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MARKET WRAPS

Watch For:

Weekly Jobless Claims

Today's Top Headlines/Must Reads:

- The Most Important Debate on Wall Street: Is Inflation Licked?

- A Hidden Risk in the Municipal Bond Market: Hackers

- Investors Should Think Beyond Tech to Access AI Investment Momentum

Opening Call:

Stock futures were little changed on Thursday as global bond yields rose and traders eyed two more jobs reports that may impact the chances of the Fed cutting interest rates next year.

Investors will wish to see confirmation from Thursday's weekly unemployment claims data, and Friday's nonfarm payrolls report, that the slower jobs market will help ease inflationary pressures.

"Get out the popcorn, it could be an entertaining 48 hours as traders jockey for position into and eventually out of the granddaddy of all economic releases, U.S. nonfarm payrolls," SPI Asset Management said.

However, SPI warned that investors should be careful wishing for weak jobs reports.

"Without stating the obvious, the labor market is showing signs of contracting much faster than expected. This is not necessarily a 'risk-on' panacea, especially if the downward momentum in the jobs markets picks up a good head of steam."

Overseas Markets

Stocks weakened, as Japan's Nikkei 225 lost 1.8% while Hong Kong's Hang Seng Index fell 0.7% after disappointing import data from China . Germany's Dax, which set a new record Wednesday, pulled back following weak industrial-production figures .

Speculation mounted that Japan's longstanding experiment with negative rates could soon come to an end, causing the yen to rally.

Premarket Movers

Chewy swung to a third-quarter loss and said active customers declined. Shares sank more than 10%.

GameStop reported a 9% sales drop for its most-recent quarter. Shares fell more than 6%.

Wednesday's Post-Close Movers

Braze's revenue surged 33% in the fiscal third quarter, topping analysts' estimates and helping the company's loss narrow. The company also increased its full-year guidance for revenue and said it expects a narrower loss than previously forecast. Shares rose 12%.

Cerevel Therapeutics will be acquired by AbbVie for about $8.7 billion . Shares rose 16%.

Nogin is entering Chapter 11 bankruptcy proceedings, with backing by B. Riley Financial. The company said there would be no interruptions to service as it financially restructures, which is meant to add stability and allow for future growth. Shares rose 12%.

Forex:

November was a very negative month for the dollar, with the DXY index falling by almost 4%, and the near-term outlook isn't much better due to evidence of a weakening economy, Natixis Research said.

"In an environment of soft landing for the economy and a potentially substantial cut in Fed Funds rates, the dollar will continue to perform poorly over the coming months."

Energy:

Oil prices regained some ground after falling to their lowest levels since July earlier this week.

Following OPEC+'s output cuts announcement, which left traders broadly disappointed, concerns around weakening demand and an oversupplied market remained.

Meanwhile, the latest EIA report showed U.S. crude oil inventories fell more than expected last week but gasoline and distillate inventories rose.

Metals:

Base metals prices moved higher, while gold remained firm, buoyed by a weaker dollar ahead of Friday's key employment data.

Investors are worried over worsening economic data and slowing growth going into 2024, Peak Trading Research said.

Investors expect 185,000 nonfarm jobs to be added to the economy Friday, with an unemployment rate of 3.9%, it added. A weaker jobs report would likely stress the dollar, a bullish sign for commodities, Peak said.

TODAY'S TOP HEADLINES

Woodside Energy, Santos in Merger Talks to Create Global Energy Giant

SYDNEY-Woodside Energy and Santos said they are discussing a merger that could result in a new global giant worth around $52 billion, illustrating how rising demand for natural gas in the wake of the Ukraine war is reshaping the energy sector.

Woodside and Santos said talks are at an early stage and there is no agreement over a deal that would rank as one of the largest in the energy sector this year. Santos said it was weighing the merger alongside other options to boost value for shareholders after its stock declined around 5% over the past 12 months.

OpenAI's Unusual Board: Should It Change Its Structure to Govern Effectively?

OpenAI has a new board, but its directors may still confront the same old problem.

The artificial-intelligence startup's unusual business structure that gave oversight of its for-profit business to a nonprofit board will be an unresolved issue for the new board to tackle.

Coming EU Rules on AI May Shape Companies' Use of Automated Systems

BRUSSELS-The European Union passed a strict privacy law in 2018 that influenced the way companies handled personal data. Coming rules on AI might have a similar effect in shaping corporate use of AI systems, said the head of privacy at tax software maker Intuit.

The company, which offers financial software including TurboTax and CreditKarma and the newsletter distribution service Mailchimp, already engineers products that can be used in different jurisdictions to avoid adjusting them to changing local data and privacy rules that have cropped up in many countries, said Elise Houlik.

Congress Moves Forward on Roughly $900 Billion Defense Bill

WASHINGTON-House and Senate lawmakers agreed to scrap the most contentious pieces of a nearly $900 billion defense and national security policy bill, such as restrictions on abortion and transgender care for service members, clearing the way for its passage by the end of the year.

Lawmakers who serve on both chambers' Armed Services committees on Wednesday night released compromise text for the annual National Defense Authorization Act. This year's NDAA, which lays out top policy priorities for the Pentagon, calls for a 5.2% pay raise for service members and military training assistance to Taiwan to help the island defend itself against a possible invasion by China.

Atomic Power Is In Again-and China Has the Edge

SINGAPORE-China became the first country to put the latest evolution in civilian nuclear technology into use, placing it at the cutting edge of atomic power just as climate change is bringing nuclear plants back into vogue.

With soaring global temperatures and concerns about climate change casting a renewed spotlight on nuclear as a low-carbon power source, China said Wednesday that the first-ever fourth-generation nuclear power plant began commercial operation in the eastern province of Shandong following seven days of continuous operation.

Write to ina.kreutz@wsj.com

TODAY IN CANADA

Earnings:

EQB 4Q

Laurentian Bank of Can 4Q

Major Drilling Group 2Q

Economic Calendar (ET):

0830 Oct Building permits

Expected Major Events for Thursday

05:00/JPN: Oct Indexes of Business Conditions - Preliminary Release

07:00/GER: Oct Industrial Production Index

07:00/UK: Nov Halifax House Price Index

07:45/FRA: Oct Foreign trade

07:45/FRA: Oct Balance of Payments

09:00/ITA: Oct Industrial Production

10:00/ITA: Oct Retail Sales

12:30/US: Nov Challenger Job-Cut Report

13:00/RUS: Weekly International Reserves

13:30/CAN: Oct Building permits

13:30/US: 12/02 Unemployment Insurance Weekly Claims Report - Initial Claims

13:30/US: U.S. Weekly Export Sales

15:00/US: Oct Monthly Wholesale Trade

15:30/US: 12/01 EIA Weekly Natural Gas Storage Report

20:00/US: Oct Consumer Credit

21:30/US: Federal Discount Window Borrowings

21:30/US: Foreign Central Bank Holdings

23:30/JPN: Oct Household Spending

23:50/JPN: Nov Bank Lending

23:50/JPN: 3Q 2nd Preliminary Quarterly GDP Estimates

23:50/JPN: Oct Balance of Payments

23:50/JPN: Nov International Transactions in Securities

23:50/JPN: 3Q Quarterly External Debt & International Investment Position

All times in GMT. Powered by Kantar Media and Dow Jones.

Expected Earnings for Thursday

ADF Group (DRX.T) is expected to report $0.13 for 3Q.

Avid Bioservices Inc (CDMO) is expected to report $-0.06 for 2Q.

Broadcom Inc (AVGO) is expected to report $8.41 for 4Q.

Ciena Corp (CIEN) is expected to report $0.34 for 4Q.

Comtech Telecommunications Corp (CMTL) is expected to report $0.12 for 1Q.

Cooper Companies Inc (COO) is expected to report $2.62 for 4Q.

Delta Apparel Inc (DLA) is expected to report $0.23 for 4Q.

DocuSign Inc (DOCU) is expected to report $0.00 for 3Q.

Dollar General (DG) is expected to report $1.26 for 3Q.

EQB Inc (EQB.T) is expected to report for 3Q.

GMS Inc (GMS) is expected to report $1.97 for 2Q.

Genasys Inc (GNSS) is expected to report for 4Q.

Guidewire Software Inc (GWRE) is expected to report $-0.56 for 1Q.

HashiCorp Inc (HCP) is expected to report for 3Q.

Hooker Furnishings Corp (HOFT) is expected to report $0.19 for 3Q.

IES Holdings Inc (IESC) is expected to report for 4Q.

KalVista Pharmaceuticals Inc (KALV) is expected to report $-0.61 for 2Q.

Laurentian Bank of Canada (LB.T,LRCDF) is expected to report $1.16 for 4Q.

Lee Enterprises Inc (LEE) is expected to report for 4Q.

Liquidity Services (LQDT) is expected to report $0.16 for 4Q.

Lululemon Athletica Inc (LULU) is expected to report $2.29 for 3Q.

Major Drilling Group International Inc (MDI.T,MJDLF) is expected to report for 2Q.

Methode Electronics (MEI) is expected to report $0.11 for 2Q.

Planet Labs PBC (PL) is expected to report for 3Q.

RH (RH) is expected to report $0.90 for 3Q.

RVL Pharmaceuticals PLC (RVLPQ) is expected to report for 3Q.

SecureWorks Corp (SCWX) is expected to report $-0.17 for 3Q.

Smartsheet Inc (SMAR) is expected to report $-0.32 for 3Q.

Smith & Wesson Brands Inc (SWBI) is expected to report for 2Q.

Spanish Broadcasting System Inc (SBSAA) is expected to report for 3Q.

Three Valley Copper Corp (TVC.H.V) is expected to report for 3Q.

Torrid Holdings Inc (CURV) is expected to report for 3Q.

Vail Resorts (MTN) is expected to report $-4.41 for 1Q.

WeWork Inc (WEWKQ) is expected to report for 3Q.

Powered by Kantar Media and Dow Jones.

ANALYST RATINGS ACTIONS

Arvinas Raised to Buy From Hold by Jefferies

Asana Cut to Reduce From Hold by HSBC

AutoZone Raised to Strong Buy From Outperform by Raymond James

Bloom Energy Cut to Neutral From Buy by B of A Securities

Builders FirstSource Raised to Buy From Neutral by B. Riley Securities

Capital One Raised to Buy From Neutral by B of A Securities

Devon Energy Raised to Overweight From Neutral by JP Morgan

Discover Financial Raised to Buy From Neutral by B of A Securities

EOG Resources Cut to Neutral From Overweight by JP Morgan

Jack Henry & Associates Raised to Buy From Neutral by B of A Securities

Ovintiv Raised to Overweight From Neutral by JP Morgan

PayPal Holdings Cut to Neutral From Buy by B of A Securities

Plug Power Cut to Underweight From Equal-Weight by Morgan Stanley

Range Resources Cut to Underweight From Neutral by JP Morgan

Realty Income Raised to Outperform From Peer Perform by Wolfe Research

Shake Shack Raised to Strong Buy From Outperform by Raymond James

Sphere Entertainment Raised to Buy From Neutral by Guggenheim

SW Energy Raised to Neutral From Underweight by JP Morgan

Toast Cut to Neutral From Buy by B of A Securities

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

December 07, 2023 06:19 ET (11:19 GMT)

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