Stock Markets Experience Mixed Movements Ahead of Key Inflation Data
The S&P 500 Index ($SPX) (SPY) is up +0.13%, while the Dow Jones Industrials Index ($DOWI) (DIA) has fallen -0.29%. In contrast, the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.49%.
Market Snapshot Before Inflation Report
Today’s trading has produced mixed results, notably with the Dow settling at a two-week low. Investors are awaiting Wednesday’s U.S. consumer price index (CPI) report for November. Concerns about corporate earnings are dragging some stocks down. Notable declines include Oracle, which dropped more than -8% after its Q2 adjusted revenue fell below analysts’ projections, and Toll Brothers, down over -6% due to lower expectations for Q1 home sales margins. Additionally, climbing Treasury note yields are putting more pressure on stock prices.
Positive Highlights in the Market
On a brighter note, Alphabet experienced a rise of over +4% after revealing advancements in quantum computing with its new Willow chip. Furthermore, Alaska Air Group soared more than +15% after announcing an adjusted earnings per share (EPS) forecast for 2025 that exceeded expectations.
Economic Data and Global Trade Concerns
In economic news, Q3 nonfarm productivity remained unchanged at +2.2%, but unit labor costs were revised downwards to +0.8% from the previous +1.9%, which was less than the anticipated +1.3%. Trade data from China was disappointing; November exports only grew +6.7% year-on-year, significantly below the expected +8.7%. November imports unexpectedly fell -3.9% year-on-year, marking the steepest drop in nine months. Such factors are raising concerns about global growth.
Looking Ahead to the CPI Report
All eyes are now on the upcoming U.S. consumer price report for November to see if inflation trends will provide the Federal Reserve with room to ease monetary policy further. The CPI is projected to rise slightly to +2.7% year-on-year, up from +2.6% in October. Meanwhile, CPI excluding food and energy is expected to remain stable at +3.3% year-on-year.
Interest Rate Expectations
The market currently estimates an 86% chance of a -25 basis point cut at the upcoming FOMC meeting on December 17-18.
International Market Developments
Internationally, stock markets are also mixed. The Euro Stoxx 50 has dipped -0.23%, while China’s Shanghai Composite rose +0.59% to reach a one-month high. Japan’s Nikkei Stock 225 climbed +0.53%.
Interest Rates
March 10-year T-notes (ZNH25) decreased by -6 ticks today. The yield on the 10-year T-note increased by +2.7 basis points to 4.228%. Prices are facing downward pressure following weakness in UK gilt prices, which hit a one-and-a-half week low, along with supply concerns as the Treasury prepares a $58 billion auction of 3-year T-notes.
Across Europe, government bond yields displayed mixed results. The 10-year German bund yield retreated from a recent high of 2.143%, falling -0.3 basis points to 2.118%. The 10-year UK gilt yield increased to 4.329%, up +3.9 basis points.
Swaps indicate a full 100% chance of a -25 basis point cut by the ECB during its policy meeting on December 12, with a 6% chance of a -50 basis point cut.
US Stock Movers
Alphabet (GOOGL) leads the gains in the S&P 500 and Nasdaq 100, climbing over +4% based on its new developments in quantum computing.
Cruise line stocks are also up, led by Norway’s Norwegian Cruise Line Holdings Ltd (NCLH), which gained +3% following an upgrade from Goldman Sachs with a price target of $35. Other cruise operators like Royal Caribbean Cruises Ltd (RCL) and Carnival (CCL) are both up more than +2%.
Boeing (BA) increased by over +3% after reports surfaced that the company has resumed production of the much-anticipated 737 Max Jet.
Alaska Air Group (ALK) surged more than +15% after reporting a 2025 adjusted EPS estimate of at least $5.75, surpassing the consensus estimate of $5.58.
American Airlines Group (AAL) gained more than +4% after Bernstein improved its rating on the stock, projecting a price target of $24.
Warner Bros Discovery (WBD) saw an increase of more than +2% after KeyBanc Capital Markets raised its price target from $11 to $14.
Ball Corp (BALL) rose over +1% following an upgrade from Mizuho Securities, with a new price target of $67.
On the downside, Oracle (ORCL) leads the losers in the S&P 500, plummeting more than -8% after reporting Q2 adjusted revenue of $14.06 billion, which was shy of the consensus of $14.12 billion.
MongoDB (MDB) also faced a decline of more than -8% after announcing the departure of CFO and COO Gordon, a move that analysts fear could impact the company negatively.
Moderna (MRNA) fell more than -5% after Bank of America Global Research resumed coverage with an underperform recommendation, citing potential removal from the Nasdaq 100 during the next month’s rebalancing.
Centene (CNC) decreased more than -4% after Jeffries downgraded the stock to underperform, setting a price target of $52.
Ferguson Enterprises (FERG) dropped over -10% after disclosing Q1 revenue of $7.77 billion, slightly below the predicted $7.81 billion.
Homebuilders are feeling the strain following Toll Brothers’ predictions of a lower-than-expected Q1 adjusted home sales gross margin of 26.3%. Toll Brothers (TOL) fell more than -6%, while PulteGroup (PHM), DR Horton (DHI), and Lennar (LEN) also dipped more than -3%.
eBay (EBAY) decreased over -3% after Jeffries downgraded it from hold to underperform with a target price of $52.
Upcoming Earnings Reports (12/10/2024)
AutoZone Inc (AZO), Ferguson Enterprises Inc (FERG), GameStop Corp (GME), and Ollie’s Bargain Outlet Holdings (OLLI).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
