Today’s Big Picture

Asia-Pacific equity markets finished the day higher except for India’s SENSEX, which declined 0.54% after crossing an all-time high of 70,000 last week. Japan’s Nikkei rose 0.16%, Taiwan’s TAIEX added 0.19%, China’s Shanghai Composite and South Korea’s KOSPI came in at about 0.40%, Australia’s ASX All Ordinaries gained 0.49% and Hong Kong’s Hang Seng closed 1.07% higher in a broad rally led by Non-Energy Metals. European markets are mixed in midday trading, and U.S. equity futures point to a modestly positive market open later this morning.

We could see a shift in equity futures after the November Consumer Price Index (CPI) is released at 8:30 AM ET, especially if the data shows inflation pressures retreating quicker than expected. Headline CPI is expected to rise 3.1% YoY, down from 3.2% in October, but come in flat on a sequential basis. The consensus view for core CPI in November, however, is expected to remain unchanged at 4.0% YoY compared to October and tick higher to +0.3% MoM versus +0.2% in October. Should the November data come in mixed or mimic the wage data found in the November Employment Report and come in hotter than expected, odds are that would push back against the 4-5 rate cuts the market is expecting in 2024. It would also set the stage for more cautious comments from the Fed exiting its monetary policy meeting tomorrow afternoon.

Data Download

International Economy

Producer prices in Japan rose 0.3% YoY in November, slowing from an upwardly revised 0.9% gain in October but above market expectations for a 0.1% rise. The November figure was the lowest producer inflation since a deflation in February 2021, marking the 11th straight month of a slowdown in the reading.

Germany’s wholesale prices decreased 3.6% YoY in November, slightly easing from an over three-year low of 4.2% drop in October. On a month-over-month basis, wholesale prices fell 0.2%, cooling from a prior 0.7% drop.

The ZEW Indicator of Economic Sentiment for the Euro Area jumped by 9.2 points to 23 in December, marking the highest reading in ten months and well above market forecasts of 11.2. Findings showed that 37.6% of the surveyed analysts expected improvement in economic conditions, 47.8% predicted stability and 14.6% anticipated a deterioration.

Domestic Economy

The NFIB Small Business Optimism Index fell for a fourth consecutive month to 90.6 in November, a new low since May, compared to 90.7 in October and forecasts of 90.7. Even with the growing economy, small business owners have not seen a strong wave of workers to fill their open positions. The findings also showed Inflation continues to be an issue among small businesses.

Markets

Equities had a somewhat muted start to the week, waiting for today’s CPI update and of course, the comments and forecast from tomorrow’s conclusion of the Fed meeting. Communications Services was the only sector to lose ground yesterday, falling 0.77% while leadership came from Consumer Staples and Industrials, both gaining around 0.95%. The Russell 2000 added 0.15%, the Nasdaq Composite rose 0.20%, the S&P 500 advanced 0.39% and the Dow closed 0.43% higher. Names that started the week with a bang included Broadcom (AVGO) which saw a 9% gain on the heels of a strong reported quarter, the closing of its acquisition of VMware, and the resumption of coverage from Citi with a “Buy” rating and a $1,100 price target.

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

Dow Jones Industrial Average: 9.83%
S&P 500: 20.39%
Nasdaq Composite: 37.89%
Russell 2000: 6.95%
Bitcoin (BTC-USD): 148.20%
Ether (ETH-USD): 85.39%
Stocks to Watch

Before U.S. equity markets begin trading today, Johnson Controls (JCI) is expected to report its quarterly results.

Pre-market breadth is healthy as 245 of the 503 names in the S&P 500 have traded hands so far this morning with 160 gainers and 85 decliners. Names catching traders’ eye include Match.com (MTCH), Prudential Financial (PRU), and Global Payments Inc (GPN) while Oracle (ORCL) and Hasbro (HAS) are seeing weakness (more on both below).

Oracle shares are under pressure this morning following last night’s quarterly earnings report contained weaker-than-expected revenue and guided revenue for the current quarter to $13.14-13.40 billion compared to the $13.33 billion consensus. Oracle’s revenue from cloud services and license support totaled $9.64 billion in the quarter, up 12% but below the $9.71 billion consensus. Revenue from cloud and on-premises licenses fell 18% to $1.18 billion, slightly lower than the $1.21 billion consensus.

Hasbro announced additional strategic steps that include the elimination of ~1,100 positions over the next 18 to 24 months. Earlier this year, the company had ~6,300 employees. Those and other actions are expected to deliver gross annual run-rate cost savings of approximately $100 million.

Ford Motor (F) is dialing back its planned output of the electric F-150 Lightning pickup by half next year because of “changing market demand.”

Taro Pharm (TARO) agreed with Sun Pharmaceutical Industries’ revised proposal to acquire TARO for $43.00 per share in cash.

Star Bulk Carriers (SBLK) and Eagle Bulk Shipping (EGLE) announced a definitive agreement to combine in an all-stock merger. Under the terms of the agreement, Eagle shareholders will receive 2.6211 shares of Star Bulk common stock for each share of Eagle common stock owned. This represents a total consideration of approximately $52.60 per share, a 17% premium based on Eagle’s closing share price of $44.85 on December 8.

AstraZeneca (AZN) agreed to acquire vaccine developer Icosavax (ICVX) in a deal valued at up to $1.1 billion to strengthen its respiratory syncytial virus (RSV) vaccine portfolio.

Nokia (NOK) is acquiring privately held Fenix Group to strengthen wireless offerings in the defense segment. Nokia also trimmed its 2026 comparable operating margin target to at least 13% from at least 14% previously, citing ongoing 5G market challenges.

Moody’s Investors Service downgraded Walgreens Boots Alliance’s (WBA) senior unsecured ratings to Ba2, non-investment grade. The two-notch downgrade from the previous long-term rating of Baa3 (investment grade) reflects the company’s high financial leverage, poor interest coverage, and weak free cash flow, all of which would last 12 to 18 months.

Intel (INTC) Chief Executive Officer Pat Gelsinger and other Intel leaders will host Intel’s “AI Everywhere” event on December 14.

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

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

Wednesday, December 13

UK: GDP, Industrial Production, Manufacturing Production – October
Eurozone: Industrial Production – October
US: Weekly MBA Mortgage Applications
US: Producer Price Index – November
US: Weekly EIA Crude Oil Inventories
US: FOMC Rate Decision, Economic Projections

Thursday, December 14

UK: Bank of England Interest Rate Decision
Eurozone: European Central Bank Interest Rate Decision
US: Weekly Initial & Continuing Jobless Claims
US: Import/Export Prices – November
US: Retail Sales – November
US: Business Inventories – October
US: Weekly EIA Natural Gas Inventories

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

“People may not always tell you how they feel about you, but they will always show it. Pay attention.” ~ Denzel Washington

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: November CPI Brings Tea Leaves Ahead of the Fed