Stocks Slip Before the Open as Bond Yields March Higher, U.S. Jobless Claims Data in Focus

March S&P 500 E-Mini futures (ESH25) are down -0.45%, and March Nasdaq 100 E-Mini futures (NQH25) are down -0.52% this morning as Treasury yields climbed after cash trading resumed following the Christmas holiday, with investors turning their attention to U.S. jobless claims numbers due later today.

In Tuesday’s trading session, Wall Street’s three main equity benchmarks closed in the green. All the Magnificent 7 megacap technology stocks advanced, with Tesla (TSLA) climbing over +7% to lead gainers in the S&P 500. Also, chip stocks extended gains after the Biden administration launched a probe into Chinese chips, with Broadcom (AVGO) rising more than +3% and Advanced Micro Devices (AMD) gaining over +1%. In addition, NeueHealth (NEUE) soared more than +74% after the company announced that it had agreed to be taken private by New Enterprise Associates in a $1.3 billion deal. 

“Santa Claus rally could still be alive, with strong seasonality into the end of the year,” said London Stockton at Ned Davis Research.

A Santa Claus rally refers to the consistent gains observed in the stock market over the final five trading days of December and the first two trading days of January. Since 1950, the S&P 500 has delivered average and median returns of 1.3% during this period, significantly exceeding the market’s average seven-day gain of 0.3%, according to Adam Turnquist at LPL Financial. 

Economic data released on Tuesday showed that the U.S. Richmond Fed manufacturing index came in at -10 in December, in line with expectations.

Meanwhile, U.S. rate futures have priced in a 91.4% chance of no rate change and an 8.6% chance of a 25 basis point rate cut at the next central bank meeting in January.

Today, investors will focus on U.S. Initial Jobless Claims data, which is set to be released in a couple of hours. Economists estimate this figure will come in at 223K, compared to last week’s 220K.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.621%, up +0.72%.

Most major markets in Europe remain closed today.

Asian stock markets today settled in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.14%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +1.12%.

China’s Shanghai Composite Index ended slightly higher today after swinging between modest gains and losses amid thin trading volumes typical of the year-end period. Technology stocks gained ground on Thursday. Shares of computing-equipment makers also rose after the nation announced plans to include the sector in the investment scope of local government special bonds. At the same time, energy stocks retreated. Meanwhile, the People’s Bank of China issued 300 billion yuan in one-year medium-term lending facility loans to financial institutions at an unchanged rate of 2% on Wednesday, prompting analysts to suggest it is holding off on deploying its policy instruments until later to deal with the economic impact of the Trump administration. Investors are waiting for the details of China’s supportive measures after policymakers reiterated their pledges this week to boost consumption and stabilize the property market. Analysts anticipate the details to be disclosed in March next year during China’s annual parliamentary meeting. In corporate news, Weihai Guangwei Composites surged over +10% after securing a 3.66 billion yuan deal through its subsidiary to supply carbon fiber fabrics to an undisclosed customer. 

Japan’s Nikkei 225 Stock Index closed sharply higher today. Automobile stocks led the gains on Thursday amid a weaker yen. Retail stocks also advanced after the country agreed with China to implement additional measures aimed at boosting tourist visits. Data from the Cabinet Office released on Thursday showed that Japan’s leading economic indicators index, which gauges the economic outlook for a few months ahead based on data such as job offers and consumer sentiment, was revised upward in October, reaching its highest level since July. Meanwhile, Bank of Japan Governor Kazuo Ueda on Wednesday refrained from clearly indicating a potential interest rate hike next month by emphasizing the need to continue monitoring economic risks. “The timing and pace of adjusting the degree of monetary accommodation will depend on developments in economic activity and prices as well as financial conditions going forward,” Ueda said. In other news, Japan’s government is poised to compile a record $735 billion budget for the fiscal year starting April due to increased social security and debt-servicing costs, according to a draft of the plan Bloomberg obtained on Wednesday. Tokyo also plans to reduce new bond issuance to under 30 trillion yen for the first time in 17 years. In corporate news, Toyota Motor climbed about +6%, extending yesterday’s gains following a Nikkei newspaper report that the company aims to double its ROE target to 20% by around 2030. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -1.85% to 20.65.

The Japanese October Leading Index stood at 109.1, stronger than expectations of 108.6.

Pre-Market U.S. Stock Movers

Cryptocurrency-exposed stocks are moving lower in pre-market trading, with the price of Bitcoin down more than -3%. MicroStrategy (MSTR) is down more than -5%. Also, MARA Holdings (MARA) is down over -3%, and Bit Digital (BTBT) is down more than -2%.

Limoneira (LMNR) slumped over -5% in pre-market trading, extending Tuesday’s losses after the company posted a wider-than-expected FQ4 loss. 

EverQuote (EVER) gained more than +1% in pre-market trading after Raymond James upgraded the stock to Strong Buy from Outperform with a $35 price target. 

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Thursday - December 26th

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