U.S. stock futures were down as investors eagerly awaited the latest consumer price index data for clues on inflation trends. The major indices had already declined during Tuesday’s session, with the market taking a pause. According to Tom Hainlin, senior investment strategist at U.S. Bank Wealth Management, part of Tuesday’s market dip was due to profit-taking following strong post-election gains, while some of it was likely due to positioning ahead of the upcoming inflation and retail sales reports. This cautious sentiment reflects the market’s sensitivity to economic indicators and their potential impact on future monetary policy.

European stocks remained relatively flat, with notable movements in specific stocks. Just Eat Takeaway saw its shares surge by 20% following the announcement of a deal to sell its U.S. unit, Grubhub, to Wonder for $650 million. Siemens Energy also performed exceptionally well, with its shares skyrocketing by 19.1%. In contrast, ABN Amro’s shares fell by 1% after the Dutch bank reported a 9% decline in quarterly net profit. These mixed performances highlighted the varied responses of investors to corporate news and earnings reports.

Asia-Pacific stock markets experienced a general decline as traders evaluated Japan’s latest corporate goods data. The data revealed that year-on-year producer price growth, or wholesale inflation, in October surged to 3.4%, marking the highest rate since July of the previous year. This economic indicator contributed to a downturn in major indices across the region. Japan’s Nikkei 225 fell by 1.66%, South Korea’s Kospi dropped 2.64%, Australia’s S&P/ASX 200 decreased by 0.75%, and Hong Kong’s Hang Seng Index was down 0.45%. The overall market sentiment was cautious as investors digested the implications of rising inflation on future economic performance.

Economic Calendar

Earnings Calendar

Notable reports for Thursday before the bell include AFGC, ARCO, CGON, CURB, CYBR, DOLE, ENLT, GFF, INBX, JHX, LOAR, PSFE, RSKD, SSYS, TSEM, & UBS.

After the bell reports include BZH, BV, CSCO, DGII, DLO, HP, HI, IBTA, JJSF, KLIC, NVEI, PACS, SONO, & TTEK.

News & Technicals’

DirecTV’s proposed acquisition of Dish assets appears to be off the table after bondholders rejected a revised offer. The deal, which involved DirecTV acquiring Dish’s pay TV business for a nominal $1 and assuming approximately $10 billion in debt, now seems unlikely to proceed. There remains a slim chance of revival if Dish Chairman Charlie Ergen decides to negotiate, but this currently seems improbable. The rejection by bondholders underscores the challenges and complexities involved in such high-stakes corporate transactions.

Microsoft’s president and vice-chairman cautioned that the West should not underestimate China’s advancements in technology. Microsoft has maintained a presence in China since 1992, operating its largest research and development center outside the U.S. Recently, Huawei surprised the market by releasing a smartphone with download speeds indicative of 5G capabilities, despite U.S. tech sanctions. This development has fueled speculation about a significant chip breakthrough by Huawei, highlighting China’s potential to innovate and compete on the global tech stage.

Shares of Amgen declined as analysts scrutinized bone density loss data from an early-stage trial of its experimental weight loss injection, MariTide. While some analysts viewed the new data as a potential safety concern, others argued that the market reaction was exaggerated and emphasized the need for more data from a larger patient group. MariTide is a promising contender in the weight loss drug market, offering a monthly injection alternative to the weekly injections currently available from Novo Nordisk and Eli Lilly. This development highlights the ongoing competition and innovation within the weight loss pharmaceutical sector.

Investors are eagerly anticipating the release of October’s Consumer Price Index (CPI) numbers on Wednesday morning to gauge the rise in the costs of goods and services. Economists surveyed by Dow Jones predict a 0.2% increase for the month and a 2.6% year-over-year rise. The rate of price increases is crucial for the Federal Reserve’s decisions on whether to adjust interest rates. Additionally, this week’s economic calendar includes the producer price index data on Thursday and retail sales figures on Friday, both of which will provide further insights into the economic landscape.

Market sentiment and today’s price action will all be determined by the result of the Consumer Price Index report.  If the number comes in weak, I suspect the market will continue its post-election celebration.  However, should the number come in hot the profit taking that began yesterday could quickly accelerate, filling some gaps and testing areas of price support in the index charts. Keep in mind what ever happens we will quickly turn out attention toward Jobless Claims and the PPI numbers on Thursday.

Trade Wisely,

Doug