Stock Market Update

The S&P 500 futures are down four points and are trading 0.1% below fair value, the Nasdaq 100 futures are down 34 points and are trading 0.2% below fair value, and the Dow Jones Industrial Average futures are up 30 points and are trading 0.1% above fair value.

Early trading features a negative bias pressured in part by pre-open declines in large-cap technology stocks. The downside bias also follows flash November Manufacturing PMI data out of the Eurozone and UK that showed a deepening contraction (i.e. sub-50 readings) in manufacturing activity and an unexpected contraction in eurozone's Services PMI. This sent the euro to its lowest level in nearly two years (EUR/USD -0.6% to 1.04).

US economic data today includes the Flash November S&P Global U.S. Manufacturing PMI (prior 48.5) and flash November S&P Global U.S. Services PMI (prior 55.0) at 9:45 ET, and the Final November University of Michigan Consumer Sentiment (Briefing.com consensus 73.0; prior 73.0) at 10:00 ET. 

Treasury yields are lower. The 10-yr yield is down four basis points to 4.39% and the 2-yr yield is down two basis points to 4.33%. 

In corporate news:

• Ross Stores (ROST 153.00, +10.04, +7.0%): beats by $0.08, reports revs in-line, comps of +1%; guides Q4 EPS below consensus; guides FY25 EPS in-line; sees Q4 total sales declining by 1-3% (FactSet consensus calls for decline of 1.2%)
• Gap (GAP 25.48, +3.44, +15.6%): beats by $0.14, reports revs in-line, comps +1%; guides FY25 revs above consensus
• Intuit (INTU 659.00, -19.70, -2.9%): beats by $0.14, beats on revs; guides JanQ EPS below consensus, revs below consensus; reaffirms FY25 EPS guidance, revs guidance
• NetApp (NTAP 134.00, +7.32, +5.8%): beats by $0.09, reports revs in-line; guides Q3 EPS in-line, revs in-line; guides FY25 EPS above consensus, revs in-line

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended the week on a mostly higher note with Chinese stocks showing relative weakness. Japan's Nikkei: +0.7% (-0.9% for the week), Hong Kong's Hang Seng: -1.9% (-1.0% for the week), China's Shanghai Composite: -3.1% (-1.9% for the week), India's Sensex: +2.5% (+2.0% for the week), South Korea's Kospi: +0.8% (+3.5% for the week), Australia's ASX All Ordinaries: +0.8% (+1.1% for the week).
  • In economic data:
    • Japan's October CPI 0.6% m/m (last -0.3%); 2.3% yr/yr (last 2.5%). October Core CPI 2.3% yr/yr (expected 2.2%; last 2.4%). Flash November Manufacturing PMI 49.0 (expected 49.5; last 49.2) and flash Services PMI 50.2 (last 49.7)
    • India's flash November Manufacturing PMI 57.3 (last 57.5) and flash Services PMI 59.2 (last 58.5)
    • Singapore's Q3 GDP 5.4% yr/yr (last 3.0%)
    • Australia's flash November Manufacturing PMI 49.4 (last 47.3) and flash Services PMI 49.6 (last 51.0)
  • In news:
    • Flash Manufacturing PMI readings for November showed an ongoing contraction in Japan (49.0) and Australia (49.4) while Japan's Services PMI (50.2) returned to expansion and Australia's reading (49.6) fell into contraction.
    • China's 10-yr note auction saw strong demand, pricing just above record low yield.
    • Japan's Prime Minister Ishiba said that the stimulus package will total JPY39 trln with JPY13.9 trln coming from the general account.
• Major European indices are on course for a mostly positive finish to the week. STOXX Europe 600: +0.5% (+0.4% week-to-date), Germany's DAX: +0.4% (UNCH week-to-date), U.K.'s FTSE 100: +0.9% (+2.0% week-to-date), France's CAC 40: +0.1% (-0.7% week-to-date), Italy's FTSE MIB: UNCH (-2.7% week-to-date), Spain's IBEX 35: UNCH (-0.2% week-to-date).
  • In economic data:
    • Eurozone's flash November Manufacturing PMI 45.2 (expected 46.0; last 46.0) and flash Services PMI 49.2 (expected 51.6; last 51.6)
    • Germany's Q3 GDP 0.1% qtr/qtr (expected 0.2%; last 0.2%); -0.3% yr/yr (expected -0.2%; last -0.2%). Flash November Manufacturing PMI 43.2 (expected 43.1; last 43.0) and flash Services PMI 49.4 (expected 51.8; last 51.6)
    • U.K.'s October Retail Sales -0.7% m/m (expected -0.3%; last 0.1%); 2.4% yr/yr (expected 3.4%; last 3.2%). October Core Retail Sales -0.9% m/m (expected -0.3%; last 0.1%); 2.0% yr/yr (expected 3.3%; last 3.2%). Flash November Manufacturing PMI 48.6 (expected 50.1; last 49.9) and flash Services PMI 50.0 (expected 52.3; last 52.3)
  • In news:
    • There's some relief from a lack of further escalation between Russia and Ukraine and rising hopes for a December rate cut from the European Central Bank.
    • Flash November PMI readings from the region were disappointing, showing a deepening contraction in Manufacturing in the eurozone (45.2; prior 46.0) and the U.K. (48.6; prior 49.9) and an unexpected contraction in eurozone's Services PMI (49.2; expected 51.6). The news pressured the euro to its lowest level in nearly two years.
    • Germany's SPD is expected to nominate Chancellor Scholz for re-election on Monday with a snap election planned for February.