March S&P 500 E-Mini futures (ESH25) are trending up +0.29% this morning, indicating an attempt by the benchmark index to snap a five-session losing streak, while investors awaited U.S. manufacturing data and remarks from a Federal Reserve official.
In yesterday’s trading session, Wall Street’s three main equity benchmarks ended lower. Tesla (TSLA) slumped over -6% and was the top percentage loser on the S&P 500 and Nasdaq 100 after the EV giant reported weaker-than-expected Q4 vehicle deliveries and posted a fall in annual deliveries for the first time in over a decade. Also, Apple (AAPL) slid more than -2% after Reuters reported that the tech giant was offering rare discounts on several iPhone models in China due to rising competition from domestic rivals. In addition, SoFi Technologies (SOFI) dropped over -8% after Keefe Bruyette downgraded the stock to Underperform from Market Perform with a price target of $8. On the bullish side, Constellation Energy (CEG) climbed more than +8% and was the top percentage gainer on the Nasdaq 100 after announcing it has secured two contracts with the U.S. government to supply over $1 billion in electricity and services. Also, chip stocks advanced, with ARM Holdings (ARM) and Micron Technology (MU) gaining over +3%.
The Labor Department’s report on Thursday showed that the number of Americans filing for initial jobless claims in the past week unexpectedly fell by -9K to an 8-month low of 211K, compared with the 222K expected. Also, the U.S. December S&P Global manufacturing PMI was revised upward to 49.4, beating the consensus of 48.3. In addition, U.S. construction spending was unchanged m/m in November, weaker than expectations of +0.3% m/m.
“The claims data are consistent with a labor market that is strong enough to allow the Federal Reserve to proceed with rate cuts at a more measured pace in 2025,” said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics.
Meanwhile, U.S. rate futures have priced in an 88.8% probability of no rate change and an 11.2% chance of a 25 basis point rate cut at the Fed’s monetary policy committee meeting later this month.
Today, all eyes are focused on the U.S. ISM Manufacturing PMI, which is set to be released in a couple of hours. Economists, on average, forecast that the December ISM manufacturing PMI will be 48.2, compared to November’s figure of 48.4.
Also, market participants will be looking toward a speech from Richmond Fed President Tom Barkin.
On the political front, investors will be monitoring the U.S. House Speaker vote later today to see if Mike Johnson will retain his position. Republican infighting over his reelection might spell trouble for Trump’s agenda, according to Tom Essaye, founder of the Sevens Report.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.553%, down -0.48%.
The Euro Stoxx 50 Index is down -0.32% this morning, with the benchmark still on track to close the week with modest gains. Automobile stocks underperformed on Friday as certain EV models became ineligible for U.S. tax credits under tighter rules. Mining stocks also retreated on concerns about Chinese demand for iron ore. At the same time, energy and financial services stocks gained ground. Data from the Federal Employment Agency released on Friday showed that Germany’s unemployment rate remained unchanged in December, even with ongoing concerns about job cuts at key manufacturing companies. Meanwhile, investors are weighing regional and global political uncertainties that can impact markets and the economy, including political turmoil in France, upcoming elections in Germany, and potential tariffs under U.S. President-elect Donald Trump. In corporate news, Airbus Se (AIR.FP) fell about -1% after slightly missing its annual delivery target for 2024. Also, Tullow Oil Plc (TLW.LN) jumped over +10% after announcing that it would not have to pay $320 million in taxes following a ruling by the International Chamber of Commerce on its operations in Ghana.
Germany’s Unemployment Change and Germany’s Unemployment Rate were released today.
The German December Unemployment Change stood at 10K, stronger than expectations of 15K.
The German December Unemployment Rate was 6.1%, stronger than expectations of 6.2%.
China’s Shanghai Composite Index (SHCOMP) closed down -1.57%, while Japanese financial markets were closed for a holiday.
China’s Shanghai Composite Index closed lower today as concerns about the state of the nation’s economy continued to weigh on sentiment. Technology stocks led the declines on Friday, with the benchmark index posting its biggest weekly loss in almost a year. Investor sentiment has been dampened by recent data indicating that the Chinese economy is still struggling. Meanwhile, Chinese authorities took steps to reassure investors concerned about the growth outlook. A Beijing official stated that China would significantly increase funding from ultra-long treasury bonds this year to drive business investment and consumer-focused initiatives. Also, China’s securities regulator pledged late on Thursday to crack down on the fabrication and spread of rumors that had led to market declines. In a further market-friendly move, the People’s Bank of China announced it had conducted a second round of swap facility operations totaling 55 billion yuan ($7.53 billion) to support the stock market. In other news, China’s central bank told the Financial Times that it would likely lower interest rates from the current 1.5% “at an appropriate time” in 2025. The central bank also highlighted a shift in focus toward “the role of interest rate adjustments” rather than “quantitative objectives” for loan growth. In corporate news, Sun Art slumped over -8% in Hong Kong, extending yesterday’s losses after Alibaba said it had agreed to sell its majority stake in the hypermarket chain to private equity firm DCP Capital.
Japan’s Nikkei 225 Stock Index was closed today for the New Year holidays. The markets will reopen on Monday, January 6th.
Pre-Market U.S. Stock Movers
U.S. Steel (X) plunged over -9% in pre-market trading after Bloomberg reported that U.S. President Joe Biden had decided to block the sale of the company to Japan’s Nippon Steel.
JPMorgan Chase & Co. (JPM) gained nearly +1% in pre-market trading after Wolfe Research upgraded the stock to Outperform from Peer Perform with a $269 price target.
Block (SQ) rose more than +3% in pre-market trading after Raymond James upgraded the stock to Outperform from Market Perform with a $115 price target.
Chewy (CHWY) advanced over +2% in pre-market trading after Wolfe Research upgraded the stock to Outperform from Peer Perform with a price target of $42.
Las Vegas Sands (LVS) rose more than +2% in pre-market trading after Jefferies upgraded the stock to Buy from Hold with a price target of $69.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Friday - January 3rd
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On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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