Pre-Market Brief: Stocks Mixed Ahead Of Fed Rate Decision

March S&P 500 futures (ESH23) are trending up +0.10% this morning after three major U.S. benchmark indices finished the regular session in the green after a smaller-than-anticipated increase in U.S. consumer prices buoyed optimism that the Federal Reserve could soon back out of its aggressive path of interest rate hikes. Three major U.S. stock indexes were fueled primarily by gains in the Oil & Gas, Technology, and Basic Materials sectors. 

On Wall Street, S&P 500 and Nasdaq 100 rose to 3-month highs, and the Dow Jones Industrials climbed to a 7-1/2 month high following cooler CPI data on Tuesday, but then all three major indexes cut the bulk of their gains ahead of the Fed's interest rate decision. 

The Labor Department report showed that U.S. November consumer prices rose 7.1% on an annualized basis, marking the smallest annual inflation increase since December 2021, as the cost of gasoline and used cars dropped. At the same time, core inflation, which is considered a more accurate gauge of inflation, slowed to +0.2% m/m from +0.3% m/m in the prior month, weaker than expectations of +0.3% m/m.

“This month's report provides confirmation of October's step down in inflation pressures and is welcome news for the Fed,” Morgan Stanley strategists wrote in a note on Tuesday.

Today, all eyes are focused on the U.S. Federal Reserve interest rate decision. The central bank has raised interest rates by 375 basis points this year, including four successive jumbo 75 basis point hikes, in the fastest rate-hiking cycle since the 1980s, and is widely expected to deliver a smaller 50 basis point rate hike later in the session. In addition, market participants will be closely eyeing Powell’s statement for more signals on the path of interest rates.

Also, investors are likely to focus on the U.S. Export Price Index, which was at -0.3% m/m in October. Economists foresee the new figure to be -0.4% m/m.

U.S. Import Price Index will come in today. Economists expect November's figure to be -0.5% m/m, compared to the previous number of -0.2% m/m.

U.S. Crude Oil Inventories data will be reported today as well. Economists estimate this figure to be -3.595M, compared to the last week’s value of -5.187M.

In the bond markets, United States 10-Year rates are at 3.490%, down -0.37%.

The Euro Stoxx 50 futures are down -0.48% this morning, with investors remaining cautious ahead of the U.S. Federal Reserve’s last scheduled monetary policy decision of the year. At the same time, the European Central Bank and the Bank of England are set to release their latest rate decisions on Thursday, with both expected to hike by 50 basis points.

U.K. CPI, U.K. Core CPI, Spain's CPI, and Eurozone’s Industrial Production data were released today.

U.K. November CPI has been reported at +0.4% m/m and +10.7% y/y, weaker than expectations of +0.6% m/m and +10.9% y/y.

U.K. November Core CPI stood at +0.3% m/m and +6.3% y/y, weaker than expectations of +0.5% m/m and +6.5% y/y.

The Spanish November CPI came in at -0.1% m/m and +6.8% y/y, compared to expectations of -0.1% m/m and +6.3% y/y.

Eurozone October Industrial Production has been reported at -2.0% m/m and +3.4% y/y, compared to expectations of -1.5% m/m and +3.4% y/y.

Asian stock markets today closed in the green as softer-than-expected U.S. inflation data fueled risk appetites. China’s Shanghai Composite Index (SHCOMP) closed up +0.01%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.72%.

China’s Shanghai Composite today closed slightly higher. Chinese stocks garnered support after a report showed the government is planning a more than 1 trillion yuan support package for its semiconductor industry to help local firms counter U.S. restrictions on semiconductor imports. However, concerns over rising COVID-19 cases in the country continued to weigh on sentiment, even as the Chinese authorities eased more curbs.

At the same time, Japan’s Nikkei 225 Stock Index closed higher today, even as data revealed that sentiment among the country’s largest manufacturers deteriorated in the fourth quarter. Also, Japan's industrial production stood at -3.2% m/m, weaker than expectations of -2.6% m/m, indicating a nearly doubled decline in October from the prior month. At the same time, the outlook for the services industry remained optimistic after a post-COVID boom. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up 0.91% to 18.95.

Pre-Market U.S. Stock Movers

Netcapital Inc (NCPL) plunged over -24% in pre-market trading after the company priced an underwritten public offering of 1.25M shares of its common stock.

SoFi Technologies Inc. (SOFI) climbed about +3% in pre-market trading after the company's CEO, Anthony Noto, bought $5M in common stock.

Moderna Inc (MRNA) rose about +2% in pre-market trading, extending yesterday's gains after the company and partner Merck (MRK) reported the Phase 2b KEYNOTE-942/mRNA-4157-P201 trial met the primary efficacy endpoint. 

Braze Inc (BRZE) slid around -5% in pre-market trading after the company reported upbeat Q3 results but issued weaker-than-expected Q4 guidance.

Telefonica SA ADR (TEF) rose about +2% in pre-market trading after Goldman Sachs upgraded the stock to buy from neutral.

You can see more pre-market stock movershere

Today’s U.S. Earnings Spotlight: Wednesday - December 14th

Lennar (LEN), Lennar B (LENb), Nordson (NDSN), Weber (WEBR), Planet Labs PBC (PL), Uranium Energy (UEC), RCI Hospitality (RICK), Rev Group (REVG), Mitek (MITK), Oramed (ORMP), Mesabi Trust (MSB), Byrna Technologies (BYRN), Citius Pharma (CTXR), CleanSpark (CLSK), Innovative Solutions (ISSC), Uxin (UXIN), Streamline (STRM).

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