Stock Market Update

The S&P 500 futures are up 45 points and are trading 0.8% above fair value, the Nasdaq 100 futures are up 160 points and are trading 0.8% above fair value, and the Dow Jones Industrial Average futures are up 292 points and are trading 0.7% above fair value.

Stock futures indicate a higher open after yesterday's sharp retreat. Pre-open gains in the mega cap space have helped the early bounce. Market rates are also high, but equities haven't been deterred by the price action in Treasuries. The 10-yr yield is up five basis points to 4.54.

The Bank of England left its bank rate at 4.75%, as expected, and the Bank of Japan voted 8-1 to maintain its policy rate at 0.25% against some expectations for a 25-basis point increase. Norway's Norges Bank also left its rate unchanged at 4.50% while the Hong Kong Monetary Authority and Sweden's Riksbank lowered their policy rates by 25 basis points.

In corporate news:

• Micron (MU 90.88, -13.02, -13.5%): beats by $0.03, reports revs in-line; guides Q2 EPS below consensus, revs below consensus
• Lennar (LEN 133.66, -12.27, -8.4%): misses by $0.12, misses on revs, new orders decreased 3%; Issues 1Q25 guidance, sees Gross Margin on Home Sales of 19.0-19.25%
• MillerKnoll (MLKN 21.99, -2.34, -9.6%): beats by $0.02, beats on revs; guides FebQ EPS below consensus, revs in-line; lowers FY25 EPS guidance
• Accenture (ACN 369.50, +21.89, +6.3%): beats by $0.17, beats on revs; guides Q2 revs in-line; lowers FY25 EPS guidance; raises FY25 revenue guidance; increases dividend 15%
• CarMax (KMX 87.05, +5.63, +6.9%): beats by $0.19, beats on revs
• Darden Restaurants (DRI 173.56, +13.69, +8.6%): beats by $0.01, reports revs in-line, consolidated same-restaurant sales of +2.4%; guides FY25 EPS in-line, revs above consensus
• Apple (AAPL 247.92, -0.13, -0.1%): in discussions with Tencent (TCEHY) to introduce artificial intelligence features in China (BIDU), according to Reuters; close to getting Indonesia to remove iPhone 16 ban, according to Bloomberg
• Amazon (AMZN 223.91, +3.42, +1.6%): founder Jeff Bezos had dinner with President-elect Trump, according to NY Post

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended Thursday on a lower note after yesterday's plunge on Wall Street. Japan's Nikkei: -0.7%, Hong Kong's Hang Seng: -0.6%, China's Shanghai Composite: -0.4%, India's Sensex: -1.2%, South Korea's Kospi: -2.0%, Australia's ASX All Ordinaries: -1.7%.
  • In economic data:
    • Australia's December MI Inflation Expectations 4.2% (last 3.8%)
    • New Zealand's Q3 GDP -1.0% qtr/qtr (expected -0.2%; last -1.1%); -1.5% yr/yr (expected -0.4%; last -0.5%). New Zealand's December ANZ Business Confidence 62.3 (last 64.9)
  • In news:
    • Mortgage rates in China increased for the first time since 2021 due to falling margins.
    • The People's Bank of China could alter its loan prime rate tomorrow.
    • The Bank of Japan voted 8-1 to maintain its policy rate at 0.25% against some expectations for a 25-basis point increase.
    • The Hong Kong Monetary Authority followed yesterday's rate cut by the FOMC with a 25-basis point decrease of its own (to 4.75%).
• Major European indices trade in the red. STOXX Europe 600: -1.4%, Germany's DAX: -1.1%, U.K.'s FTSE 100: -1.2%, France's CAC 40: -1.2%, Italy's FTSE MIB: -1.2%, Spain's IBEX 35: -1.5%.
  • In economic data:
    • Eurozone's October Current Account surplus EUR25.8 bln (expected surplus of EUR33.5 bln; last surplus of EUR38.8 bln)
    • Germany's January GfK Consumer Climate -21.3 (expected -22.6; last -23.1)
    • France's December Business Survey 97 (expected 96; last 97)
    • Swiss November trade surplus CHF5.424 bln (expected CHF6.200 bln; last CHF8.025 bln)
    • Spain's October trade deficit EUR3.93 bln (last deficit of EUR3.30 bln). November Consumer Confidence 80.6 (last 79.6)
  • In news:
    • The Bank of England left its bank rate at 4.75%, as expected.
    • The Sweden's Riksbank lowered its policy rate by 25 basis points to 2.50% while Norway's Norges Bank left its rate at 4.50%.
    • Norges Bank also raised its domestic growth forecasts for 2025 (to 1.1% from 1.4%) and 2026 (to 1.4% from 1.3%) while the CPI outlook for 2025 was reduced to 2.7% from 3.0% and the forecast for 2026 was lowered to 2.7% from 2.8%.
    • Riksbank lowered its 2025 growth forecast to 1.8% from 1.9% and hinted at another rate cut during the first half of next year.