Today’s Big Picture

Asia-Pacific equity markets finished the day mostly following US markets’ lead following Fed Chair Powell’s comments except for Japan’s Nikkei which fell 0.73% and China’s Shanghai Composite which closed 0.33% lower. Taiwan’s TAIEX gained 1.05%, Hong Kong’s Hang Seng added 1.07%, and both India’s SENSEX and South Korea’s KOSPI rose 1.34%. Australia’s ASX All Ordinaries closed 1.74% higher with Communications the only declining sector. European markets are all a bright shade of holiday green in midday trading, and U.S. equity futures point to a healthy open.

At 8:30 AM ET, the November Retail Sales report will be published, and it will serve not only as a barometer for the consumer but also the current holiday shopping season. The Commerce Department is expected to report headline retail sales fell 0.1% during the month, the same as in October, but retail sales ex-automobiles are thought to also fall 0.1% compared to the 1.0% climb in October.

As traders and investors digest that report and tomorrow’s earlier than usual December Flash PMI data, seasonal factors could still provide a tailwind for the market into the year end. Typically, December has been the third best month for the market dating back to 1950 with the second half of the month stronger than the first half. Should that seasonality play out once again, and following the Fed’s dovish pivot yesterday there is little reason to think it won’t, before too long we would expect valuation questions to come back into vogue, as well as questions over 2024 expectations. The latter tends to unfold as companies report their December quarter results in January, which means for now, most investors are likely to sit back and enjoy a glide path and the holiday season to the end of 2023.

Data Download

International Economy

The Bank of England left its benchmark interest rate unchanged at 5.25% following its December policy meeting, keeping borrowing costs at a 15-year high.

Around 8:15 AM ET, the European Central Bank will announce its latest rate decision and the market expects the central bank will leave rates unchanged at 4.5%.

Domestic Economy

In addition to this morning’s November Retail Sales report, we have the usual Thursday fare that are the next iteration of jobless claims and natural gas inventories. Import and Export prices, which are expected to fall month over month in November, will be published alongside the Retail Sales report at 8:30 AM ET.

Markets

Despite couching his terms as best he could, Fed Chair Powell ended up generating optimism for traders yesterday. All sectors closed higher led by Utilities (3.78%) and Real Estate, which gained 3.63%, and followed by Healthcare (1.84%) and Consumer Staples (1.82%). Relative weakness was found in Technology and Communication Services which posted gains of 0.88% and 0.94%, respectively. Needless to say, broad indexes had a strong day, with the S&P 500 rising 1.37%, the Nasdaq Composite adding 1.38%, the Dow up 1.40% and hitting an all-time high, crossing 37,000, and the Russell 2000 rising 3.52% which many read as a sign of improved breadth.

Not all caution was thrown to the wind as shares of Pfizer (PFE) fell 6.72% after the company took down 2024 guidance citing reduced demand for Covid-related products, prompting S&P Global Ratings to lower its rating for existing Pfizer debt, and move the company to an “A” rating from “A+” while declaring “Outlook Stable.” Here’s how the major market indicators stack up year-to-date:

Dow Jones Industrial Average: 11.90%
S&P 500: 22.60%
Nasdaq Composite: 40.77%
Russell 2000: 10.58%
Bitcoin (BTC-USD): 158.55%
Ether (ETH-USD): 88.47%
Stocks to Watch

Before U.S. equity markets begin trading today, Jabil (JBL) is expected to report its quarterly results.

Pre-market breadth is strong today as 298 of the 503 names in the S&P 500 have traded hands so far this morning with 236 gainers and 62 decliners. Names seeing a healthy bid this morning include Westrock Company (WRK) advancing on news that cardboard prices are set to rise for the first time since the beginning of this rate hike cycle. Also being bid up are Illumina Inc (ILMN) and Invesco Ltd (IVZ) while shares of Adobe Inc (ADBE) are coming under pressure (more below).

November quarter results at Adobe bested Wall Street expectations, but that was overshadowed by mixed guidance for the current quarter that included softer revenue guidance compared to the consensus forecast. Adobe also shared it is under investigation by the U.S. government regarding subscription practices. In an SEC filing, the company shared a settlement could involve “significant monetary costs or penalties.”

Mueller Water (MWA) reported September quarter results that topped expectations but weighing on the shares was the company’s downside guidance for the current quarter. Management sees revenue of $245-255 million for the current quarter compared to the $266.39 million consensus. Mueller also shared it continues to evaluate the business, financial, and related impacts of the cybersecurity incident announced on October 28 but anticipates the incident will negatively impact the Company’s results.

Carrier Global (CARR) agreed to sell its carrier commercial refrigeration to Haier for $775 million, including approximately $200 million of net pension liabilities.

Vir Biotechnology (VIR) plans to cut its workforce by around 12% and close two of its R&D facilities as part of an effort to refocus the company on its hepatitis and antibody programs.

Mattel (MAT) announced that it plans to develop a live-action feature film with Paramount Pictures (PARA) and Temple Hill Entertainment based on the toy company’s iconic American Girl doll line.

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

Costco (COST) and Lennar (LEN) 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 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

“Sometimes, growth requires new company, new locations, and new mindsets.” ~ 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: Fed Pivot in Hand, Seasonal Market Strength to Continue