Today’s Big Picture

Asia-Pacific equity markets finished the day higher except for Japan’s Nikkei which fell 1.68% on continued strength in the Yen and speculation regarding potential Bank of Japan rate hike actions. Hong Kong’s Hang Seng closed close to flat, down 0.07%. China’s Shanghai Composite rose 0.11%, Australia’s ASX All Ordinaries gained 0.28%, India’s SENSEX advanced 0.44%, and Taiwan’s TAIEX added 0.61%. South Korea’s KOSPI closed 1.03% higher in mixed trading led by Financials. European markets are mostly higher in midday trading, and U.S. equity futures point to a mixed open as some components of the Nasdaq-100 are coming under pressure this morning, including mega-cap Microsoft; see Stocks to Watch below for more.

Readers will want to revisit equity futures after the November Employment Report is published at 8:30 AM ET. Following a string of weaker-than-expected jobs data earlier this week, the market is waiting to see how many jobs were created in November according to the Employment Report. The consensus forecast sees an uptick to 180,000 jobs compared to the 150,000 created in October. However, the miss in the ADP November Employment Change report and weak job additions in the November Challenger Gray Job Cuts report suggest far fewer jobs were added during November.

In yesterday’s Daily Markets, we pointed out the stock market is walking a data tightrope, with better-than-expected data potentially challenging the Goldilocks narrative that has been driving the market melt up. Similarly, a far weaker-than-expected jobs print this morning could stoke concerns the economy is decelerating at a quick pace, renewing recession fears and raising questions over 2024 revenue and EPS prospects. The bottom line is it will take a “just right” number of jobs being created in November to keep the Goldilocks narrative humming along.

Data Download

International Economy

The Japanese economy contracted 2.9% on an annualized basis during the third quarter of 2023, compared with preliminary data of a 2.1% fall and after a downwardly revised +3.6% in 2Q 2023.

China’s Politburo, comprising the top 24 leaders of the Communist Party, pledged to strengthen the government’s fiscal measures and make monetary policy more effective, bolstering efforts to stabilize growth.

German consumer price inflation rate was confirmed at 3.2% YoY in November, slowing from October’s 3.8% and marking the lowest point since June 2021.

Domestic Economy

When the dust settles from this morning’s November Employment Report, at 10 AM ET the University of Michigan will release its preliminary December Consumer Sentiment data. The headline figure is expected to come in at 62, up from 61.3 for November. Still, we expect investors will be looking to see if consumer inflation expectations move lower compared to November.

President Biden on Friday is announcing $8.2 billion in new funding for 10 passenger rail projects nationwide, representing the largest federal investment in passenger rail transportation since Amtrak was created in 1971.

Markets

Equities shrugged off the past few down days in advance of today’s employment report, buoyed mostly by Technology (1.21%) and Communications Services (2.10%) as Alphabet’s announcement of their answer to ChatGPT boosted shares. Utilities gave back some of the previous day’s gains, falling 0.22% and Energy (-0.68%) continued to fall as oil prices remained relatively low. Broad market indexes all posted gains as the Dow rose 0.17%, the S&P 500 added 0.80%, the Russell 2000 advanced 0.87% and the Nasdaq Composite closed 1.37% higher.

The enthusiasm for AI did not extend to shares of O’Reilly Automotive which saw its shares trade off 3.20% after the company filed an 8-K outlining the CEO’s plan to sell up to 32,291 shares during 2024.

Here’s how the major market indicators stack up year-to-date:

Dow Jones Industrial Average: 8.96%
S&P 500: 19.43%
Nasdaq Composite: 37.01%
Russell 2000: 6.08%
Bitcoin (BTC-USD): 161.00%
Ether (ETH-USD): 96.50%
Stocks to Watch

Before U.S. equity markets begin trading today, Hello Group (MOMO) is the lone company expected to report its quarterly results.

Pre-market breadth is healthy as 220 names in the S&P 500 have traded hands so far this morning with 150 gainers and 70 decliners. Shares seeing a strong bid include EQT Corporation (EQT), First Solar (FSLR), and Sealed Air Corporation (SEE) while Lululemon Athletica (LULU) (more below), and Synchrony Financial (SYF) are coming under some pressure.

Broadcom (AVGO) reported better-than-expected October quarter results and lifted its quarterly dividend by 14% to $5.25 per share. Revenue in the quarter benefitted from investments in accelerators and network connectivity for AI by hyperscalers. Broadcom issued fiscal 2024 revenue guidance of ~$50 billion, which included recently acquired VMware, compared to the $39.2 billion consensus, which does not include VMware.

Taiwan Semiconductor (TSM) announced its net revenue for November came in at ~NT$206.03 billion, a decrease of 15.3% from October, and fell 7.5% YoY.

The UK’s Competition and Markets Authority is seeking views from interested parties to address whether Microsoft’s (MSFT) $10 billion investment in OpenAI has led to a “relevant merger situation,” where two or more businesses have ceased or will cease to be distinct as a result of a transaction.

October quarter results from RH (RH) fell short of Wall Street’s expectations. The top-line miss was compounded by the drop in gross margin to 45.3% compared to 49.7% in the year-ago quarter. RH issued downside guidance for its fiscal 2024 with revenue of $3.06-$3.08 billion against the $3.08 billion consensus. Management commented “With 82% of homeowners having mortgages below 5%, and 62% below 4%, we continue to expect the existing housing market to remain frozen until interest rates and/or home prices fall meaningfully. Additionally, the home furnishings market has become increasingly promotional, and we believe that will create a mix shift towards clearance products, pressuring gross margins.”

While Lululemon delivered better-than-expected October quarter EPS, the company issued downside guidance for its holiday shopping quarter. Comp sales for the October quarter rose 9% YoY and direct-to-consumer net revenue rose 18% vs. year-ago levels. For its January quarter, lululemon guided EPS to $4.85-$4.93 compared to the $4.94 consensus on revenue between $3.135-$3.170 billion compared to the $3.18 billion consensus and the $2.2 billion posted in the October quarter.

Honeywell (HON) announced plans to enhance and strengthen its building automation capabilities with the acquisition of Carrier Global Corporation’s (CARR) Global Access Solutions business for $4.95 billion, in an all-cash transaction.

Apple (AAPL) and its suppliers aim to build more than 50 million iPhones in India annually within the next two to three years, with additional tens of millions of units planned after that.

IPOs

Readers who want to dig deeper into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.

After Today’s Market Close

Once again, we’ve made it to the end of the trading week and that means no companies are slated to report their quarterly results after equities stop trading. Those looking for more on upcoming quarterly earnings reports should head on over to Nasdaq’s Earnings Calendar.

On the Horizon

Monday, December 11

Japan: Machine Tool Orders – November

Tuesday, December 12

Japan: Producer Price Index – November
UK: Unemployment Rate – October
Eurozone: ZEW Economic Sentiment Index – December
US: NFIB Small Business Optimism Index – November
US: Consumer Price Index – November
US: Treasury Budget – November

Wednesday, December 13

UK: GDP, Industrial Production, Manufacturing Production – October
Eurozone: Industrial Production – October
US: Weekly MBA Mortgage Applications
US: Producer Price Index – November
US: Weekly EIA Crude Oil Inventories
US: FOMC Rate Decision, Economic Projections

Thursday, December 14

UK: Bank of England Interest Rate Decision
Eurozone: European Central Bank Interest Rate Decision
US: Weekly Initial & Continuing Jobless Claims
US: Import/Export Prices – November
US: Retail Sales – November
US: Business Inventories – October
US: Weekly EIA Natural Gas Inventories

Friday, December 15

Japan: Jibun Bank Flash Manufacturing and Services PMI – December
China: Industrial Production, Retail Sales, Vehicle Sales, Foreign Direct Investment – November
Eurozone: HCOB Flash Manufacturing and Services PMI – December
UK: S&P Global/CIPS Flash Manufacturing and Services PMI – December
US: Empire Manufacturing Index – December
US: Industrial Production & Capacity Utilization – November
US: S&P Global Flash Manufacturing and Services PMI – December
Thought for the Day

“Always, always, always believe in yourself. Because if you don’t, then who will, sweetie?” ~ Marilyn Monroe

Disclosures

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Original: Earnings Feed: Daily Markets: All About the November Jobs Report