Today’s Big Picture

Asia-Pacific equity markets finished the day mostly higher, except for Hong Kong’s Hang Seng, which fell 0.75% on a broad decline led by Health Technology names, and Taiwan’s TAIEX, declining 0.43%. China’s Shanghai Composite and South Korea’s KOSPI came close to flat, with both up around 0.05% while India’s SENSEX gained 0.17% and Australia’s ASX All Ordinaries was up 0.87%. Japan’s Nikkei ended the day 1.41% higher after the Bank of Japan kept its rate target unchanged at -0.10% as it has since February of 2016. European markets are mostly higher in midday trading, and U.S. equity futures point to a modestly positive open.

When we see such pronounced moves in the market like the one we saw in November and again so far in December, we tend to see some digestion occur. A lack of market-moving headlines, economic data, and earnings this morning increases the odds that is the kind of action we’ll see today. Lunchtime comments from Atlanta Fed’s President Raphael Bostic could temper the rate-cutting narrative that has propelled stocks higher following the Fed’s dovish tilt last week – see Data Download below for more.

Such a pause could bring some profit-taking, but the market is quickly approaching the final five trading days of 2023 and the first two trading days of the new year. That block of seasonally strong trading days is more widely recognized as the Santa Claus Rally and suggests stocks will close out 2023 on a strong note.

Data Download

International Economy

By unanimous vote and as widely expected, the Bank of Japan maintained its key short-term interest rate at -0.1% and that of 10-year bond yields at around 0% following its final meeting of 2023.

The annual inflation rate in the Euro Area decreased to 2.4% in November, the lowest since July 2021, from 2.9% in October, consistent with the preliminary data. Core inflation rate in the Euro Area, excluding volatile food and energy prices, fell to 3.6% YoY in November, down from 4.2% the month before, hitting the lowest since April 2022.

Domestic Economy

At 8:30 AM ET, November Housing Starts and Building Permits will be published. The consensus sees housing starts decreasing to 1.36 million from 1.372 million in October. November building permits are also expected to move lower month over month to 1.47 million compared to the 1.498 million registered in October.

At 12:30 PM ET, Atlanta Fed’s President Raphael Bostic is expected to speak on the U.S. economy, outlook for businesses, and the Federal Reserve’s role before a Harvard Business School Club of Atlanta alumni luncheon. Last week, Bostic, one of the more dovish members of the Fed’s monetary policy voting committee, noted that the first-rate cuts wouldn’t likely occur until the 3Q 2024 and that he sees two quarter-percentage point rate cuts in 2H 2024. That’s a very different scenario than the one depicted by the CME FedWatch Tool that shows the Fed funds rate falling to 375-400 basis points at the end of next year from 525-500 basis points at the close of 2023.

The U.S. and other countries have formed a naval task force to protect commercial vessels traveling through the Red Sea from Houthi rebel attacks.

Markets

Markets didn’t stage a return to last week’s post-Fed meeting euphoria but ended yesterday very similarly to Friday. Real Estate and Utilities extended their previous session losses, declining an additional 1.16% and 1.33%, respectively while leadership came from Communication Services, as gains in Meta Platforms (META) and Alphabet (GOOG, GOOGL) helped push sector returns to 0.99%. The Russell 2000 fell 0.14%, the Dow ended the day flat, up a mere 0.86 points while the S&P 500 rose 0.45% and the Nasdaq Composite gained 0.62%.

Names that didn‘t get the “Hey, take it easy today” memo included Etsy (ETSY) which saw shares gain 4.69% as investors reassessed the recent 11% workforce reduction. Here’s how the major market indicators stack up year-to-date:

Dow Jones Industrial Average: 12.55%
S&P 500: 23.47%
Nasdaq Composite: 42.41%
Russell 2000: 12.56%
Bitcoin (BTC-USD): 157.12%
Ether (ETH-USD): 84.82%
Stocks to Watch

Before U.S. equity markets begin trading today, Accenture (ACN), FactSet (FDS), and FuelCell Energy (FCEL) are expected to report quarterly results.

Pre-market breadth is softer than recent mornings as 243 names of the S&P 500 index have traded hands so far with 153 gainers and 90 decliners. This morning’s standouts include Kenvue Inc (KVUE) which is seeing shares bid up and Accenture and Agilent (A), which are coming under some pressure.

Enphase Energy (ENPH) announced it will reduce its global workforce by about 10%, including contractors and employees. In addition, it will be streamlining its operations by ceasing operations at its contract manufacturing locations in Timisoara, Romania, and Wisconsin, United States, and resizing its other contract manufacturing sites.

Following yesterday’s admission by VF Corp (VFC) that it was hacked, Comcast’s (CMCSA) Xfinity notified customers of a recent data security incident that included usernames, hashed passwords, and other personal information. For some customers, other information obtained included names, contact information, last four digits of social security numbers, dates of birth and/or secret questions and answers.

Alphabet will pay $700 million and expand billing options in Google’s Play app store as part of a settlement of an antitrust lawsuit brought on by 36 U.S. states and Washington, DC.

Location solutions provider TomTom (TMOAF) shared it is working with Microsoft (MSFT) to bring generative artificial intelligence, or AI, into the vehicles. Solutions include an integrated, AI-powered conversational automotive assistant that enables voice interaction with infotainment, location search, and vehicle command systems.

Salesforce (CRM) signed a definitive agreement to acquire Spiff, a provider of a new class of incentive compensation management software. Per Salesforce, the transaction does not result in any change to its current financial guidance.

Luxshare Precision Industry will acquire Qorvo’s (QRVO) assembly and test facilities in China.

O’Reilly Automotive (ORLY) entered into a definitive stock purchase agreement with the shareholders of Groupe Del Vasto, headquartered in Montreal, Quebec, Canada. The transaction moves O’Reilly into the Canadian auto aftermarket.

Kodiak Gas Services (KGS) will acquire CSI Compressco in an all-equity transaction valued at approximately $854 million

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

FedEx (FDX), Steelcase (SCS), and Worthington (WOR) 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

Wednesday, December 20

Eurozone: New Car Registrations – November
Germany: GfK Consumer Confidence, Producer Price Index – November
UK: Inflation Rate – November
Eurozone: Consumer Confidence (Flash) – December
US: Weekly MBA Mortgage Applications
US: Existing Home Sales – November
US: Weekly EIA Crude Oil Inventories

Thursday, December 21

US: Weekly Initial & Continuing Jobless Claims
US: GDP (Third Estimate) – 3Q 2023
US: Philadelphia Fed Index – December
US: Leading Indicators – November
US: Weekly EIA Natural Gas Inventories

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

“You can tell a lot about a person by the way they handle three things: a rainy day, lost luggage, and tangled Christmas tree lights.” – Maya Angelou

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: Has Santa Claus Already Visited Wall Street?