S&P Futures Gain With U.S. Inflation Data in Focus

December S&P 500 E-Mini futures (ESZ24) are trending up +0.10% this morning as investors awaited the all-important U.S. inflation report for clues on whether the Federal Reserve will lower or hold interest rates next week.

In yesterday’s trading session, Wall Street’s main stock indexes closed in the red. MongoDB (MDB) tumbled over -16% and was the top percentage loser on the Nasdaq 100 after the company announced that its Chief Operating Officer and Chief Financial Officer, Michael Gordon, would step down on January 31st. Also, Moderna (MRNA) slumped more than -9% and was the top percentage loser on the S&P 500 after BofA reinstated coverage of the stock with an Underperform rating. In addition, Oracle (ORCL) slid over -6% after the IT giant reported weaker-than-expected FQ2 results. On the bullish side, Walgreens Boots Alliance (WBA) soared more than +17% and was the top percentage gainer on the S&P 500 after the Wall Street Journal reported that the drugstore chain was in talks to sell itself to private equity firm Sycamore Partners. Also, Alphabet (GOOGL) climbed over +5% and was the top percentage gainer on the Nasdaq 100 after the tech titan discussed breakthroughs made through the use of its new Willow quantum computing chip.

Economic data released on Tuesday showed that U.S. Q3 nonfarm productivity was unrevised at +2.2% q/q, while Q3 unit labor costs were revised lower to +0.8% q/q from +1.9% q/q, a smaller increase than expectations of +1.3% q/q.

Today, all eyes are focused on the U.S. consumer inflation report, which is set to be released in a couple of hours. Economists, on average, forecast that the U.S. November CPI will come in at +0.3% m/m and +2.7% y/y, compared to the previous numbers of +0.2% m/m and +2.6% y/y.

The U.S. Core CPI will also be closely watched today. Economists anticipate the core CPI to be +0.3% m/m and +3.3% y/y in November, matching October’s figures.

A survey conducted by 22V Research showed that 37% of investors expect the market response to the consumer inflation report to be “risk-off.” Also, investors are evenly split between those predicting a “risk-on” reaction and those expecting it to be “mixed/negligible.”

“A softer print can clear the path for a year-end rally, with the second half of December being the second strongest period of the year. On the contrary, a firmer print can revamp volatility,” a team led by Ohsung Kwon said.

U.S. rate futures have priced in an 86.1% chance of a 25 basis point rate cut and a 13.9% chance of no rate change at the December FOMC meeting.

On the earnings front, Photoshop maker Adobe (ADBE) is set to report its FQ4 earnings results today.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.245%, up +0.52%.

The Euro Stoxx 50 futures are down -0.04% this morning as investors digested a batch of downbeat corporate updates and looked ahead to key U.S. inflation data. Retail stocks led the declines on Wednesday, while media stocks gained ground. Meanwhile, market participants are also gearing up for the European Central Bank’s monetary policy decision on Thursday, with the central bank widely expected to lower its policy rate by 25 basis points for the fourth time this year amid a deteriorating economic outlook and ongoing political instability in France and Germany. In corporate news, Industria DE Diseno Textil Inditex Ord S (0QWI.LN) slid over -6% after the Zara owner posted weaker-than-expected Q3 sales. Also, Zalando Se (ZAL.D.DX) slumped more than -4% after the German retailer agreed to acquire rival About You Holding SE. In addition, Siemens Energy Ag (ENR.D.DX) fell over -1% after the CEO of U.S. rival GE Vernova offered a cautious outlook for the struggling wind energy sector.

The European economic data slate is empty on Wednesday. 

Asian stock markets today settled in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.29%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.01%.

China’s Shanghai Composite Index closed higher today, extending gains from the previous session. Retail stocks outperformed on Wednesday. Investor focus turned to the annual Central Economic Work Conference, which began today. The key policy meeting is anticipated to outline China’s economic priorities and targets for 2025, with investors encouraged by stimulus signals from a readout of a Politburo meeting. According to economists, China might increase its budget deficit to the highest level in three decades and implement the steepest interest rate cuts since 2015. At least seven Chinese brokerages predict that the fiscal deficit target for next year could widen to 4% of gross domestic product. Meanwhile, the offshore yuan slid as much as 0.5% on Wednesday after Reuters reported that Chinese policymakers are considering allowing the currency to weaken in anticipation of higher tariffs under a second Donald Trump presidency. In other news, the Asian Development Bank maintained its gross domestic product forecast for mainland China at 4.8% for 2024 and 4.5% for 2025. In corporate news, JCHX Mining Management gained over +3% after announcing the acquisition of a 51% stake in Terra Mining.

Japan’s Nikkei 225 Stock Index closed just above the flatline today as investors digested mixed economic data from the country and cautiously awaited the key U.S. inflation report. Gains in defense stocks helped offset losses in utilities stocks on Wednesday. The Reuters Tankan survey released on Wednesday showed that Japan’s manufacturing sentiment deteriorated significantly in December due to concerns about U.S. protectionist policies and the Chinese economy, with pessimists outnumbering optimists for the first time in 10 months. At the same time, the Cabinet Office reported that the business survey index for large manufacturers in Japan rose to a 3-year high in the October-December period. Meanwhile, the yen strengthened slightly after Japan’s producer prices rose at their quickest rate in 16 months in November, highlighting growing inflationary pressures in the economy and bolstering expectations for further policy normalization by the Bank of Japan. In other news, Kyodo News reported on Wednesday that Japan’s government plans to propose an increase in the country’s corporate tax starting in April 2026 to finance additional defense spending. In corporate news, Topcon Corp. soared more than +23% after the eyecare products maker announced it is considering going private, among other measures, to boost corporate value. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -0.71% to 22.40.

The Japanese BSI Large Manufacturing Conditions Index arrived at 6.3 in the fourth quarter, stronger than expectations of 1.8.

The Japanese November PPI has been reported at +0.3% m/m and +3.7% y/y, stronger than expectations of +0.2% m/m and +3.4% y/y.

Pre-Market U.S. Stock Movers

Dave & Buster’s (PLAY) plunged over -15% in pre-market trading after the company reported a wider-than-expected Q3 loss and announced a CEO transition.

Stitch Fix (SFIX) surged more than +20% in pre-market trading after the company reported better-than-expected FQ1 results and raised its full-year revenue guidance.

C3.ai Inc. (AI) fell over -3% in pre-market trading after JPMorgan downgraded the stock to Underweight from Neutral with an unchanged price target of $28.

GameStop (GME) rose more than +3% in pre-market trading after the videogame retailer reported a surprise Q3 profit.

Figs (FIGS) climbed over +11% in pre-market trading after the Wall Street Journal reported that the company had received a more than $1 billion takeover offer from private equity firm Story3 Capital Partners.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Wednesday - December 11th

Adobe (ADBE), Nordson (NDSN), Macy’s Inc (M), Macy’s Inc (M), Photronics (PLAB), Rev Group (REVG), Oxford Industries (OXM), Cognyte Software (CGNT), J.Jill (JILL), Vera Bradley (VRA), Champions Oncology (CSBR).