S&P Futures Tick Lower With Focus on U.S. Retail Sales and PPI Data

December S&P 500 E-Mini futures (ESZ25) are trending down -0.12% this morning as investors brace for a flood of U.S. economic data, with particular attention on the retail sales report and producer inflation figures, to assess whether optimism about a potential Federal Reserve rate cut in December can hold up.

In yesterday’s trading session, Wall Street’s main stock indexes ended in the green. The Magnificent Seven stocks advanced, with Tesla (TSLA) and Alphabet (GOOGL) climbing over +6%. Also, semiconductor stocks rallied, with Broadcom (AVGO) surging more than +11% to lead gainers in the S&P 500 and Nasdaq 100, and Micron Technology (MU) rising about +8%. In addition, Inspire Medical Systems (INSP) jumped more than +30% after Stifel and Nephron Research upgraded the stock to Buy from Hold. On the bearish side, Frontline Plc (FRO) slid over -3% after Clarksons Securities downgraded the stock to Neutral from Buy.

“I believe the combination of a reset of the equity market and the increased odds of a rate cut in December has propelled stocks higher and put the year-end melt-up back on the table,” said Chris Murphy, Susquehanna International Group’s co-head of derivatives strategy.

Fed Governor Christopher Waller said on Monday he’s backing a rate cut in December. “My concern is mainly the labor market, in terms of our dual mandate. So I’m advocating for a rate cut at the next meeting,” Waller said on the Fox Business Network. “You may see more of a meeting-by-meeting approach once you get to January.”

San Francisco Fed President Mary Daly told the Wall Street Journal that she supports cutting interest rates next month, saying a sudden weakening in the labor market is both more probable and more difficult to manage than a resurgence in inflation.

U.S. rate futures have priced in an 80.9% probability of a 25 basis point rate cut and a 19.1% chance of no rate change at the December FOMC meeting.

Today, all eyes are focused on the U.S. Retail Sales report for September, which is set to be released in a couple of hours. The report was originally scheduled for release on October 16th, but was delayed due to the government shutdown. Economists, on average, forecast that Retail Sales will show a +0.4% m/m increase in September following a +0.6% m/m gain in August.

Investors will also focus on U.S. Core Retail Sales data, which climbed +0.7% m/m in August. Economists expect the September figure to rise +0.3% m/m.

The U.S. Producer Price Index for September will be closely monitored today. The PPI was originally scheduled for release on October 16th, but was delayed due to the shutdown. Notably, the PPI will be one of the final inflation readings the Fed sees before its rate decision in December. Economists forecast that the U.S. September PPI will stand at +0.3% m/m and +2.7% y/y, compared to the August figures of -0.1% m/m and +2.6% y/y.

The U.S. Core PPI will also be released today. Economists expect September figures to be +0.2% m/m and +2.7% y/y, compared to August’s numbers of -0.1% m/m and +2.8% y/y.

The U.S. Conference Board’s Consumer Confidence Index will come in today. Economists anticipate that the November figure will stand at 93.5, compared to last month’s value of 94.6.

The U.S. S&P/CS HPI Composite - 20 n.s.a. will be reported today. Economists expect the September figure to ease to +1.4% y/y from +1.6% y/y in August.

U.S. Pending Home Sales data will be released today as well. Economists forecast the October figure at +0.5% m/m, compared to the previous figure of 0.0% m/m.

Meanwhile, the Commerce Department said on Monday it will release its initial estimate of third-quarter gross domestic product on December 23rd. The agency will not publish third-quarter GDP in its usual sequence of three successive estimates. Instead, there will be only two third-quarter GDP estimates, including the delayed second review of the data set for just before Christmas, and a final estimate that has not yet been scheduled.

On the earnings front, notable companies like Analog Devices (ADI), Dell Technologies (DELL), Autodesk (ADSK), Workday (WDAY), Zscaler (ZS), and HP Inc. (HPQ) are slated to release their quarterly results today.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.030%, down -0.12%.

The Euro Stoxx 50 Index is down -0.34% this morning as cautious sentiment prevails ahead of the release of a flurry of U.S. economic data. Travel and leisure stocks underperformed on Tuesday. At the same time, mining and bank stocks gained ground. Final data from the statistics agency Destatis released on Tuesday confirmed that the German economy was flat in the third quarter, avoiding a recession. The Bundesbank has said it expects moderate growth in the fourth quarter, supported by an expanding services sector and a stabilizing industrial sector. Robin Winkler, Deutsche Bank’s chief German economist, said, “Recovery is around the corner. We just need to wait for the fiscal stimulus to really kick in.” Meanwhile, European Central Bank Governing Council member Olaf Sleijpen said on Tuesday that the European Union must overhaul its spending approach to reignite growth, reducing state aid and channeling funds toward “public goods” that will be essential for future growth. “The EU budget is still focused on the economy of the past, and not so much on providing the public goods that are necessary for the economy of the future,” Sleijpen said. Investors now await the U.K. budget on Wednesday. Investors are also closely watching developments toward a Russia-Ukraine peace deal. In corporate news, Kingfisher Plc (KGF.LN) gained over +4% after the home improvement retailer raised its full-year profit guidance.

Germany’s GDP data was released today.

The German GDP has been reported at 0.0% q/q and +0.3% y/y in the third quarter, in line with expectations.

Asian stock markets today settled in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.87%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.07%.

China’s Shanghai Composite Index closed higher today as sentiment improved after Presidents Donald Trump and Xi Jinping held their first talks since agreeing to a tariff truce last month. President Trump described relations with China as “extremely strong,” boosting hopes for a lasting trade agreement between the two nations. Mr. Trump later spoke by phone with Japanese Prime Minister Sanae Takaichi, in what seemed to be an effort to defuse the China-Japan dispute over Taiwan. Technology stocks led the gains on Tuesday. Meanwhile, the People’s Daily reported that China is prioritizing advanced tech self-reliance and the development of “new quality productive forces” as a central strategy for its 15th Five-Year Plan. In corporate news, Xiaomi rose over +4% in Hong Kong after its chief executive and founder, Lei Jun, bought the company’s shares on the open market. Investors now await China’s October industrial profit data, scheduled for release on Thursday, to see whether the stretch of strong profits continued following a sharp increase in September and a stronger-than-expected increase in August. Market participants also look ahead to the Politburo meeting and the Central Economic Work Conference in December for signals on next year’s policy agenda.

Japan’s Nikkei 225 Stock Index closed just above the flatline today. The benchmark index initially climbed as much as 1.14% on strength in technology stocks that mirrored a surge in global peers that rallied during Japan’s long weekend. However, a nearly 10% drop in SoftBank Group dragged on the Nikkei, causing the index to give back most of its early gains. Shares of the Japanese conglomerate sank on concerns that Alphabet’s latest Gemini AI model could intensify competition for OpenAI, which is one of the company’s key investments. Meanwhile, Japan’s longest-dated government bonds declined on Tuesday ahead of an auction of 40-year JGBs, while shorter-term bonds slid on expectations that the Bank of Japan may be nearing a rate hike. BOJ board member Kazuyuki Masu was quoted in a Nikkei newspaper report over the weekend as saying that the central bank is “nearing” a decision to raise interest rates. In other news, Japan introduced a program on Tuesday aimed at reducing unnecessary government spending by reviewing existing subsidy programs and investment funds, a move the administration hopes will calm market concerns about its expansionary fiscal stance. Investor focus this week is on Japan’s Tokyo CPI, labor-market data, retail sales, and industrial production, which will provide a comprehensive look at how households and manufacturers are handling tighter monetary conditions and a weaker yen. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -0.11% to 37.21.

Pre-Market U.S. Stock Movers

Nvidia (NVDA) fell over -3% in pre-market trading after The Information reported that Meta Platforms was in discussions to spend billions on Google’s AI chips. Alphabet (GOOGL) climbed more than +3% in pre-market trading on the news.

Keysight Technologies (KEYS) surged over +13% in pre-market trading after the technology company posted upbeat FQ4 results and issued above-consensus FQ1 guidance.

Zoom Communications (ZM) climbed more than +5% in pre-market trading after the communications software company reported better-than-expected Q3 results.

SanDisk (SNDK) rose over +3% in pre-market trading after S&P Dow Jones Indices announced that the memory chipmaker would be added to the S&P 500 index on November 28th.

Applied Materials (AMAT) advanced more than +1% in pre-market trading after UBS upgraded the stock to Buy from Neutral with a price target of $285.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Tuesday - November 25th

Analog Devices (ADI), Dell Technologies (DELL), Autodesk (ADSK), Workday (WDAY), Zscaler (ZS), HP Inc. (HPQ), NetApp (NTAP), Burlington Stores (BURL), Dick’s Sporting Goods (DKS), Best Buy (BBY),  Nutanix (NTNX), JM Smucker (SJM), Arrowhead Pharma (ARWR), Urban Outfitters (URBN), Pony AI (PONY), Ambarella (AMBA), Abercrombie&Fitch (ANF), CleanSpark (CLSK), Kohl’s Corp (KSS), Pagerduty (PD), Guess (GES), Embecta (EMBC), Petco Health and Wellness (WOOF), Noah (NOAH), Safe Bulkers (SB), Movado (MOV), Clearfield (CLFD), Jiayin (JFIN), Yirendai Ltd (YRD), Titan Machinery (TITN), Anavex Life Sciences (AVXL), StealthGas (GASS), Baozun Inc (BZUN), BOS (BOSC).