Watch For:

Weekly Jobless Claims; Toronto-Dominion Bank 4Q earnings

Opening Call:

Stock futures pointed to a stronger start Thursday, in what's becoming an increasingly volatile market due to uncertainty over the spread of coronavirus and the direction of interest rates.

Commentary from scientists and pharmaceutical executives has helped drive market sentiment, as investors await more concrete data on vaccine efficacy against the Omicron variant. On Thursday, investors were focused on comments from the World Health Organization's chief scientist suggesting vaccines were likely to still offer some protection.

"It seems that investors' main concern remains the uncertainty surrounding omicron and the implications any new restrictions could have to the global economy," said Charalambos Pissouros, head of research at JFD Group.

Market sentiment soured Wednesday after the confirmation of the first U.S. omicron variant case, which sent the S&P 500 below its 50-day moving average for the first time since Oct. 13.

It also came as Jerome Powell, for a second day, brought up the prospect of a quicker taper, which in turn sets the stage for more, and faster, interest-rate hikes.

"It is not about covid; it is about the Fed and what they plan to do. This selling will grow much worse; this will become about how much pain the Fed can endure," said Michael Kramer, chief executive of Mott Capital Management.

Four Fed officials are due to speak Thursday, as the latest jobless claims report gets released. The OPEC+ grouping also will be debating production policy in response to the virus.

Earnings season is ongoing, with food-retailer Kroger and Dollar General scheduled to report Thursday before the opening bell. Cosmetics company Ulta Beauty and gunmaker Smith & Wesson Brands are expected to post earnings after markets close.

Overseas, the pan-continental Stoxx Europe 600 fell 1%.

"It does seem like European countries are a bit more reactive to Covid news. We expect European stocks to be more sensitive to what's going on with Omicron, or Covid broadly," said Salman Baig, a multiasset investment manager at Unigestion. "Right now we have a significant preference for U.S. equities over European."

Stocks to Watch:

Hopes that Apple will see a rebound in demand for its products after the holiday season were dimmed following a report that the company has warned suppliers of softness stretching into 2022. According to a Bloomberg article published early Thursday, the company has informed vendors that a production pick up in the new year may not happen.

However, Equita Sim said Apple "is still on track for a record holiday season, with consensus projecting a sales increase of 6% to $117.9 billion in the final three months of the calendar year, although it won't be the blockbuster quarter that Apple had originally envisioned."

Equita Sim also said Apple should be able to report an increase in sales in its fiscal first quarter despite news that iPhone demand is slowing.


AT&T isn't making changes to how it operates due to the Omicron variant, said CFO Pascal Desroches. "This is the latest of what will be a continuation of many different variants," Desroches said earlier this week, adding that he considers new lockdowns unlikely. AT&T's international roaming business could be negatively impacted by the variant, while its streaming services could benefit, he said. AT&T has been pursuing a hybrid approach in recent quarters, with a proportion of its employees continuing to work from home.


Blackstone, which has sought to reduce carbon emissions at portfolio companies and said in November that Jean Rogers would join as ESG head in January, announced a deal in line with its environmental goals. The firm's Tactical Opportunities unit said it bought Sustana Group, a maker of recycled fiber, paper and packaging products, from H.I.G. Capital. Sustana's projects have included working with Starbucks to recycle coffee cups.


Costco comparable sales, those from stores or digital channels operating for at least 12 months, rose 9.2% in the four weeks ended Nov. 28 compared to last year, excluding the impact of gas sales and currency fluctuation. Ecommerce sales rose 11.7% during that time compared to the same period last year.

The warehouse retailer has reported a string of strong sales this year on top of high sales growth last year, when pandemic buying behavior sent shoppers to Costco for bulk goods, electronics and furniture.


Fannie Mae named Chryssa Halley as CFO. Halley, whose appointment took effect Nov. 29, most recently served as controller of the government-sponsored firm, which guarantees mortgage loans. She joined Fannie Mae in 2006. In her new role, Halley succeeds Celeste Brown, who resigned in May to become finance chief at Evercore.


It is too early to tell whether the Omicron variant will impact Hewlett Packard Enterprise's guidance, CFO Tarek Robbiati said. "We will have to figure this one out and see if it impacts us." While he doesn't expect new lockdowns, the company's existing regulations, which include a vaccine requirement for U.S. employees, will remain in place. "The world will have to learn to live with the virus," Robbiati said.


Cancer victims who blame Johnson & Johnson's talc-based baby powder for their disease asked for the dismissal of chapter 11 proceedings the company filed, in an effort to drive a settlement. A committee of injury claimants said J&J's decision to place talc-related liabilities into bankruptcy was meant only to shield assets and avoid jury trials, which isn't what chapter 11 is for.

J&J has said the bankruptcy by its LTL Management subsidiary was designed to facilitate a fair settlement and avoid wasteful spending on nearly 40,000 talc-related injury lawsuits filed around the country. Talc claimants disagree, saying J&J is exploiting legal protections meant for "honest but unfortunate" businesses.

"The world is watching this case," they said in Wednesday's filing in the U.S. Bankruptcy Court in Trenton, N.J. J&J maintains its talc products are safe and don't cause cancer. A hearing on the dismissal request is set for mid-February.


Walmart is bringing back a $150 Covid-19 vaccine incentive payment to encourage its 1.6 million U.S. workers to get the shot, citing rising concern about variants. It's also extending its paid-leave policy through March 31.

The policy provides up to two weeks of paid time off to workers who test positive for Covid-19 if a facility is part of a mandated quarantine or if a worker is required to quarantine. Walmart said more than 90% of corporate staff are fully vaccinated.


Shares of WeWork dropped over 5% in off-hours trading. The office-sharing company said in a securities filing that it would restate several quarters of its results, including its latest one, and that management had concluded there was a material weakness in its internal controls.


The dollar inched higher in Europe as concerns about omicron continued to dominate markets, leaving limited effect for now from the prospect of faster monetary tightening by the Federal Reserve.

However, the dollar should strengthen by the beginning of next year as monetary policy takes center stage, said MUFG. "We expect the Fed to continue to tighten policy. It leaves room for rates and the dollar to rise further at the start of next year," said currency analyst Lee Hardman.

Comments this week from Jerome Powell "provided strong guidance" that the pace of asset-purchase tapering would be speeded up, potentially allowing interest rates to rise sooner, Hardman added.

The "hawkish" tilt from the Fed earlier this week has moved its statements in line with market expectations and it now looks likely the taper will be completed by March, said Charles Diebel, head of fixed income at Mediolanum International Funds.

"This will allow rates to start moving higher from June onwards with market pricing now for two to three hikes in 2022, Diebel said. "Obviously set against recent virus concerns, volatility will remain elevated but unless there is a major growth side effect, we would expect the FOMC to lift off next year and potentially at a faster pace than currently discounted by the market."

The Turkish lira depreciated 1.1% against the dollar, after President Recep Tayyip Erdogan named a loyalist as the new finance minister. The lira has lost around 45% of its value this year on concerns about Turkey's economic policy.

Bitcoin extended losses into a third consecutive day. It traded at around $56,650, down 0.7% from its level at 5 p.m. Wednesday, and around 18% lower than its last record high.


The yield on the benchmark 10-year Treasury note edged up in Europe. The yield curve has flattened this week, with shorter-dated bond yields rising and longer-dated ones ticking down.

Markets are still reacting to Jerome Powell's comments earlier in the week, said Georgina Taylor, a multiasset fund manager at Invesco. She said the central bank was prepared to accelerate the pullback of stimulus, as the risk of higher inflation has increased.

How do we balance this potential growth impact from Omicron, with more signals of policy tightening from the Fed, Ms. Taylor asked. "Markets are all over the place."

The problem for the bond market posed by the omicron variant "is to know not only how big this threat is, but whether it is deflationary or inflationary," said Steve Barrow, head of G-10 strategy at Standard Bank.

Policy makers in the U.S. and the U.K. "seem to be skewing the risks towards higher inflation and we think this is correct," he said. "So, while there's no doubt that bonds will rally and yields fall if risk aversion takes an even firmer grip, bond bulls have to remember that the cost of omicron could be higher inflation--and higher yields--over the longer term."


Oil held gains of more than 1% in Europe as investors awaited signals from OPEC on what policy it will take into its ministerial summit with non-cartel allies.

Previous OPEC+ policy had been to raise production by 400,000 barrels a day in January. Now, with Omicron and recent U.S. Strategic Petroleum Reserve releases, analysts expect no action this month. "The combination of both these forces will be enough to push OPEC+ to pause its monthly output hikes for one month," said MUFG's Ehsan Khoman.

Gold prices weakened around 0.7%, with Jerome Powell's comments on tapering prompting investors to exit gold exchange traded funds.

Gold ETFs tracked by FactSet registered net outflows just shy of $170 million on Wednesday. The outflows came in the wake of Powell's comments that the tapering of stimulus measures could happen faster, opening the door to earlier rate hikes.




WeWork to Restate Results Due to Classification Error With Its SPAC Acquirer

WeWork Inc. said in a securities filing that it would restate several quarters of its results, including its latest one, and that management has concluded there was a material weakness in its internal control.

The office-sharing company, which went public in October through a combination with BowX Acquisition Corp., a special-purpose acquisition company, said Wednesday that the reinstatement relates to accounting classification of common shares issued as part of BowX's initial public offering.


FAA Chief Steve Dickson Takes On Fight Over 5G and Aviation Safety

In the battle over new 5G wireless service and aviation safety, a decision that could disrupt U.S. air travel will come down to a regulator known for methodical reviews and a cautious streak.

Over more than two years as the nation's top aviation regulator, Steve Dickson's approach to safety at the Federal Aviation Administration has created obstacles for companies including Boeing Co., as well as Pentagon officials.


Macau Casinos Shut High-Roller Rooms Tied to Arrested Operator

HONG KONG-Macau's casinos have shut down the VIP rooms of the city's largest junket operator, and its leader, Alvin Chau, has resigned following his arrest on illegal gambling and money-laundering allegations.

Casino operators informed Macau's Gaming Inspection and Coordination Bureau that they have ended their relationship with the junket operator known as Suncity, and suspended its rooms for high rollers starting on Dec. 1, the regulator said in a statement late Wednesday.


Disney Elects Susan Arnold as Board Chairman, Replacing Robert Iger

Walt Disney Co.'s board of directors has elected Susan Arnold its new chairman, replacing Robert Iger, the longtime chief executive who is set to depart from the company later this month.

Ms. Arnold, whose career in business has included positions at the Carlyle Group Inc. and Procter & Gamble Co., has been a Disney board member since 2007 and is to become chairman on Dec. 31. She most recently served as its lead independent director.


GlaxoSmithKline Says Sotrovimab Antibody Retains Activity Against Omicron

GlaxoSmithKline PLC said Thursday that preclinical data shows its Sotrovimab antibody retains its effectiveness against key mutations found in the Omicron coronavirus variant.

The British pharmaceutical major said that the data was created through pseudo-virus testing of specific individual mutations found in the variant, and to date Sotrovimab has demonstrated persistent activity against all tested variants of concern and interest defined by the World Health Organization.


Novartis Says Top Drugs Should Fuel Sales Growth Through 2026

Novartis AG said Thursday ahead of its research-and-development day starting later today that it expects sales to keep growing in the mid-term mainly thanks to its main in-market growth drivers, while several new assets could be approved by 2026.

The Swiss pharma giant said that sales should continue to rise at a compound annual growth rate of at least 4% through 2026, driven by multi-billion dollar sales from its medicines Cosentyx, Entresto, Kesimpta, Zolgensma, Kisqali and Leqvio.


Low Initial Jobless Claims Reflect Tight Labor Market

The number of people filing new claims for unemployment benefits is expected to have remained near pandemic lows last week as employers continued to hold on to their workers in a tight labor market.

Initial jobless claims, a proxy for layoffs, are expected to total a seasonally adjusted 240,000 for the week that ended on Nov. 26, according to economists surveyed by The Wall Street Journal, following the prior week's report showing the lowest number of new claims in 52 years.


Bond Investors Bet on Low Peak Interest Rates

U.S. government-bond yields have climbed a lot this year. Some analysts are concerned that they haven't risen even further.

The reason is that the world has moved closer with each passing month to the day when investors think that the Federal Reserve will raise its benchmark federal-funds rate above its current level near zero.


Derby's Take: Fed Taper Not Taking Wind Out of Treasury Market's Sails

The performance of the Treasury bond market over recent weeks is again suggesting that the idea of a clear link between the central bank's asset buying and the movement of yields remains tenuous.

In the time the Fed has employed bond purchases to bolster the economy, an unorthodox strategy during the financial crisis and its aftermath now elevated to a normal part of the monetary-policy toolkit, economists have struggled to measure what the central bank gets for its buying.


Turkey's Erdogan Names Loyalist as Finance Minister Amid Lira Rout

ISTANBUL-Turkey's President Recep Tayyip Erdogan named a loyalist as the country's new finance minister Thursday, after the incumbent resigned over clashes with the longtime leader's unconventional economic policies that have intensified a currency crisis shaking the country.

Nureddin Nebati, a former deputy finance minister, replaces Lütfi Elvan at the top of the finance ministry.


Biden to Toughen Testing for International Travelers to Slow Omicron

WASHINGTON-President Biden plans to tighten up Covid-19 testing timelines for travelers entering the U.S. and extend a mask mandate on airplanes and other public transportation as part of a broad administration effort to combat the Omicron variant.

International travelers coming to the U.S. will have to test within a day of departure, regardless of vaccination status, rather than the 72 hours currently required for vaccinated travelers, under new protocols early next week, senior administration officials said. The new testing rules will apply both to U.S. citizens and foreign nationals entering the country.


U.S. and South Korea to Update Wartime Plans for North Korea

SEOUL-The U.S. and South Korea said they would update their joint wartime contingency plans for North Korea, as the Kim Jong Un regime has kept pursuing military advances amid a stall in nuclear talks.

During a visit to Seoul, Defense Secretary Lloyd Austin, alongside his South Korean counterpart, approved an update to the strategic guidance used for wartime operation plans, a document that hadn't been updated since 2010. The precise nature of the review, or what might change, wasn't immediately disclosed.


California Prepares for More Water Restrictions as Drought Worsens

Californians may face new restrictions, including fines for improperly washing their cars, as the state prepares to virtually eliminate the water it supplies to local communities as it grapples with an unrelenting drought.

The state's Department of Water Resources said Wednesday that for the first time it is preparing to allocate 0% of the water it is contracted to give next year to local districts, which handle what goes into the taps of homes, businesses and farms. That means that unless drought conditions ease, no supplies will be shipped except for critical health and safety needs, such as drinking water and sanitation.


Illinois Abortion Clinics Are Preparing for a Potential Post-Roe World

As the Supreme Court weighs a case that could chip away at federal abortion protections under Roe v. Wade, providers in Illinois are preparing for a potential surge of patients.

The case before the high court, Dobbs v. Jackson Women's Health Organization, centers on abortion restrictions enacted hundreds of miles away in Mississippi. But in its brief, Mississippi took direct aim at the 1973 Roe decision, arguing the ruling tramples states' rights. The justices heard oral arguments Wednesday, and several conservative justices signaled they might be receptive to the state's arguments. A decision is expected no later than next summer.




Canadian Imperial Bank 4Q

Major Drilling 2Q

Toronto-Dominion Bank 4Q

Economic Indicators:

None scheduled

Stocks to Watch:

PHX Energy Services: Board of Directors Approves a C$10M Increase to 2022 Cap Expenditure Program; Anticipates Spending C$40M in Cap Expenditures During 2022-Yr


Expected Major Events for Thursday

05:00/JPN: Nov Consumer Confidence Survey

09:00/ITA: Oct Unemployment

11:00/FRA: Oct OECD CPI

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

13:00/RUS: Weekly International Reserves

13:30/US: 11/27 Unemployment Insurance Weekly Claims Report - Initial Claims

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

14:45/US: Consumer Comfort Index

15:00/US: Oct Metropolitan Area Employment & Unemployment

15:30/US: 11/26 EIA Weekly Natural Gas Storage Report

17:00/US: Nov Monthly U.S. Retail Chain Store Sales Index

21:30/US: Foreign Central Bank Holdings

21:30/US: Federal Discount Window Borrowings

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


Expected Earnings for Thursday

Asana Inc (ASAN) is expected to report for 3Q.

Bit Digital Inc (BTBT) is expected to report for 3Q.

Buckle Inc (BKE) is expected to report.

Canadian Imperial Bank of Commerce (CM,CM.T) is expected to report $3.45 for 4Q.

CleanSpark Inc (CLSK) is expected to report for 4Q.

Cooper Companies Inc (COO) is expected to report $2.80 for 4Q.

Cronos Group Inc (CRON,CRON.T) is expected to report $-0.10 for 3Q.

DocuSign Inc (DOCU) is expected to report $-0.08 for 3Q.

Dollar General (DG) is expected to report $2.03 for 3Q.

Domo Inc (DOMO) is expected to report $-0.74 for 3Q.

Duluth Holdings Inc (DLTH) is expected to report $-0.03 for 3Q.

Eargo Inc (EAR) is expected to report for 3Q.

Express Inc (EXPR) is expected to report for 3Q.

FP Newspapers (FP.V) is expected to report for 3Q.

GMS Inc (GMS) is expected to report $1.35 for 2Q.

Guidewire Software Inc (GWRE) is expected to report $-0.59 for 1Q.

Helix BioPharma (HBP.T,HBPCF) is expected to report $-0.02 for 4Q.

Jewett-Cameron (JCT-T,JCTCF) is expected to report for 4Q.

Kirkland's Inc (KIRK) is expected to report $0.57 for 3Q.

Kroger Co (KR) is expected to report $0.72 for 3Q.

Lands' End Inc (LE) is expected to report for 3Q.

Major Drilling Group International Inc (MDI.T,MJDLF) is expected to report $0.15 for 2Q.

Methode Electronics (MEI) is expected to report $0.69 for 2Q.

Newmont Corp (NEM) is expected to report.

Ollie's Bargain Outlet Holdings Inc (OLLI) is expected to report $0.47 for 3Q.

Ooma Inc (OOMA) is expected to report $-0.06 for 3Q.

SandRidge Mississippian Trust I (SDTTU) is expected to report for 3Q.

SecureWorks Corp (SCWX) is expected to report $-0.19 for 3Q.

Smartsheet Inc (SMAR) is expected to report $-0.34 for 3Q.

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

TOR Minerals International Inc (TORM) is expected to report for 3Q.

Tilly's (TLYS) is expected to report $0.33 for 3Q.

Toronto-Dominion Bank (TD,TD.T) is expected to report $1.92 for 4Q.

Ulta Beauty Inc (ULTA) is expected to report $2.55 for 3Q.

Verint (VRNT) is expected to report $0.10 for 3Q.

Veru Inc (VERU) is expected to report $-0.08 for 4Q.

Village Super Market (VLGEA) is expected to report for 1Q.

Webco Industries Inc (WEBC) is expected to report for 1Q.

Yext Inc (YEXT) is expected to report $-0.23 for 3Q.

Zumiez (ZUMZ) is expected to report $1.00 for 3Q.

Powered by Kantar Media and Dow Jones.



American Water Works Cut to Underweight From Equal-Weight by Wells Fargo

Ardelyx Raised to Buy From Neutral by Ladenburg Thalmann

BeyondSpring Cut to Neutral From Buy by HC Wainwright & Co.

Brixmor Property Group Raised to Market Perform From Underperform by BMO Capital

Capital One Raised to Neutral From Underperform by Baird

DoorDash Raised to Buy From Hold by Gordon Haskett

DR Horton Cut to Neutral From Buy by Goldman Sachs

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

Federal Realty Raised to Outperform From Market Perform by BMO Capital

Immunogen Raised to Buy From Hold by Jefferies

Krispy Kreme Cut to Sell From Neutral by Goldman Sachs

Lennar Raised to Buy From Neutral by Goldman Sachs

Regency Centers Raised to Outperform From Market Perform by BMO Capital

United Fire Group Raised to Overweight From Neutral by Piper Sandler

Wolfspeed Cut to Sell From Neutral by Arete Research

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


(END) Dow Jones Newswires

December 02, 2021 05:56 ET (10:56 GMT)

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