Market Update: Wall Street Edges Down as Yields Rise
This morning, December S&P 500 E-Mini Futures are down -0.57%, and December NASDAQ 100 E-Mini Futures have declined by -0.68%. This downturn reflects a cautious sentiment on Wall Street as U.S. Treasury yields increase, partly influenced by the recent comments from Bank of Japan Governor Kazuo Ueda.
Ueda’s remarks signaled a possible interest rate hike, prompting a rise in Japanese government bond yields. He mentioned that the Bank of Japan will evaluate both domestic and international economic conditions, inflation, and the state of financial markets before deciding on a policy interest rate change. His statements seem to have led investors to shift towards safer assets, stepping back from riskier investments.
This week, investors are particularly focused on upcoming U.S. economic data, including the much-anticipated PCE inflation rate and earnings reports from well-known companies.
On Friday, the major stock indices in the U.S. performed well, with the S&P 500, Dow, and Nasdaq 100 reaching their highest levels in two weeks. Intel saw a notable increase of over +10%, leading the charge alongside companies like Analog Devices, which rose by more than +2%. On the other hand, Tilray experienced a sharp decline of over -21% after announcing a 10-for-10 reverse stock split.
The spotlight this week will be on the U.S. Core Personal Consumption Expenditure Price Index for September, which is the Federal Reserve’s preferred measure of inflation. The U.S. Bureau of Economic Analysis plans to release the long-delayed PCE data, along with personal income and spending figures, by Friday. James Knightley, an economist at ING, highlighted that recent soft-core CPI and PPI reports indicate tariffs may be doing more harm than good regarding inflation, suggesting we might see this reflected in the upcoming PCE data. Additionally, other important economic figures, such as ADP Private Employment Statistics and various PMI reports, are set to be released soon. Any signs of economic weakness could bolster expectations for an interest rate cut from the Fed later this month.
Currently, U.S. interest rate futures show an 87.6% chance of a 25 basis point rate cut during the December Fed meeting.
In a related note, President Trump announced he has selected a candidate for the next Fed chair, implying that he anticipates rate cuts. However, he didn’t reveal any details about who that might be.
This week also brings earnings reports from major companies like Salesforce and MongoDB, which investors will be keeping a close eye on.
Meanwhile, Federal Reserve officials are under a media blackout ahead of their upcoming policy meeting on December 9-10, restricting their public comments on economic conditions.
Today, attention will shift to the U.S. ISM Manufacturing PMI and S&P Global Manufacturing PMI data. Economists estimate the ISM Manufacturing Index to stand at 49.0, while the S&P Global Manufacturing PMI is predicted to be 51.9, both slightly higher than previous readings.
Later today, Federal Reserve Chairman Jerome Powell will give a brief speech at the Hoover Institution’s lecture honoring George Shultz and will also participate in a panel discussion.
In the bond market, the yield on the benchmark 10-year U.S. Treasury rose by +0.52% to reach 4.041%.
Across the Atlantic, the Euro Stoxx 50 index dipped -0.30% as December commenced on a cautious note. Notably, Airbus SE faced a decline of over -3% after recalling a considerable number of jets due to software problems. Meanwhile, mining stocks experienced slight gains. A recent survey indicated that manufacturing activity in the euro zone contracted for the second consecutive month, further raising questions about the European Central Bank’s potential policy decisions.
Today, Eurozone manufacturing PMI data was published, showing a figure of 49.6 for November, which is lower than anticipated.
In Asia, stock markets were mixed, with China’s Shanghai Composite Index rising by +0.65% while Japan’s Nikkei 225 fell by -1.89%. In China, manufacturing activity showed slight improvement, but overall economic data remains worrisome, indicating challenges ahead for policymakers balancing reforms and the need for stimulus. Xiaomi’s stock dropped by over 1% after reporting lower-than-expected electric vehicle deliveries in November.
Japan’s data revealed that capital spending increased +2.9% year-on-year in the third quarter, yet it fell short of expectations. The November au Jibun Bank Manufacturing PMI was adjusted down slightly to 48.7.
Premarket US Stock Movers
In pre-market trading, stocks within the Magnificent Seven saw declines, with Tesla and Meta both dropping over -1%. Marvell Technology and AMD also experienced similar drops. Cryptocurrency-related stocks were hit hard, with Bitcoin prices falling more than -5%, and companies like MARA Holdings and Coinbase following suit with significant losses.
Conversely, New Fortress Energy saw a remarkable increase of over 23% in pre-market trading after receiving preliminary approval for a contract in Puerto Rico.
Today’s US Earnings Spotlight
This week, several companies, including Credo Technology Holding and MongoDB, are set to announce earnings.
