March S&P 500 futures (ESH23) are trending up +0.46% this morning after three major U.S. benchmark indices closed lower on the first trading day of the year as market participants awaited the Federal Reserve’s meeting minutes for further clues on the path of future rate hikes. Three major U.S. stock indexes were weighed down primarily by losses in the Energy, Technology, and Utilities sectors.

In Tuesday’s trading session, Tesla Inc (TSLA) plunged more than -12% after the electric vehicle maker missed Wall Street estimates for quarterly deliveries. Meanwhile, Apple Inc (AAPL) slid -3.7% and closed below a $2 trillion market value for the first time since 2021 following a report of a rating downgrade by Exane BNP Paribas due to production cuts in China. Also, the energy sector dropped about -4%, dragged by lower oil prices amid weak business activity data from China.

“Even though the calendar has changed, a lot of the main issues for the market have not, specifically with the Federal Reserve tightening monetary policy as it’s still concerned about inflation. Until the Fed really changes their tone, it’s an uphill battle for the market,” said Chris Zaccarelli, a chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina.

Meanwhile, U.S. rate futures have priced in a 70.3% chance of a 25 basis point rate increase and a 29.7% chance of a 50 basis point hike at February’s monetary policy meeting. 

The spotlight of Wednesday’s trading session is likely to be the release of the FOMC minutes from the last meeting. The report will be closely watched for further clues on the central bank’s future monetary policy tightening plans. Last month, the Fed increased interest rates by 50 basis points after four consecutive 75 basis points hikes, bringing total increases to its benchmark policy rate to a range of 4.25%-4.5% in 2022.

Also, investors are likely to focus on the U.S. JOLTs Job Openings report for November. Economists foresee the new figure to be 10.000M, compared to the previous figure of 10.334M.

U.S. ISM Manufacturing PMI reading will come in today as well. Economists expect this figure to stand at 48.5 in December, compared to the previous number of 49.0.

In the bond markets, United States 10-Year rates are at 3.696%, down -2.54%.

The Euro Stoxx 50 futures are up +1.44% this morning, continuing the positive start to the new year as global investors assessed regional economic data ahead of the release of the minutes from the last Federal Reserve meeting. Economic data on Tuesday showed that Germany’s inflation eased for a second straight month in December to +8.6% y/y due to lower energy prices, boosting market sentiment in the region.

Switzerland’s CPI, France’s CPI (preliminary), France’s Services PMI, Spain’s Services PMI, Italy’s Services PMI, Germany’s Services PMI, Eurozone’s S&P Global Composite PMI, and Eurozone’s Services PMI data were released today.

Switzerland’s December CPI has been reported at -0.2% m/m and +2.8% y/y, compared to expectations of -0.2% m/m and +2.9% y/y.

The French December CPI stood at -0.1% m/m and +5.9% y/y, weaker than expectations of +0.4% m/m and +6.4% y/y.

The French December Services PMI was at 49.5, stronger than expectations of 48.1.

The Spanish December Services PMI came in at 51.6, stronger than expectations of 50.8.

The Italian December Services PMI stood at 49.9, stronger than expectations of 49.5.

The German December Services PMI came in at 49.2, stronger than expectations of 49.0.

Eurozone December S&P Global Composite PMI has been reported at 49.3, stronger than expectations of 48.8.

Eurozone December Services PMI stood at 49.8, stronger than expectations of 49.1.

Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.22%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -1.45%.  

China’s Shanghai Composite today closed slightly higher as investors turned cautious ahead of key U.S. economic data this week. Also, uncertainty over China’s COVID-19 situation limited gains as the country grapples with an unprecedented surge in COVID-19 infections after it relaxed several restrictions in December. Chinese President Xi Jinping flagged challenges this year as the country plans to scale back more of its anti-COVID restrictions. In addition, recent data showed a series of lockdowns in 2022 took a brutal toll on the Chinese economy.

At the same time, Japan’s Nikkei 225 Stock Index closed sharply lower in its first trading session of the year after data revealed that the country’s manufacturing sector contracted for a second straight month in December. The index's downward momentum was fueled by losses in the Chemical, Petroleum & Plastic, Transportation Equipment, and Mining sectors. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down 0.70% to 19.92.

Pre-Market U.S. Stock Movers

Vera Therapeutics Inc (VERA) plunged over -53% in pre-market trading after the company announced results from the Phase 2b ORIGIN clinical trial. 

Smart Global Holdings Inc (SGH) climbed about +9% in pre-market trading after the company reported upbeat Q1 results and provided a strong Q2 outlook.

Momentus Inc (MNTS) gained over +18% in pre-market trading, extending yesterday’s gains after the company named Dennis Mahoney as an interim CFO. 

Phathom Pharmaceuticals Inc (PHAT) tumbled about -22% in pre-market trading after the company disclosed FDA notice that no action would be taken on its NDA for vonoprazan.

CarMax Inc (KMX) rose over +1% in pre-market trading after the company disclosed that its CEO William Nash bought 8.2K shares of common stock on December 30th in a total transaction size of $501K.

You can see more pre-market stock movershere

Today’s U.S. Earnings Spotlight: Wednesday - January 4th

Unifirst (UNF), Simulations Plus (SLP), Resources Connection (RGP), Oramed (ORMP), Richardson Electronics (RELL), Blade Air Mobility (BLDE), Lifecore Biomedical (LFCR), Byrna Technologies (BYRN).

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