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North American Morning Briefing: Stock Futures Pause as More Key Data Eyed

12/01/2022 | 06:14am EST

MARKET WRAPS

Watch For:

Personal Income & Outlays for October; Weekly Jobless Claims; ISM Report on Business Manufacturing PMI; earnings from Toronto-Dominion Bank, Bank of Montreal

Opening Call:

Today's Headlines/Must Reads

- Spending Report to Offer Clues About Consumers' Strength This Holiday Season

- Rising Tether Loans Add Risk to Stablecoin, Crypto World

- Collapse of FTX Draws Senate Hearing Scrutiny

- Netflix to Let Tens of Thousands of Subscribers Preview Content

- Tesla to Recall About 435,000 Cars in China

- Telegram to Build Decentralized Crypto Exchanges, CEO Says

Follow WSJ markets coverage here .

Equity futures were a bit softer on Thursday, as investors paused to reflect after a less-hawkish Jerome Powell delivered a strong end to November, with the market awaiting more important economic data over the next few days.

"With markets increasingly predisposed to a terminal rate below 5% and inflation getting back close to target in 2024, the stock market's rally could extend as pivot hopes should increase with interest rate risk now disproportionately skewed to the downside," SPI Asset Management said.

However, investors will be aware that the Fed's policy trajectory remains dependent on data showing inflation continuing to slow as the economy cools. To that end traders will be keenly eyeing a batch of important data over the next two sessions.

Two reports in particular may hold great sway: the October PCE price index, among the Fed's favored inflation gauges, is released on Thursday at 8:30 a.m.; and the nonfarm payrolls survey will be published on Friday at the same time.

Meanwhile, Fundstrat warned that the stock market may experience a pause for a while following recent gains.

"Wednesday's strong 'whoosh' higher for equities and Treasuries has lifted prices along with yields to levels that are near technical targets for a possible trend reversal next week."

Global stocks rose: The Stoxx Europe 600 was up 0.8%, while Hong Kong's Hang Seng added 0.7% and Japan's Nikkei gained 0.9%.

Stocks to Watch

Costco: Shares fell 2.9% off hours after it said the pace of monthly sales had slowed in November from the prior month.

Okta: Guided for profitability for all of its next fiscal year. On the earnings conference call, Okta's CFO projected adjusted profits for the full year on revenue of $2.13-$2.15 billion. Analysts expected adjusted losses of 30 cents a share on sales of $2.3 billion. Okta shares rose 15% in after hours trading.

Orthofix Medical: Said it received an unsolicited $23-a-share takeover offer from two private equity firms but said it would stick with its current deal to acquire SeaSpine Holdings Corp. in a $285 million stock swap because it's "unable to conclude" the latest offer is superior. Orthofix shares gained 11% after the close.

Salesforce: Posted higher revenue in the latest quarter and said co-CEO Bret Taylor is leaving a year after he was elevated to run the business-software provider alongside Chairman Marc Benioff. Salesforce shares dropped 6.9% off hours.

Snowflake: Reported quarterly revenue that topped expectations but came up shy with its fourth-quarter sales outlook. Its shares dropped 5.6% off hours.

Splunk: Boosted its full-year outlook for sales and cash flow, following third-quarter results that beat expectations. The stock rose 9% in the after-hours session.

Sturm, Ruger & Co: Declared a special dividend of $5 a share payable on Jan. 5 and cited a current cash balance of $220 million. Shares rose 6% after hours.

Victoria's Secret: Forecast declines in fourth-quarter sales and profit that were below analysts' expectations, with management saying they expected the pain customers have felt from higher prices to continue for the rest of the year. The company's third quarter also suffered from weaker-than-expected sales trends. Shares fell 1.1% after hours.

Forex:

The dollar's falls since Powell signaled the pace of rate increases may slow in December could be an overreaction and the DXY dollar index is likely to stay above 105.00, ING said.

"His [Powell's] core message was one of stubbornly high core inflation. We continue to take the view that a trade-weighted measure like DXY can hold support levels around the 105 area [or at least will not sustain any break under it.]"

Focus now will center on today's core PCE data and Friday's monthly jobs data, ING said.

---

Sterling hit a one-week high against a weaker dollar and the gains could extend further depending on upcoming U.S. data, ING said.

The rally in GBP/USD could extend to the 1.22-1.23 area unless the core personal consumption expenditure price index data or the nonfarm payrolls report on Friday "can put a floor back under U.S. yields," ING said.

Energy:

Crude oil futures inched lower in European trading, with prices giving back some of the sharp post-Powell gains on Wednesday.

Metals:

Copper prices eased lower in London, while the rest of the base metals complex and gold gained, as investors weighed China's possible reopening and the Fed's signal on monetary policy.


TODAY'S TOP HEADLINES


Netflix to Let Tens of Thousands of Subscribers Preview Content

Before Netflix Inc.'s 2021 release of "Don't Look Up," a small group of its U.S. subscribers previewed the film and told the streaming giant that the movie came across as too serious, according to people familiar with the matter.

The film's creators used that feedback to dial up the comedic element of the film and make it appeal to a broader audience, the people said. While the film received lukewarm reviews among critics, "Don't Look Up" was nominated for four Academy Awards and broke a Netflix record for weekly viewing hours of a film, a record it still holds.


Timberland Manager Manulife Moving Into Forest Carbon-Offset Market

One of the country's largest timberland owners is branching out into forest-offset markets, raising a pool of cash to buy properties where sequestering the carbon in standing trees will be prioritized over cutting them down to make wood products.

Manulife Investment Management, which manages on behalf of big investors about 6 million acres of timberland in the Americas and Oceania, said it is aiming to raise a $500 million fund with cash from its parent company, Toronto insurance and financial-services firm Manulife Financial Corp., and other institutional investors.


Tesla to Recall About 435,000 Cars in China

Tesla Inc. is recalling more than 435,000 cars in China, days after the electric-car maker recalled about 80,000 vehicles in the world's largest auto market.

The company has filed a plan with China's State Administration for Market Regulation to recall 142,277 domestically made Model 3 cars and 292,855 domestically made Model Y cars, the top market watchdog said Thursday.


Naloxone Startup Pursues FDA Approval for Over-the-Counter Swab

A startup vying to produce one of the first over-the-counter overdose-reversal medications said it had submitted results to the Food and Drug Administration showing that its drug works more quickly than prescription-only versions.

The randomized trial of 60 healthy volunteers evaluated naloxone absorption from Pocket Naloxone Corp.'s nasal swab versus a 4 milligram nasal-spray delivery and found 74% higher exposure 2.5 minutes after dosing and 19% higher exposure at 5 minutes. Naloxone works by blocking the effects of opioids.


General Electric Sets Healthcare Division Spinoff Plans

General Electric Co. set the terms for the spinoff of its healthcare division, putting an initial value of roughly $31 billion on the soon-to-be-public company.

GE said current shareholders would get one share in the new GE HealthCare Technologies Inc. for every three shares they hold in GE. The separation is set for Jan. 3 after the markets close, and the new shares will trade on Nasdaq under the symbol GEHC.


Mark Zuckerberg Says Apple Holds Too Much Control Over App Ecosystem

Meta Platforms Inc. CEO Mark Zuckerberg said Apple Inc. holds too much sway over the mobile-app ecosystem and that he is still optimistic about his company's metaverse ambitions, even if they might not come to fruition for many years.

"Apple has sort of singled themselves out as the only company that is trying to control, like unilaterally, what apps get on a device," the chief executive said Wednesday at the New York Times' Dealbook Summit in New York City. "I don't think that's a sustainable or good place to be."


TikTok Chief Touts Customer Data-Privacy Initiatives

TikTok Chief Executive Shou Chew said the video-sharing platform is taking greater steps to keep user data secure and that it needs to invest more in protecting young people from getting exposed to harmful content.

"We have very rigorous data-access protocols," he said at the New York Times's Dealbook Summit in New York on Wednesday, adding that TikTok, a unit of Beijing-based ByteDance Ltd., chose Oracle Corp. as its cloud-infrastructure provider because the company has strong security controls.


Starwood-Backed Reverse Mortgage Originator Files for Bankruptcy

Reverse Mortgage Investment Trust Inc., one of the nation's largest mortgage lenders that enables people to tap the equity built up in their homes, has filed for chapter 11 bankruptcy protection.

The Bloomfield, N.J.-based company partly attributed rising interest rates to the disruption of its business. Reverse Mortgage said it faced a liquidity crunch and stopped mortgage origination in early November as it had to increase the capital to support the origination of new loans and to service portfolios. Reverse mortgages are typically made to seniors looking to tap the value built up in their homes.


Sam Bankman-Fried Denies Knowing Scale of Bad Alameda Bets

(MORE TO FOLLOW) Dow Jones Newswires

12-01-22 0613ET

Stocks mentioned in the article
ChangeLast1st jan.
AG MORTGAGE INVESTMENT TRUST, INC. -1.42% 6.595 Delayed Quote.25.99%
APPLE INC. -1.64% 143.615 Delayed Quote.12.31%
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) -0.51% 0.7066 Delayed Quote.4.32%
BANK OF MONTREAL -0.56% 132.8 Delayed Quote.8.89%
BRENT OIL -1.89% 85.47 Delayed Quote.0.12%
BRITISH POUND / US DOLLAR (GBP/USD) -0.27% 1.2365 Delayed Quote.2.50%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) -0.41% 0.7482 Delayed Quote.1.72%
COSTCO WHOLESALE CORPORATION 0.06% 503.76 Delayed Quote.10.25%
DOW JONES FXCM DOLLAR INDEX 0.17% 12700.52 Real-time Quote.-1.28%
EURO / US DOLLAR (EUR/USD) -0.10% 1.0857 Delayed Quote.1.57%
FLOKI INU (FLOKI/USD) 0.00%End-of-day quote.0.00%
GENERAL ELECTRIC COMPANY -1.71% 81.8899 Delayed Quote.27.86%
INDIAN RUPEE / US DOLLAR (INR/USD) 0.05% 0.012277 Delayed Quote.1.48%
MANULIFE FINANCIAL CORPORATION -0.25% 26.095 Delayed Quote.8.28%
META PLATFORMS, INC. -2.51% 148.03 Delayed Quote.26.09%
NASDAQ COMPOSITE -1.57% 11441.79 Real-time Quote.11.04%
NETFLIX, INC. -1.22% 356.61 Delayed Quote.22.34%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) -0.11% 0.64824 Delayed Quote.2.27%
NIKKEI 225 0.19% 27433.4 Real-time Quote.4.94%
ORACLE CORPORATION -1.78% 87.43 Delayed Quote.8.87%
ORTHOFIX MEDICAL INC. -0.85% 21.025 Delayed Quote.3.36%
S&P GSCI CRUDE OIL INDEX -1.27% 431.6013 Real-time Quote.-0.72%
SALESFORCE.COM, INC. 0.70% 165.66 Delayed Quote.24.08%
SNOWFLAKE INC. -2.31% 155.845 Delayed Quote.11.02%
STOXX EUROPE 600(EUR)(TR) -0.17% 1050.62 Delayed Quote.7.20%
TESLA, INC. -2.78% 173.01 Delayed Quote.44.42%
TETHER (USDT/USD) 0.00% 1 End-of-day quote.0.02%
THE TORONTO-DOMINION BANK -0.77% 90.74 Delayed Quote.4.28%
US DOLLAR / BRITISH POUND (USD/GBP) 0.27% 0.808558 Delayed Quote.-2.44%
WTI -1.62% 79.048 Delayed Quote.-1.29%
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