S&P Futures Slip Ahead of Key U.S. Retail Sales Data, Chinese Data Disappoints

March S&P 500 E-Mini futures (ESH24) are trending down -0.42% this morning as investors digested weak economic data from China while also gearing up for crucial U.S. retail sales data.

In Tuesday’s trading session, Wall Street’s major averages closed in the red, with the blue-chip Dow falling to a 3-1/2 week low. Boeing Co (BA) plunged over -7% and was the top percentage loser on the Dow and S&P 500 after Wells Fargo Securities downgraded the stock to Equal Weight from Overweight, citing an increased risk that the heightened scrutiny of the company’s manufacturing quality could affect the pace of production or deliveries. Also, Morgan Stanley (MS) slumped more than -4% after the bank reported mixed Q4 results and warned of lower margins in the wealth-management business. In addition, Spirit Airlines Inc (SAVE) plummeted over -47% after a federal judge blocked the company’s planned $3.8 billion sale to JetBlue Airways on antitrust grounds. On the bullish side, Advanced Micro Devices Inc (AMD) soared more than +8% and was the top percentage gainer on the S&P 500 and Nasdaq 100 after Susquehanna Financial raised its price target on the stock to $170 from $130. Also, Western Digital Corporation (WDC) gained over +4% after Deutsche Bank upgraded the stock to Buy from Hold with a price target of $65.

Economic data on Tuesday showed the U.S. NY Empire State manufacturing index, a gauge of manufacturing activity in New York State on current business conditions, unexpectedly tumbled to a 3-1/2 year low of -43.70 in January, weaker than expectations of -5.00.

Meanwhile, Fed Governor Christopher Waller stated Tuesday that continued declines in inflation would permit the central bank to reduce interest rates this year, emphasizing the need for the process to be “carefully calibrated and not rushed.” “With economic activity and labor markets in good shape and inflation coming down gradually to 2%, I see no reason to move as quickly or cut as rapidly as in the past,” he noted.

U.S. rate futures have priced in a 2.6% probability of a 25 basis point rate cut at the January FOMC meeting and a 61.4% chance of a 25 basis point rate cut at the March FOMC meeting.

On the earnings front, notable companies like Prologis (PLD), Charles Schwab (SCHW), U.S. Bancorp (USB), Kinder Morgan (KMI), and Alcoa (AA) are set to report their quarterly figures today.

Today, all eyes are focused on U.S. Retail Sales data in a couple of hours. Economists, on average, forecast that December Retail Sales will stand at +0.4% m/m, compared to the previous value of +0.3% m/m.

Also, investors will likely focus on U.S. Core Retail Sales data, which came in at +0.2% m/m in November. Economists foresee the December figure to be +0.2% m/m.

U.S. Export and Import Price Indexes for December will be reported today. Economists anticipate the export price index to be at -0.6% m/m and the import price index to stand at -0.5% m/m.

U.S. Industrial Production data will come in today. Economists expect December’s figure to be 0.0% m/m, compared to the previous number of +0.2% m/m.

U.S. Manufacturing Production data will be reported today as well. Economists forecast this figure to stand at 0.0% m/m in December, compared to the previous number of +0.3% m/m.

In addition, market participants will be looking toward speeches from Fed Governor Michelle Bowman and New York Fed President John Williams.

In the bond markets, United States 10-year rates are at 4.050%, down -0.42%.

The Euro Stoxx 50 futures are down -0.87% this morning as investors digested hawkish remarks from European Central Bank officials, while disappointing economic data from China further dampened market sentiment. All European sectors were in the red, with real estate and retailers leading the declines. Data from the Office for National Statistics revealed on Wednesday that Britain’s annual consumer price inflation rate unexpectedly accelerated in December, driven by new taxes on tobacco products. Separately, data showed Wednesday that Eurozone headline inflation increased to +2.9% y/y in December from +2.4% y/y in November, confirming preliminary estimates. Meanwhile, ECB President Christine Lagarde stated on Wednesday that the central bank is making progress in returning inflation to its 2% target, although victory has not yet been won. Also, Dutch central bank chief Klaas Knot mentioned that markets are premature in pricing monetary easing. In corporate news, Telecom Italia Spa/Milano (TIT.M.DX) rose about +1% following the approval by the Italian government for the sale of its fixed-line network to the U.S. fund KKR.

U.K.’s CPI, U.K.’s Core CPI, Eurozone’s CPI, and Eurozone’s Core CPI data were released today.

U.K. December CPI has been reported at +0.4% m/m and +4.0% y/y, stronger than expectations of +0.2% m/m and +3.8% y/y.

U.K. December Core CPI stood at +0.6% m/m and +5.1% y/y, stronger than expectations of +0.4% m/m and +4.9% y/y.

Eurozone December CPI came in at +0.2% m/m and +2.9% y/y, in line with expectations.

Eurozone December Core CPI arrived at +0.5% m/m and +3.4% y/y, compared to expectations of +0.4% m/m and +3.4% y/y.

Asian stock markets today closed in the red. China’s Shanghai Composite Index (SHCOMP) closed down -2.09% and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.40%.

China’s Shanghai Composite Index closed sharply lower today as a slew of disappointing economic data reignited concerns about the pace of the economic recovery. Data from the National Bureau of Statistics revealed on Wednesday that China’s economy expanded by +5.2% in the fourth quarter compared to the same period a year earlier, slightly falling short of economists’ expectations. However, China’s annual GDP growth rate of +5.2% matched the rate that economists had expected, surpassing Beijing’s official target of “around 5%.” At the same time, the latest figures for December continued to exacerbate concerns regarding the growth outlook. China’s new-home prices in 70 cities, excluding state-subsidized housing, fell the most in almost nine years in December, while retail sales growth slowed and investment remained tepid. Only industrial output exhibited some signs of improvement. Meanwhile, risk appetite was further dampened by President Xi Jinping’s vow to establish a financial system that “inherently differs” from the Western model, along with his calls for financial regulators to possess “long teeth and thorns.” In other news, foreign investors offloaded about 13 billion yuan ($1.8 billion) worth of Chinese stocks on a net basis on Wednesday, the most in over a year. In corporate news, Xiangyang Changyuandonggu Industry tumbled about -10% after the company announced that it was tapped to provide electric drive body cases and other components to a domestic flying car manufacturer.

The Chinese GDP has been reported at +1.0% q/q and +5.2% y/y in the fourth quarter, compared to expectations of +1.0% q/q and +5.3% y/y.

The Chinese December Industrial Production stood at +6.8% y/y, stronger than expectations of +6.6% y/y.

The Chinese December Retail Sales came in at +7.4% y/y, weaker than expectations of +8.0% y/y.

The Chinese December Fixed Asset Investment arrived at +3.0% y/y, stronger than expectations of +2.9% y/y.

The Chinese December Unemployment Rate was at 5.1%, weaker than expectations of 5.0%.

Japan’s Nikkei 225 Stock Index reached a new 34-year high today before sharply retreating, marking a second consecutive session of losses. Utilities and healthcare stocks led the declines on Wednesday. The stock benchmark initially moved higher as a weaker yen boosted export-oriented stocks, while chip-related stocks mirrored the overnight gains of U.S. peers. However, the Nikkei experienced a sharp decline mid-morning in Tokyo as investors chose to secure some profits. Meanwhile, Japanese government bond yields rose on Wednesday as caution over an upcoming 20-year bond auction in the next session led investors to sell bonds. In corporate news, Fujitsu Ltd plunged about -4% following statements from its European director to British lawmakers on Tuesday, asserting that the company holds a “moral obligation” to compensate victims of a scandal in which its defective software resulted in false accusations of embezzlement against British post office staff. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -2.55% to 20.66.

Pre-Market U.S. Stock Movers

Tesla Inc (TSLA) fell over -1% in pre-market trading following the company’s decision to reduce the prices of its Model Y cars in Germany.

Natera Inc (NTRA) soared about +9% in pre-market trading following the announcement that a jury reached a verdict of no willful infringement in the Ravgen case. Natera stated that it respectfully disagrees with the jury’s verdict and intends to file an appeal.

Impinj Inc (PI) climbed over +10% in pre-market trading after the company said it anticipates Q4 revenue to surpass its prior guidance and exceed $70 million.

Progress Software Corporation (PRGS) gained more than +2% in pre-market trading after the company reported upbeat Q4 results.

Interactive Brokers Group Inc (IBKR) slid over -3% in pre-market trading after reporting weaker-than-expected Q4 EPS.

Morgan Stanley (MS) fell about -1% in pre-market trading after JPMorgan downgraded the stock to Neutral from Overweight with a price target of $87.

Ford Motor Company (F) dropped more than -2% in pre-market trading after UBS downgraded the stock to Neutral from Buy with an unchanged price target of $12.

You can see more pre-market stock movershere

Today’s U.S. Earnings Spotlight: Wednesday - January 17th

Prologis (PLD), Charles Schwab (SCHW), U.S. Bancorp (USB), Kinder Morgan (KMI), Discover (DFS), Citizens Financial Group Inc (CFG), Wintrust (WTFC), Synovus (SNV), Alcoa (AA), H B Fuller (FUL).

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