Stock Market Update

The S&P 500 futures are up 14 points and are trading 0.2% above fair value, the Nasdaq 100 futures are up 92 points and are trading 0.4% above fair value, and the Dow Jones Industrial Average futures are up 90 points and are trading 0.2% above fair value.

The stock market is poised to open the last full week of the year on higher ground. Pre-open gains in mega caps, along with a decline in market rates, have supported the early bias. The 10-yr yield is down two basis points to 4.38% and the 2-yr yield is down one basis point to 4.23%.

Focus will be on central banks this week. The Federal Reserve will announce its policy decision on Wednesday, and the Bank of England, the Bank of Japan, and the People's Bank of China will announce policy decisions on Thursday. The Federal Reserve is expected to cut the target range for the fed funds rate by 25 basis points to 4.25-4.50%. The other central banks that meet this week are expected to hold their policy rates steady. 

US economic data today includes the December New York Fed Empire State Manufacturing survey at 8:30 ET and the preliminary December S&P Global US Manufacturing and Services PMIs at 9:45 ET.

In corporate news:

• Apple (AAPL 248.68, +0.55, +0.2%): aiming to introduce thinner and foldable iPhones, according to WSJ
• Alphabet's Google (GOOG 193.20, +1.82, +1.0%): and Apple: told by told by lawmakers to remove TikTok from application stores on January 19, according to Reuters
• Tesla (TSLA 440.14, +3.91, +0.8%): aiming to increase Model S prices by $5000, according to Reuters
• Honeywell (HON 235.50, +7.88, +3.5%): explores strategic alternatives for unlocking shareholder value; continues review of transformational portfolio actions;  Elliott statement on Honeywell; 'welcomes Honeywell's announcement today of its ongoing review of strategic alternatives'
• Super Micro Computer (SMCI 31.37, -5.07, -13.9%): considers tapping Evercore to raise equity and debt, according to Bloomberg

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region traded lower in Monday's session, undercut by some weaker-than-expected retail sales data out of China that contributed to concerns about lackluster consumer demand. Japan's Nikkei: -0.1%, Hong Kong's Hang Seng: -0.9%, China's Shanghai Composite: -0.2%, India's Sensex: -0.5%, South Korea's Kospi: -0.2%, Australia's ASX All Ordinaries: -0.7%.
  • In economic data:
    • China's November Retail Sales +3.0% yr/yr (+4.6% expected; last +4.8%); November Industrial Production +5.4% yr/yr (+5.4% expected; last +5.3%; Fixed Asset Investment +3.3% yr/yr (+3.5% expected; last +3.4%); House Prices -5.7% yr/yr (last -5.9%); Unemployment Rate 5.0% (5.0% expected; last 5.0%)
    • Japan's October Core Machinery Orders +2.1% m/m (+1.2% expected; last -0.7%) and +5.6% yr/yr (+0.7% expected; last -4.8%); Preliminary December au Jibun Bank Japan Manufacturing PMI 49.5 (49.2 expected; last 49.0); Preliminary December au Jibun Bank Japan Services PMI 51.4 (last 50.5); October Tertiary Industry Activity Index +0.30 (-0.10 expected; last +2.0)
    • Australia's Preliminary December Judo Bank Manufacturing PMI 48.2 (last 49.4) and Services PMI 50.4 (last 50.5)
    • South Korea's November Exports +1.4% yr/yr (last +1.4%) and Imports -2.4% yr/yr (last -2.4%)
    • India's Preliminary December HSBC Manufacturing PMI 57.4 (last 56.5) and Services PMI 60.8 (last 58.4); November Inflation +1.89% yr/yr (2.20% expected; last 2.36%)
  • In news:
    • Chinese regulators continued to talk up 2025 fiscal and monetary policy initiatives designed to increase domestic consumption.
    • In South Korea, President Yoon was impeached after the National Assembly passed a second impeachment vote 204-85; Prime Minister Han Duck-soo will assume role as interim president.
    • The Bank of Japan is generally expected to hold its policy rate steady at Thursday's meeting; meanwhile, the People's Bank of China is expected Friday to hold its one-year and five-year loan prime rates steady.
• Major European indices are mostly lower, digesting a batch of weak manufacturing PMI data across the region in the preliminary December readings. STOXX Europe 600: -0.3%, Germany's DAX: -0.1%, U.K.'s FTSE 100: -0.3%, France's CAC 40: -0.7%, Italy's FTSE MIB: -0.3%, Spain's IBEX 35: flat.
  • In economic data:
    • Eurozone's Preliminary December Manufacturing PMI 45.2 (45.3 expected; last 45.2), Services PMI 51.4 (49.5 expected; last 49.5), and Composite PMI 49.5 (last 48.3)
    • Germany's Preliminary December Manufacturing PMI 42.5 (43.1 expected; last 43.0), Services PMI 51.0 (49.5 expected; last 49.3), and Composite PMI 47.8 (last 47.2)
    • UK's Preliminary December Manufacturing PMI 47.3 (48.4 expected; last 48.0), Services PMI 51.4 (50.9 expected; last 50.8), and Composite PMI 50.5 (last 50.5)
    • France's Preliminary December Manufacturing PMI 41.9 (43.2 expected; last 43.1), Services PMI 48.2 (46.9 expected; last 46.9)
    • Italy's November CPI -0.1% m/m (0.0% expected; last 0.3%) and +1.3% yr/yr (1.4% expected; last 0.9%)
    • Switzerland's November PPI -0.6% m/m (+0.2% expected; last -0.3%) and -1.5% yr/yr (last -1.8%)
  • In news:
    • Moody's downgraded France's credit rating from Aa3 to Aa2 on concerns over deficit and political issues
    • An impending confidence vote on Chancellor Scholz in the German parliament is expected to fail and trigger a snap election in February 2025
    • ECB President Lagarde talking up the likelihood of more rate cuts.
    • The Bank of England meets Thursday and is expected to hold its key policy rate steady at 4.75%.