S&P Futures Slip on Souring Risk Sentiment

December S&P 500 E-Mini futures (ESZ25) are trending down -0.31% this morning as investors continue to unload risk assets while awaiting Nvidia’s earnings and a pivotal U.S. jobs report.

In yesterday’s trading session, Wall Street’s main stock indexes closed lower. Dell Technologies (DELL) plunged over -8% and was the top percentage loser on the S&P 500 after Morgan Stanley double-downgraded the stock to Underweight from Overweight with a price target of $110. Also, most chip stocks slumped, with Qualcomm (QCOM) sliding more than -4% and Marvell Technology (MRVL) falling over -3%. In addition, Hewlett Packard Enterprise (HPE) dropped more than -7% after Morgan Stanley downgraded the stock to Equal Weight from Overweight. On the bullish side, Alphabet (GOOGL) rose over +3% and was the top percentage gainer on the S&P 500 and Nasdaq 100 after Berkshire Hathaway disclosed a $4.9 billion stake in Google’s parent.

Economic data released on Monday showed that the Empire State manufacturing index unexpectedly rose to a 1-year high of 18.70 in November, stronger than expectations of 6.10. Also, U.S. construction spending unexpectedly rose +0.2% m/m in August, stronger than expectations of -0.2% m/m.

Fed Vice Chair Philip Jefferson said on Monday that risks to the labor market appear tilted to the downside, while reiterating that policymakers should move cautiously as interest rates approach neutral. At the same time, Fed Governor Christopher Waller reiterated his view that the central bank should lower interest rates again in December, pointing to a weak labor market.

Meanwhile, initial jobless claims came in at 232K for the week ending October 18th, according to the Labor Department’s website. Data for the prior three weeks were not available.

U.S. rate futures have priced in a 53.6% probability of no rate change and a 46.4% chance of a 25 basis point rate cut at the conclusion of the Fed’s December meeting.

Today, investors will focus on U.S. Factory Orders data, which is set to be released in a couple of hours. The report was originally scheduled for release on October 2nd, but was delayed due to the government shutdown. Economists expect this figure to rise +1.4% m/m in August, following a -1.3% m/m drop in July.

Market participants will also parse comments today from Fed Governor Michael Barr and Richmond Fed President Tom Barkin.

On the earnings front, home improvement chain Home Depot (HD) is slated to release its Q3 results today. Earnings reports from big retailers throughout the week will provide additional insight into the health of the economy.

Investor attention for the remainder of the week is squarely focused on Nvidia’s earnings report and the delayed September jobs report, with both events set to play a key role in shaping the outlook for markets throughout the rest of 2025.

“The monthly jobs report would normally dominate this week’s economic calendar, but with the AI trade struggling the past couple of weeks, Nvidia’s earnings are once again looking like a key piece of the market’s momentum puzzle,” said Chris Larkin at E*Trade from Morgan Stanley.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.108%, down -0.56%.

The Euro Stoxx 50 Index is down -1.22% this morning, hitting its lowest level in a month as investors continue to shift away from risk on worries over stretched tech valuations and uncertainty about the Fed’s next steps. Deutsche Bank strategists said, “In addition to the AI concerns, the risk-off tone was reinforced by the latest signals from the Fed, as investors continued to price out the likelihood of a December rate cut.” Mining and bank stocks underperformed on Tuesday. Meanwhile, the European Central Bank marginally reduced the amount of capital it requires banks to hold, bolstering their ability to make shareholder payouts after clearing a financial health check earlier this year. In other news, EU trade chief Maros Sefcovic said on Tuesday that the European Commission intends to restrict EU scrap aluminium exports to prevent the metal from flowing out of the bloc and leaving its industry short of a key input needed for decarbonisation. In corporate news, ABB (ABB.S.DX) dropped over -3% after the company reaffirmed its revenue growth forecasts, leaving investors disappointed.

The European economic data slate is empty on Tuesday.

Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.81%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -3.22%.

China’s Shanghai Composite Index closed lower today, marking a third straight session of losses, amid risk-off sentiment triggered by a sell-off on Wall Street overnight. New energy stocks led the declines on Tuesday. Sentiment was also weighed down by ongoing tensions between China and Japan. Still, Tokyo has reportedly moved to defuse a growing dispute with Beijing over Taiwan, which had led China to urge its citizens to suspend travel to its East Asian neighbor. Meanwhile, Reuters reported that China purchased at least 14 cargoes of U.S. soybeans on Monday, its biggest purchase since at least January and the most significant since the October summit between U.S. President Donald Trump and Chinese leader Xi Jinping. In corporate news, XPeng tumbled over -10% in Hong Kong after the carmaker posted slightly weaker-than-expected Q3 vehicle margins and gave soft Q4 guidance. Investor attention this week is on the People’s Bank of China, which is set to announce the country’s benchmark lending rate on Thursday. With China seemingly on course to meet its full-year growth target and banks’ net interest margins hovering near record lows, economists widely expect the PBOC to keep rates unchanged in November.

Japan’s Nikkei 225 Stock Index closed sharply lower today, posting its biggest one-day drop since April. Tech and AI-related stocks tumbled on Tuesday, mirroring a slump in their U.S. peers overnight as valuation concerns persisted. BNP Paribas analysts said that the nation’s AI-related stocks may be more vulnerable to near-term volatility due to the combination of substantial foreign ownership and mixed earnings results. Bank stocks were also among the biggest laggards amid jitters surrounding Prime Minister Sanae Takaichi’s stimulus package. Sentiment was also dampened by a diplomatic spat between Tokyo and Beijing. NHK reported that senior diplomats from Japan and China are scheduled to meet in Beijing on Tuesday to discuss rising tensions following Takaichi’s recent remarks on Taiwan. Meanwhile, Japanese government bonds came under pressure on Tuesday, with super-long yields jumping to record highs, as investor concerns intensified that a coming stimulus package from Takaichi would strain the nation’s public finances. A ruling-party panel proposed on Tuesday drafting a supplementary budget of more than 25 trillion yen ($161 billion) to finance the premier’s planned stimulus package. In other news, Bank of Japan Governor Kazuo Ueda said on Tuesday he told Takaichi that the central bank was gradually scaling back monetary support to guide inflation smoothly toward its 2% target. “We had candid, good talks on economic, price, financial developments as well as on monetary policy,” Ueda told reporters after his first bilateral meeting with Takaichi since she took office last month. Ueda also said the BOJ will base any rate hikes on economic data, reaffirming its data-dependent stance. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +23.62% to 35.28.

Pre-Market U.S. Stock Movers

Chip stocks are moving lower in pre-market trading, with Advanced Micro Devices (AMD) and Intel (INTC) falling more than -1%.

Amazon.com (AMZN) fell over -1% in pre-market trading after Rothschild & Co. Redburn downgraded the stock to Neutral from Buy.

Microsoft (MSFT) dropped about -1% in pre-market trading after Rothschild & Co. Redburn downgraded the stock to Neutral from Buy with a price target of $500.

Home Depot (HD) slid more than -3% in pre-market trading after the world’s largest home-improvement retailer reported weaker-than-expected Q3 comparable sales and cut its full-year earnings guidance.

Deckers Outdoor (DECK) rose more than +1% in pre-market trading after Stifel upgraded the stock to Buy from Hold with an unchanged price target of $117.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Tuesday - November 18th

Home Depot (HD), Medtronic (MDT), Trip.com ADR (TCOM), Baidu (BIDU), Futu (FUTU), Aecom Technology (ACM), Amer Sports (AS), Dolby Labs (DLB), Powell Industries (POWL), Golub (GBDC), Bellring (BRBR), Helmerich Payne (HP), Weibo Corp (WB), Star Bulk Carriers (SBLK), iQIYI (IQ), Energizer (ENR), Navios Maritime Unit (NMM), La-Z-Boy (LZB), Oaktree Specialty Lending (OCSL), Ituran (ITRN), Canaan (CAN), Varex Imaging (VREX), Euroseas (ESEA).