Stock Market Update

Equity futures point to a slightly lower open this morning after the major averages started the week with modest losses as weakness in tech outweighed rotational gains in the broader market. 

The market is slated to receive several notable economic data points this morning, including the November Employment Situation Report (Briefing.com consensus 30K) and the October Retail Sales Report (Briefing.com consensus 0.2%) at 8:30 a.m. ET. 

The employment situation report is of particular note, as it is the first comprehensive view of the labor market since the FOMC reduced the Fed funds target rate by 25 basis points last Wednesday. Additionally, Fed Chair Jerome Powell stated at last week's meeting that there is a possibility that recent employment reports have overstated recent hiring figures. 

Outside of the upcoming data, headlines are relatively quiet this morning. The market continues to see a rotation out of tech and related AI plays, while cyclical and defensive stocks have garnered some rotational interest. 

In geopolitical news, the U.S., Ukraine, and Europe have agreed to NATO-like security guarantees for Ukraine, but territory is still an issue, according to The New York Times. 

In corporate news:

• Bipartisan senators are discussing a two-year Obamacare extension with limits. The plan also includes cost-sharing reductions and more flexibility for health savings accounts. Senators hope for a vote next week, according to Politico. 
• Kraft Heinz (KHC 24.67, +0.17, +0.7%) appointed former Kellanova CEO Steve Cahillane as its new CEO.  
• PayPal (PYPL 61.78, +1.04, +1.7%) applied to become a bank, according to Bloomberg. 
• Pfizer (PFE 26.65, +0.22, +0.8%) reaffirmed its FY25 EPS guidance and issued guidance for FY26. 

Reviewing overnight developments:

Equity indices in the Asia-Pacific region had a mostly lower showing on Tuesday. Japan's Nikkei: -1.6%, Hong Kong's Hang Seng: -1.5%, China's Shanghai Composite: -1.1%, India's Sensex: -0.6%, South Korea's Kospi: -2.2%, Australia's ASX All Ordinaries: -0.5%.

In news:

• Flash December Manufacturing PMI readings from Australia (52.2) and India (55.7) pointed to ongoing expansion while Japan's reading (49.7) remained in contraction.
• Australia's Consumer Sentiment reversed in December after hitting a seven-year high in November.
• National Australia Bank expects the Reserve Bank of Australia to announce 25-basis point rate hikes in February and May.

In economic data:

• Japan's flash December Manufacturing PMI 49.7 (expected 49.0; last 48.7) and flash Services PMI 52.5 (last 53.2)
• Hong Kong's November Unemployment Rate 3.8% (last 3.8%)
• India's flash December Manufacturing PMI 55.7 (last 56.6) and flash Services PMI 59.1 (last 59.8)
• Australia's flash December Manufacturing PMI 52.2 (last 51.6) and flash Services PMI 51.0 (last 52.8). December Westpac Consumer Sentiment -9.0% (last 12.8%)
• New Zealand's November FPI -0.4% m/m (last -0.3%)

Major European indices trade on a mostly lower note, while Italy's MIB (+0.2%) outperforms. STOXX Europe 600: -0.1% Germany's DAX: -0.5% U.K.'s FTSE 100: -0.5% France's CAC 40: flat Italy's FTSE MIB: +0.3% Spain's IBEX 35: -0.1%.

In news:

• Growing hopes for a viable Ukraine peace deal are weighing on military contractor names.
• The U.S. has reportedly suspended its tech prosperity deal with the U.K. that was announced in September.
• Flash December PMI readings remained generally weak with the eurozone's Manufacturing PMI (to 49.2 from 49.6) dipping further into contraction while Services PMI (52.6 from 53.6) pointed to ongoing expansion, but at a slower pace.

In economic data:

• Eurozone's flash December Manufacturing PMI 49.2 (expected 49.9; last 49.6) and flash Services PMI 52.6 (expected 53.3; last 53.6). December ZEW Economic Sentiment 33.7 (expected 26.3; last 25.0). October trade surplus EUR18.4 bln (last surplus of EUR18.4 bln)
• Germany's flash December Manufacturing PMI 47.7 (expected 48.6; last 48.2) and flash Services PMI 52.6 (expected 53.0; last 53.1). December ZEW Economic Sentiment 45.8 (expected 38.4; last 38.5) and ZEW Current Conditions -81.0 (expected -80.0; last -78.7)
• U.K.'s flash December Manufacturing PMI 51.2 (expected 50.3; last 50.2) and flash Services PMI 52.1 (expected 51.6; last 51.3). October Average Earnings Index + Bonus 4.7% yr/yr (expected 4.4%; last 4.9%). October three-month employment change -16,000 (last -22,000) and October Unemployment Rate 5.1%, as expected (last 5.0%). November Claimant Count Change 20,100 (expected 21,600; last -3,900)
• France's flash December Manufacturing PMI 50.6 (expected 48.1; last 47.8) and flash Services PMI 50.2 (expected 51.1; last 51.4)
• Italy's November CPI -0.2% m/m, as expected (last -0.2%); 1.1% yr/yr (expected 1.2%; last 1.2%). October trade surplus EUR4.156 bln (expected surplus of EUR3.210 bln; last surplus of EUR2.968 bln)