Futures remained relatively stable after stocks closed at record highs on Tuesday, with only slight declines as Wall Street continued to evaluate which sectors to invest in amid a post-election rally that has propelled equities to unprecedented levels. Investors are keenly awaiting economic data on small businesses, set to be released in the morning. Additionally, they will be closely monitoring remarks from Federal Reserve officials, including Fed Governor Christopher Waller and Minneapolis Fed President Neel Kashkari, throughout the day. Traders are also poised to analyze earnings reports from major companies like Home Depot and Shopify, which are expected to be released on Tuesday.

European markets saw a decline, primarily driven by a significant drop in mining stocks, which fell by 2.6%. In contrast, technology stocks managed a modest gain of 0.5%. Germany reported a 2.4% rise in inflation for October, as confirmed by the latest data from the country’s statistics office. Among the major indices, France’s CAC 40 slipped by 1.2%, while Britain’s FTSE 100 and Germany’s DAX fell by 0.9% and 0.8%, respectively.

Asia-Pacific markets experienced a downturn as investors adopted a cautious stance. Hong Kong’s Hang Seng index led the declines with a significant drop of 2.76%, followed by South Korea’s Kospi, which fell by 1.94%. China’s CSI 300 also saw a decrease of 1.1%, while Japan’s Nikkei 225 slipped by 0.4%. Australia’s S&P/ASX 200 had a relatively minor decline, closing 0.13% lower.

Economic Calendar

Earnings Calendar

Notable reports for Thursday before the bell include ALIT, ALMS, AZN, AVDL, CAMT, DAVA, EVGO, FA, GENI, HD, HTZ, HBM, HUYA, IAC, LEGN, LYV, MIRM, MOS, NMRA, NWN, NVAX, ONON, PTVE, PGY, PLL, PLUG, RGEN, ROIV, SRRK, SDGR, SE, FOUR, SHLS, SDHC, SPHR, SWTX, SHO, SGRY, SLVM, TH, TME, THS, TGI, TSN.

After the bell reports include DOX, AHR, AZTA, CAE, CNNE, CAVA, CHGG, CRNX, DHT, EVCM, GRAB, HPP, ICUI, CART, IAS, LNW, MARA, NTRA, NATL, NPCE, OXY, OUT, FNA, PAY, PRDO, PGNY, PRTA, PUBM, RXT, RPAY, RKLB, SDRL, SWKS, SOUN, SPOT, SU, TTGT, MODG, XENE, & ZI.

News & Technicals’

Home Depot reported quarterly earnings and revenue that surpassed analysts’ expectations, driven by increased sales from its acquisition of SRS Distribution, as well as a surge in demand for hurricane-related repairs and the impact of warmer-than-usual weather across much of the U.S. Despite these positive factors, the company noted that consumers are exercising caution following a period of elevated interest and mortgage rates.

On Tuesday, a Dutch court dismissed a landmark climate ruling against Shell, which had previously mandated the oil giant to significantly cut its global carbon emissions. This decision overturns the May 2021 ruling by The Hague district court that required Shell to reduce its greenhouse gas emissions by 45% from 2019 levels by 2030. The outcome represents a significant development in a precedent-setting case with potential far-reaching implications for future climate litigation.

U.S. Treasury yields saw a notable increase, with the 10-year Treasury yield rising by over four basis points to 4.3550%. The 2-year Treasury yield, which is particularly sensitive to interest rate expectations, climbed by more than six basis points to 4.3149%. Investors are also closely watching key economic data set to be released throughout the week, including the NFIB Business Optimism Index on Tuesday, which will provide insights into the performance of small businesses in October.

Germany is preparing for a federal election in February, earlier than initially proposed by Chancellor Olaf Scholz, following the collapse of his ruling coalition last week. A confidence vote is now scheduled for December 16, a crucial step before the early elections can proceed. This parliamentary vote is necessary for the chancellor to formally call for the election. According to sources within Scholz’s Social Democratic Party (SPD), the federal election is set to take place on February 23.

The record highs continued Monday though we did see a little weakness, beginning to show up by the close of the day.  With another light day on the economic calendar traders will look for inspiration in earnings reports.  Bond yields continue to be problematic as markets grapple with the pending CPI and PPI reports as well as the changes the new administration will deliver.  If some profit taking does begin be prepared for the possibility of some big point moves.

Trade Wisely,

Doug