Morning Markets

December S&P 500 futures (ESZ22) this morning are down -0.52%, and December Nasdaq 100 E-Mini futures (NQZ22) are down -0.42%. 

Stock indexes are moderately lower this morning on negative carry-over from last Friday’s stronger-than-expected U.S. Nov payroll report that may keep the Fed raising interest rates for longer.  The 10-year T-note yield today is up +3.6 bp at 3.522%.

Tesla is down more than -2% in pre-market trading and is weighing on technology stocks after it said it plans to reduce vehicle production at its Shanghai factory.

A rally in Chinese stocks is providing carry-over support to U.S. and global markets as the Shanghai Composite today rallied +1.76% to a 2-1/2 month high after Chinese authorities accelerated a shift toward reopening the economy.   

Another supportive factor for stocks is today’s +1.46% rally in Bitcoin (^BTCUSD) to a 3-week high after there was no news over the weekend of any fresh contagion from the collapse of FTX.com.

Overseas stocks today are mixed.  The Euro Stoxx 50 index is down -0.47% today.   Losses in consumer-related stocks are leading the overall market lower after today’s economic news showed that Eurozone Oct retail sales fell more than expected and posted their biggest decline in 10 months. However, a bigger-than-expected increase in Eurozone Sentix Dec investor confidence to a 6-month high limited the downside in stocks.  Also, dovish comments today from ECB Governing Council members Makhlouf and Villeroy de Galhau were positive for stocks when they said they support the ECB raising interest rates by only +50 bp at this month’s meeting.

ECB Governing Council member Makhlouf said the ECB "will probably end up" hiking interest rates by 50 bp at this month's policy meeting.

ECB Governing Council member Villeroy de Galhau said, "it's desirable to bring rates to 2.0%," so the ECB should raise interest rates by 50 bp at the Dec 15 policy meeting.

Eurozone Oct retail sales fell -1.8% m/m, slightly weaker than expectations of -1.7% m/m and the biggest decline in 10 months.

Eurozone Dec Sentix investor confidence rose +9.9 to a 6-month high of -21.0, stronger than expectations of -27.5.

China’s Shanghai Composite rallied to a 2-1/2 month high and closed up by +1.76%, and Japan’s Nikkei Stock Market Index closed up by +0.15%. Chinese stocks rallied today, and the yuan climbed to a 2-1/2 month high as Chinese authorities accelerated a shift toward reopening the economy.  Shanghai, Shenzhen, Guangzhou, and other major Chinese cities scrapped Covid testing requirements to enter most public venues, except some locations such as restaurants, bars, and nursing homes.  A slowing in the pace of new Covid infections was another positive factor for stocks after China reported 29,171 new Covid infections on Sunday, the fewest in 2 weeks

Morgan Stanley upgraded Chinse stocks to overweight from equal weight on signs of a pivot in China's Covid Zero policies. 

The China Nov Caixin services PMI fell -1.7 to 46.4, weaker than expectations of 48.0 and the steepest pace of contraction in 6 months.

Japan’s Nikkei Stock Index today posted modest gains on carry-over optimism from a rally in Chinese stocks on a further relaxation of Covid restrictions in China. Better-than-expected Japanese economic news also gave equity prices a lift after the Japan Nov Jibun Bank services PMI was revised upward.  Gains in stocks were limited on concern the Fed may keep raising interest rates longer than expected after last Friday’s stronger-than-expected U.S Nov payroll report.

The Japan Nov Jibun Bank services PMI was revised upward by +0.3 to 50.3 from the initially reported 50.0.

Pre-Market U.S. Stock Movers

Tesla (TSLA) fell more than -2% in pre-market trading after a Bloomberg report said the company plans to cut vehicle production at its Shanghai factory, which could reduce production by about -20%. 

Terex (TEX) slid more than -1% in pre-market trading after Deutsche Bank downgraded the stock to hold from buy.

Starbucks (SBUX) dropped nearly -2% in pre-market trading after Deutsche Bank downgraded the stock to hold from buy. 

NetApp (NTAP) declined more than -2% in pre-market trading after Loop Capital Markets downgraded the stock to hold from buy.

Tupperware Brands (TUP) tumbled more than -5% in pre-market trading when it was announced after last Friday’s close that the company would be removed from S&P Smallcap 600 Index before trading opens Dec 19.

Chinese stocks listed in the U.S. are moving higher in pre-market trading after major Chinese cities, including Shanghai, Shenzhen, and Guangzhou, scrapped Covid testing requirements to enter most public venues, except some locations such as restaurants, bars, and nursing homes.   Alibaba Group Holding (BABA), Baidu (BIDU), Pinduoduo (PDD), and JD.com (JD) are up more than +5%.  Also, NetEase (NTES) is up more than +3%. 

Activision Blizzard (ATVI) rose more than +2% in pre-market trading after Bloomberg News reported that Microsoft is ready to fight for its $69 billion acquisition of the company if the U.S. Federal Trade Commission files a lawsuit seeking to block the deal.

Comcast (CMCSA) is up more than +2% in pre-market trading after Wells Fargo Securities upgraded the stock to equal weight from underweight.

Allegro Microsystems (ALGM) and Cubesmart (CUBE) jumped more than +5% in pre-market trading when it was announced after last Friday’s close that both companies would join the S&P Midcap 400 Index before trading opens on Dec 19.

Cryptocurrency-exposed stocks are climbing in pre-market trading as the price of Bitcoin rises more than +1% to a 3-week high.  Marathon Digital (MARA) is up more than +4%.  Riot Blockchain (RIOT) is up more than +2%.  Coinbase Global (COIN) and MicroStrategy (MSTR) are up more than +1%. 

MGM Resorts International (MGM) rose more than +2% in pre-market trading after Truist Securities upgraded the stock to buy from hold amid renewed optimism on China reopening.

Today’s U.S. Earnings Reports (12/5/2022)

Ermenegildo Zegna NV (ZGN), IDT Corp (IDT), Mitek Systems Inc (MITK), Powell Industries Inc (POWL), 

Science Applications Internati (SAIC), Sumo Logic Inc (SUMO), Veru Inc (VERU).

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