UKX FTSE 100 Index

MARKET WRAPS

Watch For:

Industrial Production and Capacity Utilization; Canada Housing Starts for November

Today's Headlines/Must Reads

- Beware the Most Crowded Trade on Wall Street: Next Year's Soft Landing

- Tesla's Autopilot System Sparked Lawsuits Before the Recall

- Don't Buy China's November Recovery

- The Road to China-Free Supply Chains Is Long. Warning: Legless Lizards Ahead

Opening Call:

Stock futures pushed higher on Friday, with the Dow industrials poised for a third-straight record-setting session, though options expiries and index rebalancing could make for a volatile session.

Renewed appetite for stocks in the waning days of 2023 has been fueled by this week's Federal Reserve meeting, where officials surprised investors by indicating rates have peaked and mapped out rate cuts for 2024.

SPI Asset Management said "a temperature check is bound to occur with so many folks thinking the market has gotten too far over its skis on the pace of rate cuts."

"That said, with $6 trillion of dry powder sitting in money market funds that might be champing at the bit to take the plunge into stocks, it should, at minimum, keep short sellers wary."

Investors may see a more volatile session on a "triple-witching" Friday, with options contracts tied to more than $5 trillion worth of stocks, exchange-traded funds and indexes set to expire.

Also, money managers will need to finalize changes to their holdings as quarterly rebalancing of the S&P 500 and Nasdaq-100 will kick in after the market close on Friday.

Overseas

Hong Kong stocks rose more than 2% after the PBOC pumped fresh money into the economy, allocating $112 billion in one-year loans to commercial lenders.

The move will ease worries about a potential cash shortage amid government debt issuance and follows relaxation in home-buying rules in major Chinese cities as the housing market sags.

"Market reactions suggest that while combining these policies relieved investors, there is a consensus that more decisive actions may be necessary. While there are early signs of potential improvement, caution is warranted," SPI said.

Stocks to Watch

Costco reported fiscal first-quarter earnings that beat analysts' estimates. Its shares were up 1.9%.

Fiscal fourth-quarter adjusted earnings at Lennar were better than expected but the company reported a gross margin on home sales of 24.2%, lower than the 24.6% expected by analysts. The stock declined 2.8%.

Sunrun was up 2.8% after Jefferies initiated coverage on shares of the residential solar panel company with a buy recommendation and price target of $25.

Revenue at Scholastic declined 4% in the company's fiscal second quarter ended Nov. 30, the important back-to-school period for the educational publisher. Scholastic also reduced its fiscal-year earnings guidance. The stock fell 12% in after-hours trading on Thursday.

Forex:

The DXY dollar index remained close to its lowest level in four months after the Federal Reserve's hint this week that rate cuts could be forthcoming, while they remained off the agenda for the European Central Bank and Bank of England.

"The fall of the dollar across the board following the [U.S.] FOMC meeting is continuing," UniCredit Research said.

"The BOE made it clear that it is too early to think about rate cuts, while [ECB Governor] Ms. Lagarde was explicit as well, saying...that the board did not discuss rate cuts at all."

Energy:

Oil futures ticked up and were on track for a weekly recovery boosted by a broadly softer dollar and hopes for stronger demand.

Prices regained ground after the Fed hinted at interest rate cuts next year--a sign of hope for economic growth and oil demand--and were on course to break a losing streak of seven weeks.

Metals:

Metals moved higher as a softer dollar helped provide support to commodities, although BMI said it expected prices to be capped somewhat by weak Chinese demand and limited economic growth globally.

"On the upside, the decline in U.S. dollar strength will support metal prices in 2024," BMI says in a note, expecting this trend to continue as rates de

Gold is likely to maintain its current rally in 2024, with a softening economy, falling interest rates and strong central bank demand likely to provide support, according to ANZ, as it upped its 12-month price target to $2,200 from $2,150.

It added that the next technical level is $2,060 an ounce and once breached, "we would then expect technical buying to emerge, pushing prices into unchartered territory above $2,100."

TODAY'S TOP HEADLINES

Pfizer Helped Save the World With Covid Vaccines. Now It Needs to Right Itself.

Thousands of Pfizer employees from around the world were watching through their computer screens in October when Chief Executive Albert Bourla and other executives at the giant drugmaker stepped onto a stage for a company town hall.

Pfizer had announced several days earlier it was embarking on a $3.5 billion cost-cutting effort, including layoffs. Bourla and the other executives explained the company was positioning for growth.

Blackstone, Canada Pension Plan in $1.2 Billion Joint Venture With FDIC

Two units of Blackstone Real Estate Debt Strategies, Blackstone Real Estate Income Trust, Canada Pension Plan Investment Board and funds affiliated with Rialto Capital on Thursday entered a newly formed joint venture with the Federal Deposit Insurance Corp.

The groups paid $1.2 billion for a 20% equity interest in the JV, the FDIC said.

RTX Names Christopher Calio as Next CEO

RTX named Christopher Calio as its next chief executive, picking an insider to steer one of the world's largest aerospace and defense companies as it manages a costly recall of jet engines and surging demand from both military and commercial customers.

Calio, 50, named chief operating officer in March, takes over on May 2, the company said Thursday. He succeeds Greg Hayes, 63, who will remain as executive chairman.

Convenience Stores Would Rather Sell You Pizza Instead of Gas

Most people still think of convenience stores as just a pit stop for gas, a quick snack and a bathroom break.

Not so at Casey's General Stores, a Midwest chain that also happens to be America's fifth-largest pizza purveyor by number of kitchens. About three-fourths of transactions inside its stores don't involve a fuel purchase. Meanwhile Wawa, an East Coast-based chain, has a cultlike following for its sandwiches.

China's Economy Shows Signs of Losing Further Momentum

HONG KONG-China's economic recovery showed signs of losing further momentum as investment and consumer spending expanded slower than expected last month, fueling calls for policy makers to do more to support growth.

Meanwhile, a prolonged property downturn showed no signs of abating, as new home prices in key cities fell at a faster clip in November.

China's Central Bank Keeps Key Policy Rates Unchanged

China's central bank kept its key policy rates unchanged Friday, while injecting a record amount of liquidity into the market via one-year policy loans as Beijing seeks to revive an economy mired in a protracted housing slump and tepid demand.

The People's Bank of China injected 1.45 trillion yuan ($203.97 billion) worth of funds via the one-year medium-term lending facility, keeping the interest rate at 2.5%-the same as with the previous operation. There were CNY650 billion worth of medium-term loans due Friday, according to Wind, a local data provider.

Fight Over Ukraine Aid Drags On After Door to EU Membership Cracks Open

BRUSSELS-European Union leaders pledged to continue providing Ukraine financial aid despite failing to agree on a proposed $54 billion funding package after deciding to begin membership negotiations with the war-torn country.

The bloc's 27 leaders debated until early Friday how they might overcome objections from Hungarian Prime Minister Viktor Orban and nail down a four-year budget assistance plan for Ukraine, designed to help keep its government operating while it fights Russia's invasion.

Write to paul.larkins@dowjones.com TODAY IN CANADA

Earnings:

None scheduled

Economic Calendar [ET]:

0815 Nov Housing Starts

0830 Oct Wholesale Trade

0830 Oct International Transactions in Securities

0845 Canadian Deputy Prime Minister Chrystia Freeland hosts federal, provincial, and territorial Finance Ministers Meeting

1240 Bank of Canada Governor Tiff Macklem speech at Canadian Club Toronto event

Stocks to Watch:

Pineapple Financial Projects Profitability in Fiscal 2024; Actively Exploring the Initiation of a Stk Buy-Back Program in the Next Six to Twelve Mos

Wall Financial 3Q EPS C$0.30; Rev C$45.7M

Expected Major Events for Friday

00:01/UK: Dec UK Consumer Confidence Survey

00:30/JPN: Dec Japan Flash Manufacturing PMI

04:30/JPN: Oct Tertiary Industry Index

04:30/JPN: Oct Revised Retail Sales

07:45/FRA: Nov CPI

08:15/FRA: Dec France Flash PMI

08:30/GER: Dec Germany Flash PMI

09:00/ITA: Nov CPI

09:30/UK: Dec Flash UK PMI

09:30/UK: 3Q Bank of England statistics on UK banks' external claims

10:00/ITA: Oct Foreign Trade EU

13:15/CAN: Nov Housing Starts

13:30/US: Dec Empire State Manufacturing Survey

13:30/CAN: Oct Wholesale trade

13:30/CAN: Oct International transactions in securities

14:15/US: Nov Industrial Production & Capacity Utilization

14:45/US: Dec US Flash Manufacturing PMI

14:45/US: Dec US Flash Services PMI

16:00/US: ISM Semiannual Report On Business Economic Forecast

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

Expected Earnings for Friday

Amrep Corp (AXR) is expected to report for 2Q.

Centene Corp (CNC) is expected to report for Full year.

Clearday Inc (CLRD) is expected to report for 3Q.

Darden Restaurants (DRI) is expected to report $1.72 for 2Q.

Forward Industries (FORD) is expected to report for 4Q.

Franklin Resources Inc (BEN) is expected to report.

Gencor Industries (GENC) is expected to report for 4Q.

Neptune Wellness Solutions Inc (NEPT-T) is expected to report for 2Q.

Newcore Gold Ltd (NCAU.V) is expected to report for 3Q.

Orvana Minerals (ORV.T,ORVMF) is expected to report for 4Q.

Progressive Corp (PGR) is expected to report.

Value Line (VALU) is expected to report for 2Q.

Vyant Bio Inc (VYNT) is expected to report for 3Q.

Powered by Kantar Media and Dow Jones.

ANALYST RATINGS ACTIONS

ACADIA Pharmaceuticals Cut to Hold From Buy by Deutsche Bank

Alector Raised to Buy From Hold by Stifel

Amtech Systems Cut to Hold From Buy by Benchmark

Antero Resources Raised to Overweight From Equal-Weight by Wells Fargo

Apellis Pharmaceuticals Cut to Equal-Weight From Overweight by Wells Fargo

Bank of America Raised to Buy From Hold by Odeon Capital

Beacon Roofing Supply Raised to Overweight From Neutral by JP Morgan

Cepton Cut to Hold From Buy by Craig-Hallum

Cepton Cut to Hold From Buy by WestPark Capital

Chesapeake Energy Cut to Neutral From Buy by UBS

Choice Hotels Intl Raised to Neutral From Underweight by JP Morgan

Cognizant Tech Solutions Raised to Equal-Weight From Underweight by Barclays

Correction to Kontoor Brands Ratings

Coterra Energy Raised to Buy From Neutral by UBS

Coterra Energy Raised to Overweight From Equal-Weight by Wells Fargo

Deckers Outdoor Cut to Hold From Buy by Stifel

EOG Resources Cut to Equal-Weight From Overweight by Wells Fargo

Equitrans Midstream Cut to Underweight From Equal-Weight by Wells Fargo

Excelerate Energy Cut to Equal-Weight From Overweight by Wells Fargo

FMC Corporation Cut to Market Perform From Outperform by BMO Capital

Foot Locker Raised to Overweight From Neutral by Piper Sandler

Fulton Fincl Cut to Equal-Weight From Overweight by Stephens & Co.

Gaming & Leisure Props Cut to Neutral From Overweight by JP Morgan

Green Dot Cut to Underweight From Equal-Weight by Barclays

Host Hotels & Resorts Raised to Neutral From Underweight by JP Morgan

Installed Building Raised to Overweight From Neutral by JP Morgan

Live Nation Raised to Overweight From Equal-Weight by Morgan Stanley

Marathon Oil Cut to Neutral From Buy by UBS

Marathon Petroleum Raised to Overweight From Equal-Weight by Wells Fargo

Northrop Grumman Cut to Underperform From Peer Perform by Wolfe Research

Park Hotels & Resorts Raised to Neutral From Underweight by JP Morgan

Paychex Raised to Equal-Weight From Underweight by Barclays

PNC Financial Raised to Buy From Hold by Odeon Capital

Range Resources Cut to Equal-Weight From Overweight by Wells Fargo

Ryman Hospitality Raised to Neutral From Underweight by JP Morgan

SeaWorld Entertainment Cut to Equal-Weight From Overweight by Morgan Stanley

Six Flags Raised to Overweight From Equal-Weight by Morgan Stanley

Stanley Black & Decker Cut to Underweight From Neutral by JP Morgan

Sunstone Hotel Investors Raised to Neutral From Underweight by JP Morgan

TopBuild Raised to Overweight From Neutral by JP Morgan

Trex Co Raised to Neutral From Underweight by JP Morgan

TripAdvisor Raised to Buy From Neutral by BTIG

Truist Financial Raised to Buy From Hold by Odeon Capital

US Bancorp Raised to Buy From Hold by Odeon Capital

Wells Fargo Raised to Buy From Hold by Odeon Capital

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

(END) Dow Jones Newswires

December 15, 2023 06:14 ET (11:14 GMT)

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