December S&P 500 futures (ESZ23) are showing a slight gain of +0.04%, while December Nasdaq 100 E-Mini futures (NQZ23) are down -0.05% as investors brace for a barrage of U.S. economic data and eagerly anticipate the release of Nike’s earnings report.
In the previous trading session, Wall Street witnessed a mixed performance, with the Dow, a prominent blue-chip index, sliding to its lowest point in over three months. Nextera Energy Inc (NYSE:NEE) took a significant hit, plummeting by over -8%, marking it as the top loser on the S&P 500 after its affiliate, NextEra Energy Partners, revised down its long-term growth outlook. Additionally, Zions Bancorporation (ZION) saw a decline of more than -2% following a downgrade by Morgan Stanley from “Equal Weight” to “Underweight.” On the bright side, energy sector stocks surged as the price of WTI crude soared by over +3%, reaching a 13-month high. Moreover, Paychex Inc (PAYX) posted gains of more than +3% after reporting robust Q1 results.
On the economic front, data from Wednesday revealed that U.S. durable goods orders unexpectedly rose by +0.2% month-on-month in August, surpassing expectations of a -0.5% decrease. Additionally, core durable goods orders for August registered at +0.4% month-on-month, surpassing the anticipated +0.1%.
Market strategist Paul Nolte of Murphy & Sylvest Wealth Management noted, “There is concern that the economy is holding up reasonably well, but we need to see some signs of weakness to prompt interest rates to peak, and so far, we’re not seeing that.”
Minneapolis Fed President Neel Kashkari emphasized on Wednesday that a U.S. government shutdown or a prolonged strike by automotive workers could potentially slow down the economy, reducing the necessity for the Federal Reserve to employ measures to combat rising inflation. Kashkari stated, “If these downside scenarios hit the U.S. economy, we might then have to do less with our monetary policy to bring inflation back down to 2%.”
The futures market indicates a 22.4% probability of a 25 basis point rate increase at the November FOMC meeting and a 36.5% chance of a 25 basis point rate hike at the December meeting.
Meanwhile, Federal Reserve Chair Jerome Powell is scheduled to hold a town hall meeting with educators later today.
Today also marks the earnings reports of prominent companies such as Nike (NYSE:NKE), Accenture (NYSE:ACN), Jabil Circuit (NYSE:JBL), and CarMax (NYSE:KMX).
All eyes are currently on the forthcoming U.S. GDP data release, with economists projecting second-quarter GDP growth to be at +2.1% quarter-on-quarter, slightly higher than the first-quarter figure of +2.0%.
Investors are likely to closely scrutinize the U.S. GDP Price Index, which stood at +4.1% quarter-on-quarter in the first quarter. Economists anticipate the second-quarter figure to come in at +2.0% quarter-on-quarter.
Other notable data releases today include U.S. Pending Home Sales, with economists forecasting a -0.8% month-on-month reading for August, compared to the previous month’s +0.9%. Additionally, U.S. Initial Jobless Claims data is anticipated to be at 215K, up from last week’s 201K.
Furthermore, market participants will be keenly observing speeches from Federal Reserve officials Barkin, Goolsbee, and Cook.
In the bond markets, U.S. 10-year rates are currently at 4.645%, up by +0.30%.
Across the Atlantic, Euro Stoxx 50 futures are down -0.24% this morning, marking the sixth consecutive session of declines. Energy sector stocks provided some support on Thursday as a drop in crude oil stocks in the United States highlighted a growing global deficit. However, the Italian government reduced its growth projections for this year and the next while increasing its budget deficit targets. Additionally, economic institutes in Germany and Austria are predicting a 0.6% contraction in Germany’s gross domestic product for 2023, citing rising interest rates and reduced consumption due to high inflation. All eyes are now on Germany’s CPI data, expected to be released later in the session. In corporate news, Ryanair Holdings Plc (RYA.I.DX) declined by over -2% following the European airline’s announcement of reductions in its winter schedule due to Boeing delivery delays.
Spain’s CPI (preliminary) and Eurozone’s Consumer Confidence data were also released today. Spanish September CPI reported a +0.2% month-on-month and +3.5% year-on-year, in line with expectations. Eurozone September Consumer Confidence stood at -17.8, meeting expectations.
In Asian markets, stock performance was mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.10%, while Japan’s Nikkei 225 Stock Index (NIK) closed down -1.54%. In China, investors exercised caution ahead of a week-long Autumn festival holiday, with Chinese property developers continuing to decline. Trading in China Evergrande Group was suspended in Hong Kong following reports of its chairman, Hui Ka Yan, being placed under police surveillance. Additionally, Country Garden Holdings Co Ltd fell by over -2% after bondholders reported not receiving a scheduled coupon payment. Investors are also awaiting China’s PMI figures, scheduled to be released over the weekend, for further insights into the country’s economic activity.
Capital Securities noted, “Uncertainty during the holidays tends to curb investor risk appetite.”
In Japan, the Nikkei 225 Stock Index closed significantly lower, reaching a 1-month low, as concerns regarding the Federal Reserve’s intention to maintain higher interest rates weighed on risk sentiment. Technology and materials stocks led the declines on Thursday, while energy stocks outperformed. Data from Japan’s Ministry of Finance revealed that foreign investors offloaded Japanese shares worth 3 trillion yen in the week ending on September 23rd, marking a record weekly net selling by foreigners. Japan’s benchmark 10-year government bond yield reached a level not seen in a decade on Thursday, and the 20-year government bond yield rose to its highest point since 2014, driven by the increase in U.S. yields. Investor focus has now shifted to Tokyo core CPI data for September, set to be released on Friday. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +3.81% at 18.81.
In pre-market trading in the U.S., notable stock movers include:
- Micron Technology Inc (MU), which plunged over -5% after reporting better-than-expected Q4 results but providing mixed guidance.
- Peloton Interactive Inc (PTON), surged by more than +13% after announcing a five-year strategic global partnership with Lululemon Athletica.
- Gritstone Oncology Inc (GRTS), surged by about +37% after being awarded a U.S. government contract valued at up to $433 million for testing a next-generation COVID-19 vaccine.
- Workday Inc (WDAY), slumped over -10% after cutting its medium-term subscription revenue growth outlook during an Investor Day presentation.
- Redfin Corp (RDFN), which rose more than +1% after receiving an upgrade from DA Davidson, moved from “Underperform” to “Neutral.”
Today’s U.S. earnings spotlight includes companies such as Accenture (NYSE:ACN), Nike (NYSE:NKE), Jabil Circuit (NYSE:JBL), CarMax (NYSE:KMX), Vail Resorts (NYSE:MTN), BlackBerry (NYSE:BB), Park City Group (NASDAQ:PCYG), and Bassett (NASDAQ:BSET).
Featured Image: Freepik @ freepik
Author Faith Yakubu