Tuesday morning, stock futures hover near the flatline following a pullback in the S&P 500 and Nasdaq Composite from their record highs. Nvidia shares declined after a Chinese regulator announced an investigation into the chip giant for potential antimonopoly law violations. Investors are also awaiting the National Federation of Independent Business’s small business survey, set to be released Tuesday morning. The key event this week is the U.S. consumer price index report, due on Wednesday, which could significantly impact the Federal Reserve’s decisions on interest rates at their upcoming meeting on December 17-18.

On Tuesday, European markets traded in negative territory, pulling back from the previous day’s mostly positive session. This retreat came as investors prepared for the upcoming U.S. inflation report. Basic resources stocks were the hardest hit, losing around 1% due to disappointing Chinese import and export figures. As a result, traders are now keenly anticipating the U.S. inflation data set to be released on Wednesday.

China stocks showed mixed performance amid overall gains in Asia-Pacific markets. Investor sentiment was buoyed by Beijing’s announcement of “more proactive” fiscal measures and “moderately” looser monetary policy for the upcoming year, aimed at boosting domestic consumption. The CSI 300 index in China rose by 0.74%, reflecting positive market reactions. However, Hong Kong’s market dipped slightly by 0.2%. In contrast, South Korea’s market saw significant gains, with the Kospi rising 2.43% and the small-cap Kosdaq surging by an impressive 5.52%. Meanwhile, Australia’s S&P/ASX 200 fell by 0.36%, and Japan’s Nikkei 225 increased by 0.53%.

Economic Calendar

Earnings Calendar

Notable reports for Wednesday before the bell include ASO, AZO, DBI, FERG, GIII, OLLI, & UNFI. After the bell reports include PLAY, GME, & STFX

News & Technicals’

China is expected to raise its budget deficit to the highest level in three decades and implement the deepest interest-rate cuts since 2015, following strong stimulus signals from its top leaders. Economists predict that next year’s fiscal deficit target could reach 4% of GDP, the widest since a significant tax reform in 1994. Historically, Beijing has maintained its budget deficit ratio at or below 3%. A larger fiscal deficit indicates that the government will increase borrowing to fund higher public expenditure, potentially boosting domestic demand as companies and households cut back on spending and investment.

Prosecutors in New York have charged Luigi Mangione, an Ivy League graduate, with the murder of UnitedHealthcare CEO Brian Thompson, according to court records. This charge was filed just hours after Mangione was arraigned in a Pennsylvania courtroom on gun and other charges following his arrest earlier Monday at a McDonald’s in Altoona, Pennsylvania. Mangione is accused of fatally shooting Thompson as the CEO was heading into an investor meeting for UnitedHealth Group, the parent company of his health insurance giant.

Oracle shares dropped by 7% in extended trading on Monday after the company reported fiscal second-quarter results that missed analysts’ expectations and provided a weaker-than-anticipated forecast. Despite this, Oracle announced a new agreement with Meta, enabling the social media giant to utilize its infrastructure for projects related to the Llama family of large language models. Even with the recent decline, Oracle’s stock has surged over 80% this year, on track for its best annual performance since 1999.

Tesla is facing a lawsuit from the family of Genesis Giovanni Mendoza-Martinez, who died in a 2023 collision involving a Model S sedan in Walnut Creek, California. The lawsuit claims that Tesla’s “fraudulent misrepresentation” of its Autopilot technology contributed to the crash. Mendoza-Martinez’s brother, Caleb, who was a passenger, sustained serious injuries. The family’s attorneys allege that Tesla and its CEO, Elon Musk, have exaggerated or made false claims about the Autopilot system for years to generate excitement about the company’s vehicles and improve its financial condition.

Trade Wisely,

Doug