MARKET WRAPS
Watch For:
Oct Housing Starts Data; Fedspeak from Barr
Today's Top Headlines/Must Reads:
- What's Behind the Market's Wild Overreactions
- What Recession? Consumers Still Have Plenty to Spend.
- Where Have All the Foreign Buyers Gone for U.S. Treasury Debt?
Opening Call:
Stock futures were higher on Friday, consolidating recent gains ahead of the expiration of key options contracts.
Options tied to $2.4 trillion in stocks, exchange-traded funds and equity indexes are set to expire, according to data compiled by Asym50.
Meanwhile, the S&P 500 is only 2% away from its intraday high of the year, powered by optimism of a possible soft landing, as price growth - and economic activity - are cooling.
"The major reason for the recent rally is that Wall Street had convinced itself that the Federal Reserve is all done with hiking rates this cycle. In fact, investors now expect the Fed to start cutting rates in less than six months," Crossing Wall Street said.
Premarket Movers
U.S.-listed shares of Alibaba were down 4%, extending sharp losses from Thursday, after the company canceled the spinoff of its cloud arm.
Applied Materials reported fiscal fourth-quarter earnings and revenue that topped analysts' estimates but the stock was falling after a report detailed a Justice Department probe into the company. The stock fell 7%.
ChargePoint Holdings was falling 24% after it said third-quarter revenue would fall short of its prior guidance and replaced its chief executive and finance chief.
Gap on Thursday posted higher-than-expected profit and revenue for the third quarter and said it gained market share in the period. Shares rose 19% premarket.
Ross Stores third-quarter earnings were better than expected and it forecast fiscal-year profit of between $5.30 and $5.36 a share, compared with a previous guidance of between $5.15 and $5.26. The stock rose 6.8%.
Forex:
The dollar fell following Thursday's increase in jobless claims data, showing the currency is starting to be hurt by weaker data, a trend which should become prominent in 2024, although for now higher bond yields could continue to support it, ING said.
"This is the kind of price action we expect to see more frequently next year as tight rates finally play catch up with the economy," ING said.
"Before then, however, the FX market will be looking at two-year yields bouncing around in a perhaps 4.75-5.00% range and dragging the dollar with it."
Danske Bank Research expects EUR/USD to rise in the near term, reaching 1.10 on a one-month horizon, due to weaker-than-expected U.S. economic data and more positive risk appetite.
Over the next six to 12 months, however, Danske expects EUR/USD to fall, "based on relative terms of trade, real rates (growth prospects), and relative unit labor costs."
It forecasts EUR/USD at 1.06 in six months and 1.04 in 12 months, compared with a current rate of 1.0836.
Bonds:
Treasury yields are expected to hover in a wide range in volatile trade in the coming weeks, possibly rebounding higher as the recent decline seems stretched, SEB Research said.
Long-dated Treasury yields might well have peaked but the further downside seems limited until new data triggers or softer signals by the Fed, it said.
Going into 2024, SEB expects rates markets to step up their expectations of rate cuts by the Fed, causing both short- and long-end bond yields to ease and the Treasury curve to steepen.
Energy:
Oil prices settled after their steep falls on Thursday.
The move was triggered by a combination of short selling and prices dropping below a technical level, UBS said. However, demand concerns are lingering and a build-up of crude stocks in the U.S. is adding further pressure.
Still, UBS said the market is undersupplied, and forecasts Brent to trade in a range of $90-100 a barrel.
ING said weakness in the oil market is likely to make Saudi Arabia roll over its voluntary output cut into early next year.
Extending cuts "should help erase the expected surplus and provide some support to the market," ING said, adding that "there will be growing noise around OPEC policy in the coming weeks" as the group gets ready to meet in Vienna on Nov. 26.
Metals:
Base metals were lower and gold flat, as weak demand continues to keep prices pegged back.
"Over the past month, year-to-date price averages have generally declined for base metals, dragged down by the persistence of weak global market fundamentals and dollar strength," BMI said.
It said a recovery in prices is unlikely this year and fortunes are only likely to change when the dollar starts to weaken and Chinese demand picks up.
TODAY'S TOP HEADLINES
Elon Musk's X Loses Bid to Scrap FTC Privacy Order
A federal judge denied X Corp.'s request to modify or terminate a consent order between the social-media company acquired by Elon Musk last year and the Federal Trade Commission over how the platform handled users' information.
In a decision Thursday, U.S. Magistrate Judge Thomas Hixson in the Northern District of California said his court lacked the power to grant X relief from another tribunal's orders. The judge also denied X's request to stop a deposition of Musk by the FTC.
IBM pulls ads from X after Elon Musk's comments appear to endorse antisemitic conspiracy theory
IBM Corp. IBM has abruptly pulled ads from X, formerly Twitter, amid a maelstrom of controversial comments from billionaire owner Elon Musk and the placement of IBM ads.
"IBM has zero tolerance for hate speech and discrimination and we have immediately suspended all advertising on X while we investigate this entirely unacceptable situation," the company said in a statement emailed to MarketWatch.
Google Antitrust Judge Says He Has 'No Idea' How He Will Rule
WASHINGTON-The historic antitrust case against Google will soon be in the hands of a judge who says he has no idea how he will rule.
It will be many months before U.S. District Judge Amit Mehta, who oversaw the nonjury trial in Washington, rules on the question at the heart of the Justice Department's case: Did Alphabet-owned Google, which answers about 90% of all internet search queries worldwide, illegally cement its monopoly?
Pro Take: U.S. Workers Entered Economy in Droves in 2023, but Dynamics Could Be Changing
American workers may not be totally back at the office, but they're back at work. Will they keep coming back?
Job-search company Indeed is warning the gravitational pull of aging U.S. demographics and the availability of foreign-born workers are potential hindrances to the growth of the U.S. labor force.
Avoiding China Has Been a Winning Investment Strategy. But It Isn't Easy.
Investors in emerging-market stocks have profited this year by staying away from China.
The MSCI China Index is down 8% this year through Nov. 15, while a broader emerging-markets benchmark that excludes China has risen 8% over the same period. Chinese stocks have been weighed down by the country's shaky economic reopening, a pullback by foreign portfolio managers and an increasing reluctance among the country's small investors to buy stocks.
As U.S. Wavers on Ukraine Aid, Europe Steps Up
BERLIN-European governments are boosting their assistance to Ukraine as worries grow that Washington's failure to approve new aid could cause Ukraine to lose ground in the war against Russia.
Europe and the U.S. increasingly believe that Ukraine will struggle to win significant territory in the near term and are focusing their efforts on enabling Kyiv's forces to hold the line against Russia.
George Santos Faces Growing Calls for Expulsion After Damning Ethics Report
WASHINGTON-The House Ethics Committee said Thursday that it found substantial evidence that Rep. George Santos (R., N.Y.) stole money from his campaign and committed other misdeeds, igniting new calls for his immediate expulsion by colleagues and prompting the embattled lawmaker to say he won't run for re-election.
"Representative Santos sought to fraudulently exploit every aspect of his House candidacy for his own personal financial profit" and "blatantly stole from his campaign," the committee's report said. The committee said Santos's conduct "warrants public condemnation, is beneath the dignity of the office, and has brought severe discredit upon the House."
Write to ina.kreutz@wsj.com
TODAY IN CANADA
Earnings:
Real Matters 4Q
Economic Calendar [ET]:
0830 Oct Industrial Product, Raw Materials Prices
0830 Sep International Transactions in Securities
Stocks to Watch:
Farmers Edge Announces Fairfax Privatization Offer; Majority Shareholder Fairfax Financial Proposes to Buy All Outstanding Shares It Doesn't Own for C$0.25 Each; Fairfax's Proposal Is Subject to Negotiation, Finalization; Board Has Formed Independent Committee to Evaluate Proposal; Fairfax, Through Certain Controlled Affiliates, Currently Owns Approximately 61.4% of Shares; Company's Discussions With Fairfax Are at Preliminary Stage
Frontera Energy Announces Initiation of Normal Course Issuer Bid; Frontera May Purchase Up to 3.9M Common Shares Over 12 Months Starting Nov. 21; Purchase Represents Approximately 10% of Company's Public Float; Daily Purchases Through TSX Limited to 15,797 Shares, Other Than Block Purchase Exceptions; May Buy and Cancel Shares if Price Doesn't Fully Reflect Underlying Value of Business, Future Prospects, Financial Position
Other News:
Australian Pension Funds May Be More Active in Deciding Big Deals -- Interview
Pension funds have long been viewed as the quiet investors in Australia, often eschewing open disagreements with companies in favor of pushing for change behind closed doors.
Now, the fate of the around $10.50 billion takeover of Origin Energy suggests a new era of increased assertiveness is dawning.
(MORE TO FOLLOW) Dow Jones Newswires
11-17-23 0615ET
