Today’s Big Picture

Asia-Pacific equity markets finished the day mostly down or flat except for India’s SENSEX which closed 0.74% higher. Taiwan’s TAIEX (0.03%) and China’s Shanghai Composite (0.06%) ended the day essentially flat. Both Japan’s Nikkei and Australia’s ASX All Ordinaries declined 0.17%, South Korea’s KOSPI fell 1.19%, and Hong Kong’s Hang Seng gave back 1.25% in a broad decline led by Non-Energy Materials, and Consumer Durables. European markets are ahead in midday trading, and U.S. equity futures point to a mixed open as Nasdaq 100 name Tesla (TSLA) is coming under pressure this morning.

Markets are becoming increasingly comfortable with the idea that not only has the Fed stopped raising rates but that expectations are that we should be seeing our first rate cut a lot earlier than the June forecast from a week or so ago and the Fall estimate from a month or so ago. Fed Fund futures are currently pricing in no change in both the December and January meetings and, while not an overwhelming position, are pricing in a 45% chance of a cut in March compared to 11% at the end of October. Given recent bond market moves, yesterday’s positive inflation update, and consistent messaging by the Fed, markets closed out November on an upbeat note and this sentiment is expected to carry through December.

Data Download

International Economy

Last night saw the November update of Japan’s Jibun Bank Manufacturing PMI which nudged up to 48.3, slightly higher than the previously reported 48.1. Also updated was China’s Caixin Manufacturing PMI for November which provided an upside surprise at 50.7 besting both the 49.8 estimate, and the previously reported 49.5. 

November PMI figures were also updated for the broad Eurozone and the UK as the regional HCOB Manufacturing PMI was released as 44.2, ahead of both estimates and the previously released 43.8 and the UK’s S&P/CIPS Manufacturing PMI remained flat at 46.7. Germany, France, Italy, Switzerland, and Spain also saw PMI updates with all countries posting figures in the low- to mid-40s and all but Italy doing better than estimates.

Domestic Economy

9:45 AM ET sees the final update of November’s S&P Global Manufacturing PMI. The last time this metric was above 50 was back in April of this year and expectations are for it to remain at 49.4, just under that seemingly elusive expansion threshold. 10:00 AM ET brings the November ISM Manufacturing Index update, which is expected to have risen to 47.7, a full point ahead of the previously reported 46.7.

Also at 10:00 AM ET, Construction Spending for October will be released and is expected to have risen an additional 0.35% on top of September’s 0.41% increase.

Markets

Equities seemed to perk up some more as all sectors except for Communication Services, pushed 0.58% lower by downward moves by Alphabet (GOOG, GOOGL) and Meta Platforms (META) and Consumer Discretionary down 0.14% on a decline in Tesla. Healthcare (1.26%) and Financials (1.13%) led yesterday to close out November. Overall, broad indexes were higher except for the Nasdaq Composite which shed 0.23%. The Russell 2000 gained 0.29%, the S&P 500 rose 0.38% and the Dow closed 1.47% higher.

In individual names, Salesforce Inc (CRM) had a strong day, rising 9.36% after traders reacted to the company’s recent earnings release which prompted a number of price target increases from various research firms. 

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

Dow Jones Industrial Average: 8.46%
S&P 500: 18.97%
Nasdaq Composite: 35.92%
Russell 2000: 2.71%
Bitcoin (BTC-USD): 127.33%
Ether (ETH-USD): 71.41%
Stocks to Watch

Before U.S. equity markets begin trading today, there is a very light earnings reporting roster, with Bank of Montreal (BMO) being the only major name scheduled to report.

Pre-market breadth shows 201 of the 503 names in the S&P 500 trading hands this morning with 140 gainers and 61 decliners. Shares of Ulta Beauty (ULTA) are poised to open well above yesterday’s close as traders react to last night’s earnings release (more below) while Digital Realty Trust (DLR) is coming under some pressure ahead of the market open.

Dell Technologies (DELL) had a strong quarter, posting EPS of $1.88 against analyst estimates of $1.46 despite revenues of $22.25 billion coming just shy of the expected $22.90 billion. Segment revenue in the infrastructure Solutions Group saw growth in Server and Networking, while Storage slipped while the Client Solutions Group saw a decline in both Consumer and Commercial sales. Management highlighted the company’s share repurchase program and commented further that “our servers and networking business was up 9% sequentially fueled by customer interest in generative AI. And heading into FY25, we expect revenue growth given the tailwinds to our business.”

Marvell Technology (MRVL) announced its latest quarterly earnings beating EPS estimates by $0.01 at $0.41 per share. Revenues also topped estimates by $200,000 coming in at $1.42 billion. The company offered current quarter EPS guidance of $0.46 +/- 5% and revenues of $1.42 billion with the same 5% margin of error. Management was upbeat overall, commenting that “the diversification of our portfolio is serving us well, with strong growth from AI and cloud carrying us through a softening demand environment in other end markets.”

Elastic NV (ESTC) reported EPS of $0.27 as compared to estimates of $0.24 on revenues of $310.6 million against projections of $304.1 million for the quarter. The company provided current quarter revenue guidance of $320 million, besting estimates of $319 million. Subscription margins improved slightly to 81% from last year’s 79% while Services margins held steady at 25%. Subscription customer counts ended the quarter at 20,700 up 200 from the previous quarter.

Ulta Beauty posted a double beat, topping analyst EPS as the company posted $5.07 as compared to expectations of $4.96 and $2.49 billion in revenue against estimates of $2.47 billion. CEO Dave Kimbell commented that “as we look to the future, the outlook for the Beauty category is bright, and I am confident Ulta Beauty has the right plans in place to delight our guests this holiday season, expand our leadership position in specialty beauty retail, and deliver long-term shareholder growth.” 

IPOs

The December IPO calendar is extremely light. Readers who want to dig deeper into that calendar should visit Nasdaq’s Latest & Upcoming IPOs page.

After Today’s Market Close

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 4

Germany: Imports/Exports – October
US: Factory Orders – October

Tuesday, December 5

Japan: Jibun Bank Services PMI (Final) – November
China: Caixin Services PMI – November
Eurozone: HCOB Services PMI (Final) – November
UK: S&P Global/CIPS Services PMI (Final) – November
Eurozone: Producer Price Index – October
US: S&P Global Final Services PMI – November 
US: ISM Non-Manufacturing PMI – November 
US: JOLTs Job Openings Report – October 

Wednesday, December 6

Germany: Factory Orders – October
Eurozone: Retail Sales – October
US: Weekly MBA Mortgage Applications 
US: ADP Employment Change Report – November 
US: Productivity – 3Q 2023 
US: Weekly EIA Crude Oil Inventories 

Thursday, December 7

China: Imports/Exports – November
Japan: Leading Economic Index (Preliminary) – October
Germany: Industrial Production – October
Eurozone: 3Q 2023 GDP (3rd Estimate)
US: Challenger Job Cuts Report – November 
US: Weekly Initial & Continuing Jobless Claims 
US: Wholesale Inventories – October 
US: Weekly EIA Natural Gas Inventories 
US: Consumer Credit – October 

Friday, December 8

Japan: GDP (Final) – 3Q 2023
Germany: Inflation Rate (Final) – November
US: Employment Report – November (8:30 AM ET)
US: The University of Michigan Consumer Sentiment Index (Preliminary) – December
US: Used Car Prices – November
Thought for the Day

“The big money is not in the buying and selling … but in the waiting” ~ Charlie Munger

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: Markets See Strength Coming Into December