Today’s Big Picture

Asia-Pacific equity markets finished the day mixed in reaction to yesterday’s U.S. equity sell-off. China’s Shanghai Composite gained 0.57%, India’s SENSEX rose 0.51%, and Hong Kong’s Hang Seng closed flat, up a mere 0.04%. Australia’s ASX All Ordinaries fell 0.47%, Taiwan’s TAIEX dropped 0.52%, and South Korea’s KOSPI shed 0.55% while Japan’s Nikkei closed 1.59% lower following U.S. markets. While not the cause of yesterday’s decline, shares of Toshiba (TOSYY) traded their last as the company delisted from the Tokyo Stock Exchange after 74 years of trading after being taken private. European markets are down across the board in midday trading, and U.S. equity futures point to a higher open.

After taking a break yesterday after the rapid run-up over the last several weeks, stocks look to gain further ground following upbeat quarterly results last night from Micron (MU). Also helping spark today’s rebound were comments from Philadelphia Fed President Patrick Harker, who said it is important interest rates move lower, but cautioned “We don’t have to do it too fast, and we’re not going to do it right away.” Even though trading volumes are expected to become far lighter starting tomorrow, the questions over when and how quickly the Fed will begin dialing back monetary policy will be a key topic tomorrow morning with the November PCE Price Index. A hotter-than-expected figure relative to the November core consensus forecast of 3.3% YoY and November’s 3.5% reading would add to the growing view that, as former Fed Chair Alan Greenspan might say, 6-7 rate cuts in 2024 is an “irrationally exuberant” expectation.

Data Download

International Economy

For the first 11 months of 2023, foreign direct investment (FDI) into China declined by 10% YoY to CNY 1.04 trillion ($145.51 billion).

Domestic Economy

If it’s Thursday, it means we will be getting the latest weekly data for initial and continuing jobless claims as well as natural gas inventories. Today also brings the third look at 3Q 2023 GDP at 8:30 AM ET and expectations are for it to clock in at +5.2% YoY. Alongside that update, the December Philadelphia Fed Manufacturing Index will be released, and the consensus view has it improving to -3 from -5.9 in November.

The U.S. Federal Aviation Administration expects today to be the busiest travel day of the week. According to the Transportation Security Administration, the official holiday period runs from today through Tuesday, January 2, and the U.S. airline trade group Airlines for America expects carriers to fly more than 39 million passengers during the holidays, up 16% YoY.

Reports indicate the Biden administration is discussing raising tariffs on some Chinese goods, including electric vehicles, to bolster the U.S. clean-energy industry against cheaper Chinese exports.

Markets

Given this morning’s equity futures action, it looks like yesterday saw some profit-taking as all sectors closed lower. Utilities (-2.03%) and Consumer Staples (-1.94%) led the way and relative strength came from Communication services (-0.77%) and Energy (-0.93%), the only sectors that declined less than 1%. The Dow fell 1.27%, the S&P 500 and the Nasdaq Composite both gave back about 1.50% and the Russell 2000 closed 1.89% lower.

There wasn’t much to get excited about, but shares of Alphabet (GOOG, GOOGL) ended the day up 1.13% and 1.224%, respectively after it was announced that the company will pay fines of $700 million association with a settled lawsuit over Google Play app store practices. Changes to the platform include allowing “side loading” of apps (installing apps not purchased through Google Play).

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

Dow Jones Industrial Average: 11.87%
S&P 500: 22.37%
Nasdaq Composite: 41.19%
Russell 2000: 12.58%
Bitcoin (BTC-USD): 162.93%
Ether (ETH-USD): 83.36%
Stocks to Watch

Before U.S. equity markets begin trading today, Apogee Enterprises (APOG), CarMax (KMX), Cintas (CTAS), and Paychex (PAYX) are expected to report quarterly results.

Pre-market breadth is a little wider as 259 of the 503 names in the S&P 500 index have traded hands so far with 232 gainers and 27 decliners. One name that stands out this morning is Micron (MU) which is seeing its shares bid up sharply (more below) while on the other side of the coin, Ameren Corporation (AEE) is under pressure following the release of the company’s latest climate Strategy report.

Micron topped consensus revenue and EPS expectations for its November quarter and issued upside guidance for the current one. Management sees EPS of ($0.35) – ($0.21) for the February quarter compared to the ($0.62) consensus with revenue in the range of $5.1-$5.5 billion, ahead of the $4.97 billion consensus. Micron forecasts 2024 PC unit volumes to grow by a low-to-mid-single digit percentage with OEMs ramping AI-on-device PCs in 2H 2024. The company sees smartphone demand continuing to recover, and forecasts smartphone unit shipments to grow modestly in calendar 2024. For the data center market, it sees total server unit shipments up by a mid-single-digit percentage in calendar 2024 and noted that demand for AI servers has been strong “as data center infrastructure operators shift budgets from traditional servers to more content-rich AI servers.”

Blackberry (BB) also reported better-than-expected November quarter results but issued downside guidance for its February quarter. November quarter cybersecurity and IoT revenue both climbed 8% YoY. IoT revenue is expected to grow QoQ, but management’s guidance suggests a sharp sequential drop in its cybersecurity revenue due primarily to the timing of large government deals in Blackberry’s pipeline.

Reports suggest Warner Bros. Discovery (WBD) has held talks with Paramount Global (PARA) to discuss a potential merger with the owner of Paramount movie studio as well as CBS and other TV properties.

According to an International Trade Commission filing, Apple (AAPL) lost a bid to delay an impending Apple Watch import ban. Only a last-minute White House intervention can prevent a pause in sales of some of the devices in the U.S. Earlier this week, Apple said it would stop selling the Apple Watch Series 9 and Apple Watch Ultra 2, on its website starting Thursday, and in Apple stores starting after Sunday.

Southwest Air (LUV) announced a Tentative Agreement has been reached with the Southwest Airlines Pilots Association and will be voted on by the airline’s nearly 11,000 Pilots.

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

Mission Produce (AVO) and Nike (NKE) 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 22

Japan: Inflation Rate – November
UK: Retail Sales – November
UK: GDP Growth Rate, Business Investment – 3Q 2023
US: Durable Orders – November
US: Personal Income & Spending, PCE Price Index November
US: New Home Sales – November
US: The University of Michigan Consumer Sentiment Index (Final) – December
Thought for the Day

“Christmas is a magical time of year… I just watched all my money magically disappear.” –Unknown

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: Stocks Bounce Back Ahead of Nike Earnings and November PCE Data