MARKET WRAPS
Watch For:
Existing Home Sales; Conference Board Consumer Confidence; EIA
Weekly Petroleum Status Report; earnings from Micron Technology,
General Mills, Toro, BlackBerry, Winnebago Industries
Today's Headlines/Must Reads
- Powell's Pivot Sows Confusion Over When and How Fast Fed Will
Cut
- Meet the New Economy, Just Like the Old Economy
- Senate's Tricky Border Talks Get a Christmas Extension
Opening Call:
Stock futures were softer early Wednesday, not far below levels
that would represent a fresh record for the S&P 500.
Futures showed the S&P 500 in line to open less than 1% shy
of the record closing closing high of 4796.56 it recorded at the
start of January 2022.
The benchmark has jumped 24.2% this year, partly powered by
hopes that the economy has not been too badly damaged by the
Federal Reserve's ratcheting up of interest rates to cool
inflation.
Fund managers now are at their most upbeat on the stock market
in nearly two years, according to a survey by Bank of America.
The latest leg of the rally reflects hopes that with inflation
back down to 3.1%, the central bank will begin quickly trimming
borrowing costs next year.
Not even an apparently concerted effort by Fed officials to
counter the market's rate-cut optimism has damped trader's ardor.
This dismissal of less-dovish Fedspeak has left some observers
bemused.
"Isn't it amazing how investors ignore the hawkish Federal
Reserve comments but fully embrace the dovish commentaries,"
Swissquote Bank said.
"Investors are dreaming of aggressive rate cuts in an
environment of strong economic growth, and that is not the right
recipe for easing inflation and keeping it sufficiently low. The
robust economic data and high earnings expectations are not
compatible with a dovish Fed."
Perhaps the current bullishness is also reflective of seasonal
trends, with optimism about a festive bounce underpinning
stocks.
Stocks to Watch
FedEx reported weaker-than-expected fiscal second-quarter
earnings and reduced its fiscal-year sales forecast. Its shares
fell 9.5% in premarket trading.
Shares of Lowe's were downgraded to hold from buy at Stifel but
the price target was raised to $240 from $235. Lowe's shares fell
1%.
Steelcase reported fiscal third-quarter earnings that rose from
a year earlier and beat analysts' estimates but revenue fell 6% and
missed forecasts. Steelcase also said it anticipated fourth-quarter
revenue in the range of $765 million and $790 million, below
revenue of $801.7 million a year earlier. Steelcase shares declined
9.5%.
Forex:
Sterling declined as markets price in Bank of England rate cuts
in early 2024 after weaker-than-expected U.K. November inflation
data.
"There's growing confidence cuts to the base rate could begin as
early as March and that by this time next year the economic
landscape will look very different," AJ Bell said.
Bonds:
Investors surveyed in BofA's global fund manager survey in
December remain bullish on bonds with allocation up one percentage
point on the month to net 20% overweight, the biggest overweight
since March 2009.
Regarding which asset class fund managers expect to perform best
in 2024, 45% said bonds.
Short-term rates will be lower over the next 12 months,
according to 89% of respondents in the survey, the most on record.
Also, a record 62% of investors in December expect bond yields to
be lower in 12 months time.
Energy:
Oil prices edged higher on concerns about global trade
disruptions after major companies paused transit through the Red
Sea due to recent attacks by Yemen's Houthi forces.
"The attacks in the Red Sea are the third major disruption to
maritime transport this year, alongside low water levels in the
Panama Canal and collapse of the Black Sea grain deal," Capital
Economics said.
"Higher transport costs will boost the prices of intermediate
goods and may rekindle some inflationary pressure."
Metals:
Metals ticked higher supported by market optimism around
interest rate cuts next year and hopes of a brighter demand
outlook.
The Democratic Republic of Congo, the world's top producer of
cobalt, is ready to welcome more U.S. investments in its mining
industry, which is dominated by Chinese miners, the country's
president said.
For over a decade, Chinese companies have spent billions of
dollars buying out U.S. and European miners in Congo's cobalt belt,
dominating the production of a metal that has become critical to
the global transition to cleaner energy.
TODAY'S TOP HEADLINES
Starbucks CEO Takes On Chain's Social Media Controversy Over
Israel-Hamas War
The Starbucks chief executive said protesters vandalizing its
stores over the Israel-Hamas war have the wrong impression of the
company and its beliefs.
In an annual company letter to workers, Laxman Narasimhan
addressed controversies surrounding the coffee chain since the war
broke out in October. The letter seeks to remove the company from
the controversy caused in part by comments seen as pro-Palestinian
by the workers' union.
Bird Electric Scooter Company Files for Bankruptcy After 2021
SPAC
Electric-vehicle company Bird Global filed for bankruptcy with
an agreement to sell some of its assets to its existing
lenders.
Miami-based Bird filed for chapter 11 bankruptcy protection in
the U.S. Bankruptcy Court for the Southern District of Florida. The
company has a restructuring agreement with its creditors, including
selling assets in bankruptcy, according to a company
announcement.
China's Benchmark Lending Rates Held Steady
China's benchmark lending rates were kept unchanged as the
market had expected, after the central bank held its key policy
rates steady.
The one-year loan prime rate was left at 3.45% and the five-year
rate was the same as last month at 4.2%, according to the People's
Bank of China.
Trump Disqualified From 2024 Presidential Primary Ballot,
Colorado Supreme Court Rules
Donald Trump can't appear on the 2024 presidential primary
ballot in Colorado because of his actions surrounding the Jan. 6,
2021, riot at the U.S. Capitol, the state's highest court ruled
Tuesday.
The first-of-its kind decision sided with a group of Colorado
voters who argued in a lawsuit that the Republican front-runner was
disqualified under a clause in the 14th Amendment. Enacted after
the Civil War, the provision disqualifies from public office those
who swore to defend the Constitution and then "engaged in
insurrection or rebellion" against the U.S.
Hamas, Palestinian Rivals Conduct Talks About Governing Postwar
Gaza
DOHA, Qatar-Hamas's political leaders have been talking with
their Palestinian rivals about how to govern Gaza and the West Bank
after the war ends, a fraught negotiation that threatens to put
them at odds with the militant wing fighting Israel.
The talks are the clearest sign that Hamas's political faction
is starting to plan for what follows the conflict.
Write to paul.larkins@dowjones.com TODAY IN CANADA
Earnings:
BlackBerry 3Q
Economic Calendar [ET]:
0830 Oct Employment Insurance
1330 Bank of Canada summary of monetary policy deliberations
Stocks to Watch:
Gold Royalty Completes Investment in Aura's Borborema Gold
Project; Investment Consists of 2% Net Smelter Return Royalty,
Loan; Acquired Royalty for $21M, Royalty-Convertible Gold-Linked
Loan for $10M
Expected Major Events for Wednesday
05:00/JPN: Nov Convenience Store Sales
07:00/UK: Nov UK producer prices
07:00/UK: Nov CPI
07:00/GER: Nov PPI
07:00/GER: Jan GfK consumer climate survey
08:59/JPN: Dec Monthly Economic Report
09:30/UK: Oct UK House Price Index
10:00/ITA: Oct Balance of Payments
11:00/UK: Nov Aluminium Production report
12:00/US: 12/15 MBA Weekly Mortgage Applications Survey
13:30/CAN: Oct Employment Insurance
13:30/US: 3Q International Transactions
15:00/US: Nov Existing Home Sales
15:00/US: Dec Consumer Confidence Index
15:30/US: 12/15 EIA Weekly Petroleum Status Report
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Wednesday
BlackBerry (BB,BB.T) is expected to report $-0.07 for 3Q.
Celularity Inc (CELU) is expected to report for 3Q.
Citius Pharmaceuticals Inc (CTXR) is expected to report $-0.02
for 4Q.
Enzo Biochem (ENZ) is expected to report for 1Q.
General Mills (GIS) is expected to report $1.16 for 2Q.
Innovative Solutions & Support Inc (ISSC) is expected to
report $0.08 for 4Q.
Live Ventures Inc (LIVE) is expected to report for 4Q.
Micron Technology (MU) is expected to report $-1.16 for 1Q.
MillerKnoll Inc (MLKN) is expected to report $0.48 for 2Q.
Near Intelligence Inc (NIR) is expected to report for 3Q.
Ocean Biomedical Inc (OCEA) is expected to report for 3Q.
Optical Cable Corp (OCC) is expected to report for 4Q.
Quantum Corp (QMCO) is expected to report $-0.09 for 2Q.
Raymond James Financial (RJF) is expected to report.
Rite Aid Corp (RADCQ) is expected to report for 3Q.
Sonic Foundry Inc (SOFO) is expected to report $-0.39 for
4Q.
Sonnet BioTherapeutics Holdings Inc (SONN) is expected to report
for 4Q.
Technical Communications Corp (TCCO) is expected to report for
4Q.
Toro Co (TTC) is expected to report $0.57 for 4Q.
U.S. Gold Corp (USAU) is expected to report for 2Q.
Wall Financial Corp (WFC.T) is expected to report for 3Q.
Winnebago Industries Inc (WGO) is expected to report $1.00 for
1Q.
Yellow Corp (YELLQ) is expected to report for 3Q.
cbdMD Inc (YCBD) is expected to report for 4Q.
Powered by Kantar Media and Dow Jones.
ANALYST RATINGS ACTIONS
ACADIA Pharmaceuticals Raised to Overweight From Equal-Weight by
Morgan Stanley
AIG Raised to Outperform From Market Perform by BMO Capital
Alteryx Cut to Neutral From Buy by Citigroup
Alteryx Cut to Neutral From Buy by Rosenblatt
Amicus Therapeutics Raised to Overweight From Equal-Weight by
Morgan Stanley
Array Technologies Cut to Neutral From Overweight by Piper
Sandler
Arvinas Raised to Overweight From Equal-Weight by Wells
Fargo
Cingulate Cut to Hold From Buy by Maxim Group
Clear Channel Outdoor Raised to Overweight From Equal-Weight by
Wells Fargo
Cyclacel Pharmaceuticals Cut to Hold From Buy by Brookline
Capital
Disc Medicine Cut to Equal-Weight From Overweight by Morgan
Stanley
Floor & Decor Holdings Cut to Hold From Buy by Stifel
Guidewire Software Raised to Overweight From Equal-Weight by
Wells Fargo
Hayward Holdings Cut to Hold From Buy by Stifel
Illumina Raised to Sector Outperform From Sector Perform by
Scotiabank
Invivyd Raised to Equal-Weight From Underweight by Morgan
Stanley
Itron Raised to Overweight From Neutral by Piper Sandler
Kymera Therapeutics Cut to Equal-Weight From Overweight by Wells
Fargo
Lowe's Cut to Hold From Buy by Stifel
Macrogenics Raised to Buy From Neutral by Citigroup
O'Reilly Expands Into Canada Amid Retailer Caution, But Analysts
Are Bullish - Analysis
Paramount Global Raised to Equal-Weight From Underweight by
Wells Fargo
PepsiCo Cut to Neutral From Overweight by JP Morgan
Piper Sandler Cos. Cut to Market Perform From Outperform by
Northland Capital Markets
Plug Power Cut to Underweight From Neutral by Piper Sandler
Prelude Therapeutics Cut to Underweight From Equal-Weight by
Morgan Stanley
PTC Therapeutics Cut to Underweight From Equal-Weight by Morgan
Stanley
PureCycle Technologies Cut to Neutral From Buy by Roth MKM
Rhythm Pharmaceuticals Raised to Overweight From Equal-Weight by
Morgan Stanley
Rockwell Automation Raised to Overweight From Equal-Weight by
Wells Fargo
ScanSource Cut to Neutral From Buy by Northcoast Research
Sunnova Energy Intl Raised to Overweight From Neutral by Piper
Sandler
Sunrun Raised to Overweight From Neutral by Piper Sandler
Vigil Neuroscience Cut to Underweight From Equal-Weight by
Morgan Stanley
Zurn Elkay Water Soltns Cut to Hold From Buy by Stifel
This article is a text version of a Wall Street Journal
newsletter published earlier today.
(END) Dow Jones Newswires
December 20, 2023 06:12 ET (11:12 GMT)
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