Morning Markets

December S&P 500 futures (ESZ22) this morning are up +0.46%, and December Nasdaq 100 E-Mini futures (NQZ22) are up +0.49%.

Stock indexes this morning are moderately higher.  Short covering has emerged in stocks after losses over the past four sessions.  The markets are awaiting fresh news on inflation, with reports on U.S. Nov producer prices due this Friday and Nov consumer prices due next Tuesday. 

Stock indexes extended their gains this morning on news that U.S. weekly continuing unemployment claims jumped to a 9-1/2 month high.  That suggests that workers who are losing their jobs are having more trouble finding new ones, which shows labor market weakness that may prompt the Fed to slow its pace of interest rate hikes. 

WTI crude prices have surged more than +4% today after TC Energy said it shut the Keystone oil pipeline system after a leak was found in the pipeline in Steele City, Nebraska.  The Keystone pipeline system can carry more than 600,000 bpd of crude from Canada to Cushing, Oklahoma, and onward to Port Arthur and Houston, Texas.

Higher bond yields are bearish for stocks as the 10-year T-note yield today is up +5.8 bp at 3.478%. Higher European government bond yields are weighing on T-note prices this morning.  Fed officials have recently signaled that the Fed will downshift to a +50 bp rate hike at next week’s FOMC meeting after four straight +75 bp increases. 

Today’s U.S. economic news was mixed for stocks.  Weekly initial unemployment claims rose +4,000 to 230,000, right on expectations. However, weekly continuing claims rose +62,000 to a 9-1/2 month high of 1.671 million, showing a weaker labor market than expectations of 1.618 million.

Overseas stocks today are weaker.  The Euro Stoxx 50 index is down -0.02% today and fell to a 2-week low.  Losses in property and telecommunications stocks are leading the overall market lower today.  However, a rally in mining stocks is limiting the downside in the overall market as copper prices rallied to a 3-week high today on a possible increase in industrial metals demand in China.  Bloomberg reported today that Chinese authorities might further soften their stance on property policies at a key economic meeting next week.

China’s Shanghai Composite closed down -0.07%, and Japan’s Nikkei Stock Market Index fell to a 4-week low and closed down by -0.40%.  Weakness in Chinese automakers led the overall market lower as pandemic lockdowns curbed auto sales.  China’s Passenger Car Association reported that China Nov passenger car sales fell -10.5% m/m and -9.5% y/y to 1.67 million.   Chinese stocks recovered most of their losses on a rally in property stocks on a Bloomberg report that said Chinese authorities might further soften their stance on property policies when the Central Economic Work Conference meets next week. 

Comments today from Chinese Premier Li Keqiang were bullish for stocks when he said China’s economic growth would continue to pick up with the implementation of new Covid measures, and the country will better coordinate Covid control with economic and social development. 

Japan’s Nikkei Stock Index today posted moderate losses.  Concerns about global growth weighed on Japanese stocks after Wednesday’s trade news from China showed Chinese exports and imports contracted more than expected.  However, losses in Japanese stocks were limited after today’s economic news showed Japan Q3 GDP contracted less than expected.

The Japan Nov eco watchers survey expectations outlook unexpectedly fell -1.3 to a 4-month low of 45.1, weaker than expectations of an increase to 46.8.

Japan Q3 GDP was revised upward to -0.8% (q/q annualized) from the initially reported -1.2%, stronger than expectations of -1.0%.

Pre-Market U.S. Stock Movers

Exxon Mobil (XOM) rose more than +1% in pre-market trading after it expanded its share-buyback program to $50 billion through 2024. 

HashiCorp (HCP) jumped more than +6% in pre-market trading after reporting Q3 revenue of $125.3 million, better than the consensus of $111.1 million, and raising its 2023 revenue forecast to $463 million-$465 million from a previous estimate of $442 million-$448 million, above the consensus of $445.5 million.

Mid-America Apartment Communities (MAA) rose nearly +2% in pre-market trading after Goldman Sachs upgraded the stock to buy from neutral. 

Ciena (CIEN) surged +16% in pre-market trading after reporting Q4 revenue of $971.0 million, well above the consensus of $849.3 million. 

U.S. casino stocks with exposure to Macau moved higher in pre-market trading after Macau relaxed Covid rules for visitors from China, Hong Kong, and overseas.  Las Vegas Sands (LVS) and Wynn Resorts (WYNN) are up more than +4%.  Also, MGM Resorts International (MGM) is up more than +2%. 

Tesla (TSLA) dropped nearly -2% in pre-market trading after Bloomberg reported that the company is planning to shorten production shifts at its Shanghai factory and delay new hires.

Principal Financial Groups (PFG) slid more than -2% in pre-market trading after Credit Suisse downgraded the stock to underperform from neutral.   

Salesforce Inc (CRM) fell more than -1% in pre-market trading after Baird downgraded the stock to neutral from outperform.

Polaris (PII) dropped more than -3% in pre-market trading after BMO Capital Markets downgraded the stock to market perform from outperform. 

Today’s U.S. Earnings Reports (12/8/2022)

Broadcom Inc (AVGO), Ciena Corp (CIEN), Cooper Cos Inc/The (COO), Costco Wholesale Corp (COST), DocuSign Inc (DOCU), Lululemon Athletica Inc (LULU), RH (RH), Vail Resorts Inc (MTN).

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