Today’s Big Picture

Asia-Pacific equity markets finished the day flat to lower. Australia’s ASX All Ordinaries and China’s Shanghai Composite were both close to flat, declining 0.03 and 0.09%, respectively. South Korea’s KOSPI fell 0.13%, India’s SENSEX dropped 0.19%, Taiwan’s TAIEX shed 0.47% and Hong Kong’s Hang Seng closed 0.71% lower. Japan’s Nikkei gave back 1.76% in reaction to a strengthening Yen as well as renewed rate speculation about potential Bank of Japan moves. European markets are mixed in midday trading, and U.S. equity futures point to a positive open, although S&P 500 futures seem to be flirting with a flat open.

Expectations for rate cuts have continued to swell in recent days, with some calling for as many as four rate cuts by the Fed in 2024. Weaker-than-expected job openings and job creation data reported this week have helped to fuel that view, as well as drive Treasury yields lower, with the 10-year closing at 4.12% yesterday, sharply lower compared to almost 5.0% in mid-October. That fall, along with the drop in oil prices, were clear factors in the November rally for the stock market, which has now pushed its way into overbought territory. When we’ve seen the market priced to perfection in the past, especially after such a pronounced run and at a time when the Cboe Volatility Index (VIX) is near its lowest levels of the year, it doesn’t take much to upset the stock market apple cart.

This has the market walking a data tightrope. Economic data below expectations would support the Goldilocks narrative and a soft landing giving the Fed room to cut rates. However, data that points to a resurgence in the economy could raise concerns there is more fight left against inflation. And if the economic data implies the economy is about to fall out of bed, investors will have a serious think about 2024 revenue and EPS expectations. Odds are the market will be data-dependent between today’s jobs-related data through next Wednesday, when the Fed not only shares its latest policy decision but its updated economic projections as well.

Data Download

International Economy

Exports from China unexpectedly grew by 0.5% YoY to $291.93 billion in November, after a 6.4% fall in the previous month and beating market forecasts of a 1.1% drop. The November data marked the first increase in exports since April. However, imports to China unexpectedly fell by 0.6% YoY to $223.54 billion in November, missing market forecasts of a 3.3% rise and reversing from a 3.0% growth in the prior month. This was the 10th decline in purchases this year, reflecting fragile demand. YTD through November, imports fell 6% YoY.

Industrial production in Germany fell 0.4% MoM in October, easing from a marginally revised 1.3% drop in September but missing market expectations of a 0.2% rise. On a YoY basis, industrial output shrank 3.5%, little change from the 3.6% contraction recorded for September.

The third estimate for 3Q 2023 GDP in the Euro Area economy came in at 0.0%, continuing the downward trend that began in 20222. For context, the 3Q 2023 figure was the lowest since contractions in 2020.

Domestic Economy

Investors will get another perspective on the jobs market with this morning’s November Challenger Job Cuts Report out at 7:30 AM ET. Today also brings the latest figures for weekly initial and continuing jobless claims as well as natural gas inventory data from the Energy Information Administration. In addition to that weekly fare, October Wholesale Inventory data will be published at 10 AM ET and the next iteration of Consumer Credit data will be out at 3 PM ET. Investors will be parsing that credit report to see if consumers continued to take on credit card debt during October.

Markets

Equities continue to grind lower, led by Energy (-1.49%) as oil prices dipped below $70 per barrel, which, while good for the cost of replenishing the Strategic Petroleum Reserve, is putting pressure on oil company profit expectations. Technology was the next lowest returning sector as Microsoft (MSFT), Apple (AAPL), and Nvidia (NVDA) combined to contribute to just over 55% of the sector’s result. The lone bright spot was Utilities, gaining 1.34% as the sector played its traditionally defensive role.

Broad indexes were all lower as both the Dow and the Russell 2000 fell around 0.20%, the S&P 500 gave back 0.39% and the Nasdaq Composite closed 0.58% lower. Cruise line companies perked up yesterday as Royal Caribbean Group (RCL), and Norwegian Cruise Line (NCLH) gained just under 3.40% and Carnival Corporation (CCL) jumped 5.94%.

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

Dow Jones Industrial Average: 8.77%
S&P 500: 18.49%
Nasdaq Composite: 35.16%
Russell 2000: 5.16%
Bitcoin (BTC-USD): 163.87%
Ether (ETH-USD): 86.49%
Stocks to Watch

Before U.S. equity markets begin trading today, BRP (BRP), Ciena (CIEN), and Dollar General (DG) are scheduled to report their latest quarterly results.

Pre-market breadth looks moderated this morning as 212 names in the S&P 500 have traded hands so far with 105 gainers and 107 decliners. Shares seeing a healthy pre-open bid include Genuine Parts Company (GPC), Advanced Micro Devices (AMD) (more below), and Alphabet (GOOG, GOOGL) while Public Storage (PSA), Danaher Corporation (DHR) are coming under some pressure and Take-Two Interactive (TTWO) continues to see shares slide lower.

AbbVie (ABBV) announced it will acquire all outstanding shares of Cerevel (CERE) for $45.00 per share in cash. The company’s clinical-stage pipeline is expected to complement AbbVie’s current on-market portfolio and emerging neuroscience pipeline. This transaction is expected to close in the middle of 2024 but isn’t expected to be accretive to AbbVie’s EPS until 2030.

Shares of Chewy (CHWY) were under pressure after the company missed consensus expectations for its October quarter and issued downside guidance for the current quarter. The company shared that non-discretionary consumables and health categories represented ~85% of net sales for the quarter with Pharmacy now more than a $1 billion business on a trailing 12-month basis. Management sees revenue for the January quarter coming in between $2.78-$2.80 billion, up compared to the $2.74 billion booked for the October quarter but below the $2.93 billion consensus.

Shares of GameStop (GME) are falling in pre-market trading after the company reported a 9.1% YoY drop in October quarter revenue to $1.08 billion, missing the $1.18 billion consensus.

Sprinklr (CXM) reported top and bottom line beats for its October quarter led by the 22% YoY increase in subscription revenue to $170.5 million. Other color on the quarter included the company’s basket of $1 million customers rising 15% YoY to 123 customers. For its January quarter, Sprinklr guided EPS to $0.08-0.09 compared to the $0.08 consensus with revenue of $187.5-$189.5 million vs. the $188.32 million consensus.

Advanced Micro Devices introduced a long-anticipated lineup called the MI300, so-called accelerator chips that are said to run artificial intelligence software faster than rival products. Chief Executive Officer Lisa Su also gave an updated forecast for the size of the AI chip industry, forecasting it could climb to more than $400 billion in the next four years, more than twice as high as the company’s projection this past August.

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

Broadcom (AVGO), Cooper (COO), DocuSign (DOCU), Guidewire Software (GWRE), lululemon (LULU), RH (RH), Smartsheet (SMAR), Smith & Wesson Brands (SWBI), Torrid (CURV), and Vail Resorts (MTN) 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

Friday, December 8

Japan: GDP (Final) – 3Q 2023
Germany: Inflation Rate (Final) – November
US: Employment Report – November
US: The University of Michigan Consumer Sentiment Index (Preliminary) – December
US: Used Car Prices – November
Thought for the Day

“Every struggle in your life has changed you into the person you are today. Be thankful for the hard times, they can only make you stronger.” Keanu Reeves

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: Equities are Walking the Data Tightrope