The number of Americans filing new claims for unemployment benefits increased last week, by 2000 to a seasonally adjusted 205,000. However, this is lower than the 215,000 expected in the consensus.

The economy added 199,000 jobs in November, below the monthly average of 240,000 over the past year, but higher than the 150,000 positions created in October.

Gross domestic product increased at a 4.9% annualized rate last quarter, down from the previously reported 5.2% pace, the Commerce Department's Bureau of Economic Analysis said. This is fueling hopes of rates cuts next year and sent US futures on the Nasdaq 100 up 1.0%, while futures on the Dow Jones gained 0.5% and on the S&P500 rose 0.7%.

Yesterday’s session was rather odd. Everything was going pretty well until 2pm ET. Then, all hell broke loose. Two hours later, the S&P500, Dow Jones and Nasdaq 100 posted their worst session in two months, down by around 1.5% (slightly less for the Dow). Yet no central banker threw a spanner in the works. No dreadful announcements disturbed the year-end calm. No storm hit the bond market, where yields remained virtually unchanged. Yes, there was some profit taking, but the majority of investors blame yesterday's fall on 0DTE options.

We had already discussed the arrival of these options on the US market at the beginning of the year. So-called "zero day to expiry" (0DTE) options are contracts which expire in less than 24 hours, offering retail and institutional investors a relatively cheap but highly risky way of betting on intraday fluctuations in stock prices. There are index options, EFT options and equity options. Generally speaking, the pros use them as hedges, but those wishing to speculate can use them as highly leveraged products for short movements. Hence their reputation for sometimes being lottery tickets, with the potential to create brutal and artificial movements on the markets. Yesterday, financial intermediaries noted that 0DTE volumes were quite high as they approached an important area on the S&P500, while the market as a whole was quite shallow, since the holidays are approaching, and the final clearing session of the year already took place last Friday. As a result, the most talked-about hypothesis this morning is that the December 20 session was an isolated blip fueled by a large volume of 0DTE option writing, in an illiquid market. But it's also an opportunity to remind all those who are intoxicated by stock market rises that markets sometimes go down. 

On the corporate front, the attraction of the day is Nike, with the results for the second quarter of its exotic financial year, as it closes at the end of May. Last night, Micron delighted semiconductor fans with a well-received earnings report.

Overnight, European equity markets were little changed overall, moving either modestly higher (CAC40, AEX, OMX Sweden) or slightly lower (DAX, SMI, MIB, IBEX). Two other European indices stood out, this time on the rise. The UK's FTSE 100 gained 1%. The market welcomed November's further slowdown in inflation, which exceeded economists' expectations. The announcement boosted the real estate and consumer cyclical sectors. Finally, the OMX Copenhagen dominated the continent, gaining 1.4%, aided by the 3%-plus rises of heavyweights Orsted and AP Moller Maersk. The former because it reassured investors by confirming the development of a huge wind farm in the North Sea, the latter because the unrest in the Red Sea suggests that margins will increase for ocean carriers (longer routes mean that the world fleet will be more stretched). Last but not least, gains of nearly 2% by Novo Nordisk completed the Danish index's rise.

Fortunes were mixed in Asia Pacific. The Nikkei 225 ended two sessions of rebound by shedding 1.6%, weighed down by Toyota Motor's 4% decline. The automaker recalled 1 million vehicles in the United States and revealed that the offices of its subsidiary Daihatsu had been raided as part of an investigation into safety test manipulations. South Korea and Australia declined by 0.5%. India and Hong Kong are hovering around equilibrium even though the session is not yet over. In mainland China, the CSI300 recovered 0.9% thanks to hopes of an upturn in the property market, based on fragile data. Shanghai didn't really react to the negative rumors that the United States is planning to lift new customs duties on certain Chinese products, notably electric vehicles. This was revealed by the Wall Street Journal, which reported that the Biden administration is considering these surtaxes for early next year.  Today, most indices are in the red, except Wall Street’s.

Today's economic highlights:

The latest estimate of US Q3 GDP, new jobless claims and the Philadelphia Fed's business outlook, along with the leading indicators index are on the agenda.

The dollar is down 0.4% against both the dollar and the euro to EUR 0.9097 and GBP 0.7885. The ounce of gold is stabilizing at USD 2041. Oil is holding up well, with North Sea Brent at USD 78.43 a barrel and US light crude WTI at USD 73,08. The yield on 10-year US debt stands at 3.86%. Bitcoin is trading at USD 44,000.

In corporate news:

  • Micron Technology jumps 6% in pre-market trading, as the memory chip maker anticipates better-than-expected sales for the current quarter. In its wake, semiconductor group NVIDIA gained 1.3%, AMD 0.9%, QUALCOMM 1.1% and INTEL 0.9%.
  • Boeing is preparing to resume deliveries of its 787 Dreamliner aircraft to China, a source close to the matter told Reuters. Boeing shares gained 1.7% in premarket trading.
  • Tesla is the target of an investigation by the Norwegian Public Roads Administration (NPRA) into the suspension of its electric cars, which could be subject to a recall, the road safety authority told Reuters. In addition, according to reports, the US is set to raise tariffs on Chinese electric vehicles. In pre-market trading, Tesla shares rose by 1.6%, NIKOLA by 4.3% and LUCID by 3.5%.
  • Warner Bros Discovery, Paramount Global - The heads of the two groups, David Zaslav and Bob Bakish respectively, have met to discuss a possible merger, a source told Reuters on Wednesday evening, confirming information first reported by Axios. Warner Bros. shares advanced 2.3% in premarket trading on Thursday, having lost 5.7% the previous day after Axios' publication.
  • Merck - The U.S. Food and Drug Administration (FDA) refused to approve gefapixant, a chronic cough medication developed by the pharmaceutical company, due to a lack of substantial evidence of efficacy. This is the second refusal for this type of treatment in less than two years.
  • Carmax - The automotive distributor posted higher third-quarter earnings on Thursday, as cost-cutting offset lower demand. The stock gained 1.8% before the opening.

Analyst recommendations:

  • Admiral Group: Berenberg upgrades to hold from buy with price target raised from GBX 2543 to GBX 2961.
  • Align Technology: Baird maintains its outperform rating and raises the target price from USD 260 to USD 320.
  • Amgen: Daiwa Securities upgrades to buy from neutral with a price target raised from USD 264 to USD 320.
  • Crowdstrike Holdings: Rosenblatt Securities maintains its buy recommendation and raises the target price from USD 245 to USD 315.
  • Dexcom: Baird maintains its outperform rating and raises the target price from USD 130 to USD 161.
  • Eli Lilly And Company: Daiwa Securities upgrades to outperform from buy with a price target reduced from USD 660 to USD 610.
  • Extra Space Storage: Morgan Stanley upgrades to equal weight from underweight with a price target raised from USD 115 to USD 150.
  • Insulet Corporation: Baird upgrades to outperform from neutral with a price target raised from USD 180 to USD 238.
  • Intuitive Surgical: Baird maintains its outperform rating and raises the target price from USD 312 to USD 380.
  • Micron Technology: Wolfe Research maintains its outperform rating and raises the target price from USD 80 to USD 100.
  • Pg&E Corporation: Morgan Stanley maintains its market weight recommendation and raises the target price from USD 14 to USD 17.
  • Public Storage: Morgan Stanley maintains its market weight recommendation and raises the target price from USD 250 to USD 303.
  • Salesforce.com: Morgan Stanley upgrades to overweight from equal weight with a price target raised from USD 290 to USD 350.
  • Simon Property Group: Morgan Stanley downgrades to equal weight from overweight with a price target raised from USD 132 to USD 143.
  • Spotify Technology: Pivotal Research Group upgrades to buy from hold with a price target raised from USD 170 to USD 265.
  • Texas Instruments: DZ Bank downgrades to sell from hold with a target price of USD 148.