MARKET WRAPS
Watch For:
Fed Interest Rate Decision; Producer Price Index for November;
EIA Weekly Petroleum Status Report; Earnings from Adobe
Today's Top Headlines/Must Reads:
- Where Are Interest Rates Headed? What to Expect From the Fed
Meeting
- Powell Could Grapple With How to Frame the Economy
- China Turns the Tables on Wall Street
- Why Biden's EV Tax Credit Could Become Hard to Claim
Opening Call:
Stock futures were inching to fresh 2023 highs on Wednesday,
ahead of the Federal Reserve's policy decision, forecasts and
commentary later in the session.
The central bank concludes its two-day policy meeting on
Wednesday, and investors are placing a 98.2% probability it will
reveal it is keeping interest rates unchanged at a range of 5.25%
to 5.50%. It is also widely expected to stand pat at the next
meeting in January.
Indeed, the market is suggesting that the next move by the Fed
will be a cut in rates after its May meeting, and so traders will
be keen to see whether the Fed's forecasts and Jerome Powell's
comments match that narrative.
The Fed's outlook will determine investor thinking in the
shorter term, and will likely be market moving given the higher
levels of optimism which have been building over the last couple of
months, according to Interactive Investor.
"[A]ny mention of potential rate cuts next year would be seized
upon, especially since this is not something [to] which the Fed has
yet alluded," it said.
However, with core annual inflation still running at twice the
Fed's 2% target, there is danger it may challenge investors'
rate-cut optimism.
"Our economists believe that Powell will stop short of declaring
the tightening cycle as over, likely restating that 'We are
prepared to tighten policy further if it becomes appropriate to do
so,'" Deutsche Bank said.
Swissquote Bank agreed it was likely Powell will look to contain
market optimism and rectify the rate cut bets. "If so, we should
see correction and consolidation in bond and stock valuations
during the final weeks of the year."
Premarket Movers
Blend Labs rose 5.7% after Keefe Bruyette raised its price
target on shares of the company to $1.85 from $1.50 and maintained
a Market Perform rating on the stock.
Camping World was initiated with a Buy rating by analysts at
Roth MKM and the price target was set at $30. The stock was rising
1.3%.
Caribou Biosciences' lymphoma trial design was approved by the
FDA. Shares rose 2.8%.
Farfetch shares have roughly halved in the past two sessions,
and the company was downgraded on Tuesday by Moody's. The stock
wavered premarket.
Take-Two Interactive Software is set to join the Nasdaq-100
index, the compiler of the benchmark said. Take-Two stock climbed
premarket.
Tuesday's Post-Close Movers
Codorus Valley Bancorp will be acquired by Orrstown Financial
Services, the parent company of Orrstown Bank, for $207 million in
stock. The deal is expected to close in the third quarter of 2024,
creating a Pennsylvania and Maryland community bank with about $5.2
billion in assets. Shares rose 5.5%.
ReShape Lifesciences said Tuesday its modified treatment for
obesity had received approval from the FDA. The company said it was
preparing for a product launch of its modified Lap-Band 2.0 FLEX in
the U.S. Shares rose 43%.
Forex:
The Fed is expected to leave interest rates on hold, and how the
dollar moves afterward will depend on whether policymakers counter
recent growing expectations for rate cuts next year, UniCredit
Research said.
UniCredit doesn't expect the Fed to "push back firmly against
recent market expectations of aggressive rate cuts," which means
EUR/USD could stabilize above 1.08.
However, if the Fed suggests rate-cut expectations are overdone,
the DXY dollar index should rally further above 104 and EUR/USD
would retreat, albeit likely staying above 1.07, UniCredit
said.
Sterling fell after data showed U.K. GDP fell by 0.3% in October
, more than the 0.1% contraction expected in a WSJ poll, which
could cause growing speculation about possible interest-rate cuts
next year, Quilter Investors said.
The BOE is expected to leave interest rates on hold on Thursday
but close attention will be paid to any comments on economic
weakness.
"Calls for rate cuts are likely to grow stronger should this
sort of economic data persist," Quilter said. "Interest rates are
biting now and further contraction cannot be ruled out."
Energy:
Oil prices were close to 1% lower after nations agreed for the
first time to move away from using fossil fuels .
UBS said oil demand concerns coupled with worries about OPEC and
its allies unwinding production cuts next year were some of the
main factors currently weighing on prices.
Prices are down around 10% since the OPEC+ meeting at the end of
November and are expected to remain volatile as market liquidity
dries up at the end of the year, UBS added. "Further lows cannot be
excluded."
UBS still sees prices trending higher next year, with market
balances tightening in again with OPEC+ implementing their
production cuts.
Metals:
Base metals prices moved lower, while gold held firm as a
stronger dollar kept the pressure on commodities backed by the
greenback.
Worries over copper supply have emerged, largely from Latin
America where major producers are halting production.
The Panama Supreme Court found earlier this month that First
Quantum's contract to operate a copper mine was unconstitutional,
which Sucden Financial said would mean 500,000 tons of copper being
lost from the market.
Still Sucden said that for now prices are being led by the
dollar rather than fundamentals.
TODAY'S TOP HEADLINES
GM Moves Forward After Strike, Focusing on Cost Cuts and EVs
General Motors' finance chief has a balancing act to achieve as
the company moves ahead under new labor contracts that will add
billions of dollars in costs over roughly four years.
Chief Financial Officer Paul Jacobson must offset the higher
costs while convincing investors that GM is on solid ground, even
as its electric-vehicle and driverless-car businesses face
challenges.
XPO Gets Approval to Acquire 28 Service Centers as Part of
Yellow's Bankruptcy
Transport company XPO said Tuesday the U.S. Bankruptcy Court for
the District of Delaware approved the company's offer for 28
service center locations which were previously operated by trucking
company Yellow.
The deal includes sites in Brooklyn, N.Y.; Nashville, Tenn.;
Atlanta; Houston; and Las Vegas, XPO said.
Apple, Google Get Billions From Their App Stores. That's Now
Under Threat.
Monday's court ruling that Google has operated an illegal
app-store monopoly is the latest in a mounting series of threats to
the $500 billion-a-year app-store economy, which has evolved into a
profit machine for Apple and Google that helped define the
smartphone era.
A jury unanimously sided with Epic Games, saying that Google had
harmed the videogame maker by maintaining an illegal monopoly.
Google said it plans to appeal the verdict and stands by its
business model. In a separate case that concluded in 2021, a
federal judge largely ruled against Epic even as she ruled that
Apple must allow third-party software makers to steer customers to
payment options within their own apps. The outcome might ultimately
be decided by the Supreme Court.
Cash Is About to Be Dethroned. Bonds Are the Place to Be.
About the author: Ashish Shah is chief investment officer of
public investing at Goldman Sachs Asset Management.
House Set to Vote on Making Biden Impeachment Probe Official
WASHINGTON-The House is set to vote Wednesday on formally
opening an impeachment probe into President Biden, as Republicans
ratchet up their contentious investigation entering an election
year.
House Republicans, who aim to muscle through the resolution
along party lines, said opening a formal inquiry into the president
and his family members' overseas business dealings would help them
gain access to more information, even though they cautioned it
might not lead to Biden's impeachment.
Write to ina.kreutz@wsj.com
TODAY IN CANADA
Earnings:
Dollarama 3Q
VersaBank 4Q
Economic Calendar (ET):
Nothing scheduled
Stocks to Watch:
Becker Milk 6-Mos Loss/Shr C$0.30; 6-Mos Rev C$1.49M
---
Boardwalk REIT: Received Letter From Canada Revenue Agency
Saying It Will Issue Notices of Reassessment of Tax; Management Is
Assessing Implications of CRA Letter; Plan to File Objection With
CRA Appeals Division; Difficult to Estimate Time Needed to Resolve
Dispute, Appeal to Tax Court of Canada May Be Required
Expected Major Events for Wednesday
00:01/UK: Nov Scottish Retail Sales Monitor
07:00/UK: Oct Index of production
07:00/UK: Oct UK trade
07:00/UK: Oct Index of services
07:00/UK: Oct Monthly GDP estimates
09:00/ITA: 3Q Labour Cost Index
09:30/UK: 3Q Business Finance Review
11:00/FRA: Oct OECD Harmonised Unemployment Rates
12:00/US: 12/08 MBA Weekly Mortgage Applications Survey
12:30/UK: Nov NIESR Monthly GDP Tracker
13:30/US: Nov PPI
15:00/US: Nov Online Help Wanted Index
15:30/US: 12/08 EIA Weekly Petroleum Status Report
16:59/GER: Oct Balance of Payments
19:00/US: Federal Reserve economic projections
19:00/US: U.S. interest rate decision
23:50/JPN: Oct Orders Received for Machinery
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Wednesday
ABM Industries (ABM) is expected to report $0.68 for 4Q.
Adobe Inc (ADBE) is expected to report $3.08 for 4Q.
Amtech Systems Inc (ASYS) is expected to report $0.06 for
4Q.
BQE Water Inc (BQE.V) is expected to report for 3Q.
Caldwell Partners International Inc (CWL.T) is expected to
report for 4Q.
Celularity Inc (CELU) is expected to report for 3Q.
CleanSpark Inc (CLSK) is expected to report for 4Q.
Cognyte Software Ltd (CGNT) is expected to report for 3Q.
Dollarama (DLMAF,DOL.T) is expected to report $0.85 for 3Q.
Enzo Biochem (ENZ) is expected to report for 1Q.
J. W. Mays Inc (MAYS) is expected to report for 1Q.
MIND Technology Inc (MIND) is expected to report for 3Q.
Mueller Water Products Inc (MWA) is expected to report for
4Q.
National Beverage Corp (FIZZ) is expected to report $0.47 for
2Q.
Near Intelligence Inc (NIR) is expected to report for 3Q.
Nordson Corp (NDSN) is expected to report $2.39 for 4Q.
Ocean Biomedical Inc (OCEA) is expected to report for 3Q.
Ocean Power Technologies Inc (OPTT) is expected to report for
2Q.
Photronics Inc (PLAB) is expected to report $0.53 for 4Q.
QuantaSing Group Ltd - ADR (QSG) is expected to report for
1Q.
Quantum Corp (QMCO) is expected to report $-0.09 for 2Q.
RCI Hospitality Holdings Inc (RICK) is expected to report $1.02
for 4Q.
Rev Group Inc (REVG) is expected to report $0.30 for 4Q.
Scully Royalty Ltd (SRL) is expected to report for Interim.
Sonic Foundry Inc (SOFO) is expected to report $-0.39 for
4Q.
Sonnet BioTherapeutics Holdings Inc (SONN) is expected to report
for 4Q.
Streamline Health (STRM) is expected to report $-0.05 for
3Q.
U.S. Gold Corp (USAU) is expected to report for 2Q.
VersaBank (VBNK.T) is expected to report $0.42 for 4Q.
Wall Financial Corp (WFC.T) is expected to report for 3Q.
Yellow Corp (YELLQ) is expected to report for 3Q.
cbdMD Inc (YCBD) is expected to report for 4Q.
Powered by Kantar Media and Dow Jones.
ANALYST RATINGS ACTIONS
10x Genomics Raised to Neutral From Underperform by B of A
Securities
Agilent Cut to Neutral From Buy by B of A Securities
Airbnb Cut to Underweight From Equal-Weight by Barclays
Albemarle Raised to Neutral From Underperform by B of A
Securities
Amalgamated Financial Raised to Overweight From Neutral by JP
Morgan
AMC Networks Cut to Neutral From Buy by Seaport Global
Amgen Raised to Outperform From Sector Perform by RBC
Capital
AO Smith Raised to Buy From Neutral by Northcoast Research
Arthur J Gallagher & Co Cut to Market Perform From Strong
Buy by Raymond James
BlackRock Raised to Outperform From Neutral by Exane BNP
Paribas
BRP Group Raised to Strong Buy From Outperform by Raymond
James
CDW Cut to Equal-Weight From Overweight by Morgan Stanley
Comerica Cut to Neutral From Overweight by JP Morgan
Eagle Bulk Shipping Cut to Market Perform From Outperform by
Noble Capital Markets
Eagle Bulk Shipping Cut to Neutral From Buy by B. Riley
Securities
Eagle Bulk Shipping Shares Rise 10% After Buyout Offer From Star
Bulk Shipping
Eagle Materials Raised to Neutral From Underweight by JP
Morgan
EverQuote Raised to Outperform From Market Perform by Raymond
James
Expedia Group Cut to Equal-Weight From Overweight by
Barclays
Extra Space Storage Raised to Overweight From Underweight by
Wells Fargo
GoPro Cut to Underweight From Equal-Weight by Morgan Stanley
Grocery Outlet Cut to Sell From Buy by Goldman Sachs
Henry Schein Raised to Overweight From Neutral by JP Morgan
HP Raised to Overweight From Equal-Weight by Morgan Stanley
HubSpot Raised to Overweight From Neutral by Piper Sandler
Humana Raised to Buy From Hold by Argus Research
Illumina Cut to Underperform From Neutral by B of A
Securities
Itron Raised to Neutral From Underweight by JP Morgan
Macy's Cut to Sell From Neutral by Citigroup
Maravai LifeSciences Raised to Buy From Neutral by B of A
Securities
Martin Marietta Raised to Overweight From Neutral by JP
Morgan
Nike Raised to Buy From Hold by DZ Bank
Progressive Cut to Market Perform From Outperform by Raymond
James
Public Storage Cut to Equal-Weight From Overweight by Wells
Fargo
PVH Corp Raised to Buy From Neutral by Goldman Sachs
Quest Diagnostics Raised to Buy From Neutral by B of A
Securities
Ralph Lauren Raised to Neutral From Sell by Goldman Sachs
RingCentral Cut to Hold From Buy by Jefferies
Sempra Raised to Overweight From Neutral by JP Morgan
Sonos Raised to Overweight From Equal-Weight by Morgan
Stanley
Vulcan Materials Raised to Overweight From Neutral by JP
Morgan
X4 Pharmaceuticals Cut to Neutral From Buy by B. Riley
Securities
Zillow Group Raised to Market Outperform From Market Perform by
JMP Securities
Zscaler Raised to Outperform From Neutral by Macquarie
This article is a text version of a Wall Street Journal
newsletter published earlier today.
(END) Dow Jones Newswires
December 13, 2023 06:08 ET (11:08 GMT)
Copyright (c) 2023 Dow Jones & Company, Inc.
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