S&P Futures Climb Ahead of U.S. ADP Jobs Report and FOMC Meeting Minutes

A Labor Department report released on Tuesday showed that the U.S. JOLTs job openings unexpectedly rose to a 6-month high of 8.098M in November, stronger than expectations of 7.730M. Also, the U.S. ISM services PMI advanced to 54.1 in December, beating the 53.5 consensus. In addition, the U.S. November trade deficit widened to -$78.20B from -$73.60B in October (revised from -$73.80B), though it was smaller than the expected deficit of -$78.30B.

Richmond Fed President Thomas Barkin said on Tuesday that the central bank is “highly committed” to a 2% inflation target, and should price pressures persist, the Fed will need to adopt a tougher stance on interest rates. Also, Atlanta Fed President Raphael Bostic stated in a podcast recorded on December 9th and released Tuesday that policymakers should proceed carefully due to uneven progress in reducing inflation.

“The Fed will likely switch from cutting interest rates at every decision, as they did between September and December, to pausing in between rate cuts in 2025,” said Bill Adams at Comerica Bank.

U.S. rate futures have priced in a 95.2% probability of no rate change and a 4.8% chance of a 25 basis point rate cut at the conclusion of the Fed’s January meeting.

Meanwhile, the U.S. stock markets and the federal government will be closed on Thursday in observance of the National Day of Mourning for former President Jimmy Carter. Also, the bond market will close at 2 p.m. Eastern Time on Thursday, per the recommendation of the Securities Industry and Financial Markets Association. The closures follow a long-standing American tradition where financial institutions halt operations after the death of a president.

Today, market watchers will closely monitor the publication of the Federal Reserve’s minutes from the December 17-18 meeting. The report will provide additional insight into officials’ perspectives on the paths of the economy, interest rates, and inflation in the coming years.

On the economic data front, all eyes are focused on the U.S. ADP Nonfarm Employment Change data, which is set to be released in a couple of hours. Economists, on average, forecast that the December ADP Nonfarm Employment Change will stand at 139K, compared to the November figure of 146K.

Investors will also focus on U.S. Initial Jobless Claims data. Economists expect this figure to be 214K, compared to last week’s number of 211K.

U.S. Consumer Credit data will be reported today. Economists foresee this figure to stand at $10.30B in November, compared to the previous figure of $19.24B.

U.S. Crude Oil Inventories data will be released today as well. Economists estimate this figure to be -1.800M, compared to last week’s value of -1.178M.

In addition, market participants will be looking toward a speech from Fed Governor Christopher Waller.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.679%, down -0.13%.

The Euro Stoxx 50 futures are up +0.14% this morning, hovering near the highest level in three months, while investors continued to digest the economic outlook in the region. Financial services and healthcare stocks led the gains on Wednesday. At the same time, automobile stocks lost ground. Data from the Federal Statistical Office released Wednesday showed that Germany’s monthly retail sales and manufacturing orders unexpectedly slumped in November, signaling a further downturn in Europe’s largest economy. Separately, the European Commission said that Eurozone consumer confidence weakened in December. Meanwhile, Deutsche Bank AG strategists, including Maximilian Uleer, said they anticipate European shares will outperform U.S. equities in 2025 due to improving economic prospects and a low bar for corporate earnings. “Economic surprises continue to improve, political uncertainty is fading, a new German government likely offers more opportunities than risks, and potential Chinese stimulus announcements in the first quarter add upside risk,” the strategists said. In corporate news, Pluxee N.V. (PLX.FP) surged over +13% after reporting better-than-expected Q1 operating revenue growth. Also, Eqt Ab (EQT.S.DX) rose more than +2% after Deutsche Bank upgraded the stock to Buy from Hold. At the same time, Shell Plc (SHEL.LN) fell over -1% after the British energy giant lowered its Q4 LNG production outlook. 

Germany’s Retail Sales, Germany’s Factory Orders, Eurozone’s Consumer Confidence, and Eurozone’s PPI data were released today.

The German November Retail Sales came in at -0.6% m/m and +2.5% y/y, compared to expectations of +0.5% m/m and +1.9% y/y.

The German November Factory Orders stood at -5.4% m/m, weaker than expectations of 0.0% m/m.

Eurozone December Consumer Confidence arrived at -14.5, in line with expectations.

Eurozone November PPI has been reported at +1.6% m/m and -1.2% y/y, stronger than expectations of +1.5% m/m and -1.3% y/y.

Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.02%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.26%.

China’s Shanghai Composite Index closed just above the flatline today amid ongoing subdued sentiment. Appliance stocks led the gains on Wednesday after China expanded the range of its consumer goods trade-in program this year, aiming to rejuvenate demand in the sluggish household sector. The National Development and Reform Commission, China’s top economic planner, announced Wednesday that the government will expand its home appliance trade-in program in 2025, adding state subsidies for microwave ovens, water purifiers, dishwashers, and rice cookers. The government also raised the subsidy cap for air conditioners, allowing subsidies for up to three units. In addition, consumers who benefited from trade-in subsidies last year are eligible to receive them again this year. Still, investors continue to be cautious about China’s economic outlook. Goldman Sachs analysts noted that a mix of escalating U.S.-China tensions, uncertainty over tariffs linked to the incoming U.S. administration, and likely muted policy actions from Beijing before the March NPC indicate that Chinese equities are likely to face a volatile period until concrete policy actions are implemented.

Japan’s Nikkei 225 Stock Index ended lower today, tracking overnight losses on Wall Street after a series of strong U.S. economic data heightened worries that persistent inflation might slow the Fed’s pace of monetary easing. Technology stocks led the declines on Wednesday. At the same time, chip and automobile stocks outperformed. A government survey showed on Wednesday that the consumer confidence index in Japan unexpectedly fell in December. Meanwhile, former Bank of Japan governor Haruhiko Kuroda stated that the central bank will likely continue hiking interest rates in the years ahead as inflation seems poised to sustainably hit its 2% target. Despite the anticipated rate hikes, Japan’s economy is expected to grow by more than 1% this year and beyond, supported by rising real wages that bolster consumption, Kuroda said in a research paper submitted to the House of Representatives’ annual journal published on December 24th. In corporate news, Taiyo Holdings fell over -2% after denying media reports that it might merge with its biggest shareholder, DIC. Investors are awaiting Japan’s wage data due on Thursday, which will offer additional insights into the monetary policy outlook. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +11.56% to 24.31.

The Japanese December Household Confidence arrived at 36.2, weaker than expectations of 36.6.

Pre-Market U.S. Stock Movers

Sana Biotechnology (SANA) spiked about +217% in pre-market trading after announcing positive results from a study involving the transplantation of its allogeneic primary islet cell therapy UP421 into a type 1 diabetes patient without requiring immunosuppression.

Cal-Maine Foods (CALM) rose over +3% in pre-market trading after the company reported better-than-expected FQ2 results. 

Palo Alto Networks (PANW) fell about -1% in pre-market trading after Deutsche Bank downgraded the stock to Hold from Buy.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Wednesday – January 8th

Jefferies Financial (JEF), Albertsons (ACI), Acuity Brands (AYI), MSC Industrial Direct (MSM), Unifirst (UNF), PriceSmart (PSMT), Greenbrier (GBX), Helen of Troy Ltd (HELE), Penguin Solutions (PENG), Franklin Covey (FC), Radius Recycling (RDUS), AngioDynamics (ANGO), Saratoga Investment Corp (SAR), Richardson Electronics (RELL).