Stock Index Futures Muted in Run-Up to Key U.S. Jobs Data

December S&P 500 E-Mini futures (ESZ25) are down -0.06%, and December Nasdaq 100 E-Mini futures (NQZ25) are down -0.14% this morning as investors exercise caution ahead of the release of the key U.S. jobs report, which will offer clues on the Federal Reserve’s policy path next year.

In yesterday’s trading session, Wall Street’s main stock indexes ended in the red. ServiceNow (NOW) plunged over -11% and was the top percentage loser on the S&P 500 after Bloomberg reported that the company was in advanced talks to buy cybersecurity startup Armis for as much as $7 billion, and KeyBanc downgraded the stock to Underweight. Also, cryptocurrency-exposed stocks slumped as the price of Bitcoin fell more than -4%, with Riot Platforms (RIOT) tumbling over -10%, and Strategy (MSTR) sliding more than -8% to lead losers in the Nasdaq 100. In addition, iRobot (IRBT) plummeted over -72% after the Roomba maker filed for Chapter 11 bankruptcy protection. On the bullish side, KLA Corp. (KLAC) rose more than +2% after Jefferies upgraded the stock to Buy from Hold with a price target of $1,500.

Economic data released on Monday showed that the Empire State manufacturing index unexpectedly fell to -3.9 in December, weaker than expectations of 10.0.

Fed Governor Stephen Miran said on Monday that the central bank’s policy stance remains overly restrictive for the economy, citing his benign inflation outlook and warning signs in the job market. Also, New York Fed President John Williams said monetary policy is well-positioned for next year following last week’s rate cut. “The FOMC has moved the modestly restrictive stance of monetary policy toward neutral,” Williams said. In addition, Boston Fed President Susan Collins said she backed last week’s rate cut, though the decision was a “close call” given her ongoing concerns about elevated inflation. “While my analysis in November had leaned toward holding policy steady, by the December meeting, available information suggested the balance of risks had shifted a bit,” Collins said.

Meanwhile, U.S. rate futures have priced in a 73.4% chance of no rate change and a 26.6% chance of a 25 basis point rate cut at the conclusion of the Fed’s January meeting.

Today, all eyes are focused on the U.S. monthly payroll report for November, which is set to be released in a couple of hours. The report arrives later than the typical first Friday of the month due to the lingering impact of the historically long government shutdown. Notably, the report will be unusual as it will include an estimate of October payrolls — figures that were delayed by the shutdown. Economists, on average, forecast that Nonfarm Payrolls will come in at 51K in November. At the same time, October payroll data is expected to show substantial losses in government jobs stemming from buyouts of federal workers.

A survey conducted by 22V Research showed that investor expectations for the market’s reaction to the key jobs report are fairly evenly split, with 29% calling for “risk-on,” 36% “risk-off,” and 36% “mixed/negligible.”

With the Fed still appearing more focused on labor market weakness than inflation, the jobs report may bring a “bad news is good” reaction, according to Chris Larkin at E*Trade from Morgan Stanley. “As long as the numbers don’t suggest employment is falling off a cliff, the markets may embrace soft data because it could lead to a more-dovish Fed,” Larkin said.

Investors will also focus on U.S. Average Hourly Earnings data. Economists expect the November figures to be +0.3% m/m and +3.6% y/y, compared to +0.2% m/m and +3.8% y/y in September.

The U.S. Unemployment Rate will be reported today. Economists anticipate that the November figure will creep up a tick to 4.5% from 4.4% in September.

U.S. Retail Sales and Core Retail Sales data for October will be closely monitored today. The report was originally scheduled for release on November 14th, but was delayed due to the fallout from the shutdown. Economists expect retail sales to rise +0.1% m/m and core retail sales to rise +0.2% m/m in October, compared to the September numbers of +0.2% m/m and +0.3% m/m, respectively.

Preliminary U.S. purchasing managers’ surveys will be released today as well. Economists expect the December S&P Global Manufacturing PMI to be 52.0 and the S&P Global Services PMI to be 54.0, compared to the previous values of 52.2 and 54.1, respectively.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.179%, down -0.05%.

The Euro Stoxx 50 Index is down -0.14% this morning as defense stocks slipped on Ukraine peace talks, with attention now turning to key U.S. jobs data. Defense stocks slumped on Tuesday after the U.S. offered NATO-style security guarantees for Kyiv and European negotiators reported progress in talks on Monday aimed at ending Russia’s war in Ukraine. Technology stocks also fell. Limiting losses, bank and healthcare stocks advanced. A survey released on Tuesday showed that Eurozone business activity growth slowed more than anticipated in December, as manufacturing contraction deepened and expansion in the dominant services sector weakened. “The weaker performance is primarily attributable to German industry, where the downturn intensified,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank. Separately, data showed that the U.K. unemployment rate hit a post-pandemic high and wage growth eased in the three months through October, boosting expectations that the Bank of England will cut interest rates later this week. In addition, the ZEW economic research institute reported that German investor morale improved more than expected in December. Meanwhile, investors are also preparing for a string of central bank decisions in the region, including those from the European Central Bank and the Bank of England. In corporate news, UBS Group AG (UBSG.Z.EB) rose over +2% after BofA Global Research upgraded the stock to Buy from Neutral.

U.K. Average Earnings ex Bonus, U.K. Unemployment Rate, Italy’s CPI, Eurozone’s Composite PMI (preliminary), Eurozone’s Manufacturing PMI (preliminary), Eurozone’s Services PMI (preliminary), Germany’s ZEW Economic Sentiment Index, and Eurozone’s ZEW Economic Sentiment Index were released today.

U.K. Average Earnings ex Bonus stood at 4.6% in the three months to October, stronger than expectations of 4.5%.

The U.K. Unemployment Rate was 5.1% in the three months to October, in line with expectations.

The Italian November CPI fell -0.2% m/m and rose +1.1% y/y, compared to expectations of -0.2% m/m and +1.2% y/y.

Eurozone’s December Composite PMI has been reported at 51.9, weaker than expectations of 52.7.

Eurozone’s December Manufacturing PMI came in at 49.2, weaker than expectations of 49.9.

Eurozone’s December Services PMI arrived at 52.6, weaker than expectations of 53.3.

The German December ZEW Economic Sentiment Index came in at 45.8, stronger than expectations of 38.4.

The Eurozone December ZEW Economic Sentiment Index arrived at 33.7, stronger than expectations of 26.3.

Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -1.11%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -1.56%.

China’s Shanghai Composite Index closed lower today as waning tech gains and renewed concerns about economic growth weighed on sentiment. Rare earth, new energy, and AI-related stocks led the declines on Tuesday. A slew of economic indicators released on Monday showed that China’s economic momentum weakened further in November. The National Bureau of Statistics said China’s factory output growth slowed to a 15-month low in November, retail sales growth was the weakest since the Covid period, and investment weakened further. Persistent trade tensions are further increasing the economy’s vulnerability. “Deflation, soft consumption, real estate weakness, involution — none of these issues seem to have been definitively resolved,” said Vey-Sern Ling, managing director at Union Bancaire Privee, adding that profit-taking is understandable given the uncertainty. Meanwhile, BofA Securities economists said the nation’s economy may continue to face challenges in the near term due to a lack of policy support. They said the recent Central Economic Work Conference indicated a “limited appetite for policymakers to significantly ramp up stimulus in the near term.” Sentiment remained downbeat even after state media published a summary on Monday of an article by Chinese leader Xi Jinping calling for a comprehensive framework focused on boosting consumer demand. In corporate news, BAIC BluePark New Energy Techno Co. jumped +10% and Chongqing Changan Automobile climbed more than +4% after regulators for the first time approved electric sedans from the two companies with level-3 autonomous driving capabilities.

Japan’s Nikkei 225 Stock Index closed sharply lower today in a broad-based selloff ahead of this week’s risk events, including the U.S. nonfarm payrolls data and the Bank of Japan’s policy decision. Financial and energy stocks led the declines on Tuesday. Chip and other AI-related stocks were also among the biggest laggards. The benchmark index closed below the key psychological 50,000 level for the first time since December 3rd. A private-sector survey showed that Japan’s manufacturing activity contracted at a slower rate, while the services sector lost some momentum in December. Looking ahead to 2026, business confidence remained strong but eased from the previous month, particularly in manufacturing, with the uncertain outlook attributed to global economic conditions, an ageing population, and rising costs. Meanwhile, Japanese government bonds were little changed, while the yen strengthened against the dollar ahead of the BOJ’s policy decision on Friday. The central bank is widely expected to raise its benchmark rate by 25 basis points to 0.75%, marking the first hike since January. Market participants will closely watch Governor Kazuo Ueda’s post-meeting press conference for clues on how many additional rate hikes may be ahead. In other news, Japan’s upper house approved an extra 18.3 trillion yen ($118 billion) budget on Tuesday, clearing the way for Prime Minister Sanae Takaichi to roll out the country’s largest stimulus package since the COVID-19 pandemic. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +3.75% to 29.85.

The Japanese December au Jibun Bank Manufacturing PMI (preliminary) stood at 49.7, stronger than expectations of 49.0.

Pre-Market U.S. Stock Movers

Gitlab (GTLB) dropped more than -3% in pre-market trading after KeyBanc downgraded the stock to Sector Weight from Overweight.

Lockheed Martin (LMT) fell over -1% in pre-market trading after Morgan Stanley downgraded the stock to Equal Weight from Overweight.

B. Riley Financial (RILY) jumped about +32% in pre-market trading after the company filed its overdue Q2 report, showing it swung to a profit in the quarter from a loss a year earlier.

Roku (ROKU) climbed more than +4% in pre-market trading after Morgan Stanley upgraded the stock to Overweight from Equal Weight with a price target of $135.

Ford Motor (F) rose over +1% in pre-market trading after the company announced a major strategic pivot toward hybrids and commercial trucks, and away from electric vehicles.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Tuesday - December 16th

Lennar (LEN), Worthington Industries (WOR), Duluth Holdings Inc (DLTH).