Pre-Market Brief: Stocks Mixed As Brutal Year Nears End

Oleksandr Pylypenko - Barchart - Fri Dec 30, 2022

March S&P 500 futures (ESH23) are trending down -0.45% this morning after three major U.S. benchmark indices ended the regular session higher, powered by a rebound in mega-cap growth stocks as U.S. unemployment data eased investors’ worries about future interest rate hikes by the Federal Reserve. Three major U.S. stock indexes were fueled primarily by gains in the Technology, Consumer Services, and Consumer Goods sectors.

On Wall Street, all three major U.S. stock indexes rallied to end the session +1.05% to +2.59% higher, with consumer discretionary and technology leading the pack with about a +3% rise. Benchmark T-note yields softened after U.S. economic data pointed to signs of a cooling U.S. labor market, boosting dip-buying momentum in tech stocks. Shares of Meta Platforms Inc (META) rallied more than +4%, while Apple Inc (AAPL) gained over +2% as the recent plunge in mega-cap growth stocks attracted dip buyers.

The Labor Department report on Thursday showed claims for state unemployment benefits rose 9,000 to a seasonally adjusted 225,000 last week, in line with expectation, hinting at some softening in a robust labor market. At the same time, continuing jobless claims, which measure the amount of U.S. residents filing for ongoing unemployment benefits, rose to 1.71M from 1.67M, above economists’ expectations of 1.69M.

“The numbers were higher than the previous week, which is good for the Fed because it’s moving in the direction that it wants,” said Robert Pavlik, a senior portfolio manager at Dakota Wealth in Fairfield.

Meanwhile, U.S. rate futures have priced in a 71.3% chance of a 25 basis point rate increase and a 28.7% chance of a 50 basis point hike at February’s monetary policy meeting.

Today, all eyes are focused on the U.S. Chicago Purchasing Managers Index (PMI) in a couple of hours. Economists, on average, forecast that December Chicago PMI will stand at 40.0, compared to the previous value of 37.2.

In the bond markets, United States 10-Year rates are at 3.850%, up +0.39%.

The Euro Stoxx 50 futures are down -0.75% on the final trading day of 2022, with industrials and tech stocks giving up some of the previous session’s sharp gains. European stocks are on course for the worst year since 2018 as Russia’s war in Ukraine, high inflation, and aggressive monetary policy weighed on risk appetite around the world.

“Investors are going into 2023 with a cautious mindset, prepared for more rate hikes, and expecting recessions around the globe. The bar is low but arguably reasonably so,” said Craig Erlam, a senior market analyst at OANDA.

U.K. Nationwide HPI, Switzerland KOF Leading Indicators, Spain CPI (preliminary), and Spain HICP (preliminary) data were released today.

U.K. December Nationwide HPI has been reported at -0.1% m/m and +2.8% y/y, stronger than expectations of -0.7% m/m and +2.3% y/y.

Switzerland’s December KOF Leading Indicators Index stood at 92.2, stronger than expectations of 90.5.

The Spanish December CPI came in at +5.8% y/y, lower than the +6.8% y/y recorded in November.

The Spanish December HICP stood at +5.6% y/y, weaker than expectations of +6.0% y/y.

Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.51%, and Japan’s Nikkei 225 Stock Index (NIK) closed flat.

China’s Shanghai Composite today closed higher as market participants looked to end the year on an optimistic note. However, the Chinese benchmark ended the year down about -15% after anti-virus controls and a crackdown on corporate debt weighed on the world’s second-largest economy. The country’s leaders have promised to step up policy adjustments and strengthen policy coordination to soften the impact on businesses and consumers from a rise in COVID-19 cases.

At the same time, Japan’s Nikkei 225 Stock Index closed flat today, giving up initial gains. The index finished the year down about -9.4%, the highest annual decline since 2018. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down 0.36% to 19.51.

Pre-Market U.S. Stock Movers

Sesen Bio Inc (SESN) climbed over +24% in pre-market trading after the company announced an increased special dividend of $0.34 per share in the Carisma deal.

Hoth Therapeutics Inc (HOTH) plunged about -34% in pre-market trading, giving up some of yesterday’s gains after the company announced an at-the-market $10M private placement.

Cellectis SA (CLLS) rose over +5% in pre-market trading after the company partnered with Primera Therapeutics on a gene-editing platform.

Oric Pharmaceuticals Inc (ORIC) gained more than +3% in pre-market trading after Pfizer (PFE) disclosed that it had taken a 12% or 5.38M share stake in the company.

TG Therapeutics Inc (TGTX) rose about +3% in pre-market trading after B. Riley raised the firm’s price target on the stock to $23 from $17 and kept a buy rating.

You can see more pre-market stock movershere

Today’s U.S. Earnings Spotlight: Friday - December 30th

Siemens Gamesa ADR (GCTAY), Sprott Physical Gold and Silver Trust (CEF), Eaton Vance Tax Advantaged Glb Div (ETG), Oramed (ORMP), Mitek (MITK), Blade Air Mobility (BLDE), Byrna Technologies (BYRN), Inotiv (NOTV), Scully Royalty (SRL), Wolford ADR (WLFDY).

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On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes.