli Rehn stated in an interview on Wednesday that he sees growing justification for a rate cut in December and expects monetary policy easing to continue in the coming months. In corporate news, Volvo Ab (VOLVB.S.DX) gained over +2% after the carmaker said its global sales increased 5% year-over-year in November.

Spain’s Services PMI, Italy’s Services PMI, France’s Services PMI, Germany’s Services PMI, Eurozone’s Composite PMI, Eurozone’s Services PMI, and Eurozone’s PPI data were released today.

The Spanish November Services PMI stood at 53.1, weaker than expectations of 53.6.

The Italian November Services PMI arrived at 49.2, weaker than expectations of 51.1.

The French November Services PMI came in at 46.9, stronger than expectations of 45.7.

The German November Services PMI was at 49.3, weaker than expectations of 49.4.

Eurozone November Composite PMI arrived at 48.3, stronger than expectations of 48.1.

Eurozone November Services PMI came in at 49.5, stronger than expectations of 49.2.

Eurozone October PPI has been reported at +0.4% m/m, in line with expectations.

Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.42% and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.07%.

China’s Shanghai Composite Index closed lower today as a slowdown in the services sector and escalating trade tensions with the U.S. weighed on sentiment. Solar and automobile stocks led the declines on Wednesday. At the same time, energy stocks outperformed. A private-sector survey released on Wednesday showed that China’s services activity grew at a slower rate in November, weighed down by easing new business growth. Sentiment was also dampened after Beijing imposed an export ban to the United States on critical minerals with extensive military applications, escalating trade tensions a day after Washington’s latest crackdown on China’s semiconductor industry. Meanwhile, market participants are looking ahead to the Central Economic Work Conference in December, with the focus on any announcements of fiscal stimulus and signals on next year’s growth target. In corporate news, New World Development dropped more than -2% in Hong Kong amid concerns about corporate governance following the replacement of its CEO.

The Chinese November Caixin Services PMI came in at 51.5, weaker than expectations of 52.5.

Japan’s Nikkei 225 Stock Index closed marginally higher today as South Korea’s political turmoil kept sentiment subdued. Gains in defense and retail stocks helped offset losses in financial stocks on Wednesday. Investors exercised caution amid political turmoil in South Korea following President Yoon Suk Yeol’s unexpected declaration of martial law late Tuesday. However, he rescinded the decision after the National Assembly voted against the measure. A private-sector survey released on Wednesday revealed that Japan’s service activity returned to growth in November, driven by improving demand that boosted new business. Meanwhile, investors continued to focus on the outlook for monetary policy. Media reports published on Wednesday indicated that the Bank of Japan might adopt a more cautious stance this month, prompting investors to reassess the likelihood of a rate hike. In corporate news, Ryohin Keikaku surged over +7% after the operator of Muji retail stores reported an increase in domestic retail and online store sales in November compared to the previous year. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -6.87% to 21.27.

The Japanese November au Jibun Bank Japan Services PMI arrived at 50.5, stronger than expectations of 50.2.

Pre-Market U.S. Stock Movers

Marvell Technology (MRVL) surged over +12% in pre-market trading after the company posted upbeat Q3 results and issued above-consensus Q4 guidance.

Salesforce (CRM) climbed more than +12% in pre-market trading after the software giant reported better-than-expected Q3 revenue and raised the lower end of its full-year revenue forecast.

Okta (OKTA) jumped over +16% in pre-market trading after the cybersecurity company reported stronger-than-expected Q3 results and boosted its full-year guidance.

Pure Storage (PSTG) soared about +24% in pre-market trading after the data storage company reported upbeat Q3 results and lifted its annual revenue outlook.

Trimble (TRMB) gained more than +2% in pre-market trading after JPMorgan upgraded the stock to Overweight from Neutral with a price target of $92.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Wednesday - December 4th

RBC (RY), Synopsys (SNPS), Hormel Foods (HRL), Dollar Tree (DLTR), Chewy (CHWY), Campbell Soup (CPB), SentinelOne (S), PVH (PVH), Thor Industries (THO), Five Below (FIVE), AeroVironment (AVAV), Ncino (NCNO), American Eagle Outfitters (AEO), Greif Bros (GEF), Foot Locker (FL), Sprinklr (CXM), Verint (VRNT), IDT (IDT), Cracker Barrel Old (CBRL), Daktronics (DAKT), Secureworks (SCWX), ChargePoint Holdings (CHPT), Ooma Inc (OOMA), DLH Holdings (DLHC), Culp (CULP).