MARKET WRAPS
Watch For:
Durable Goods for October, Weekly Jobless Claims, University of
Michigan Final Consumer Survey, EIA Weekly Petroleum Status
Report
Today's Top Headlines/Must Reads:
- American Shoppers Have Plenty of Dry Powder
- FedNow Price Tag Is More Than Half a Billion Dollars
- OpenAI Says Sam Altman to Return as CEO
Opening Call:
Stock futures were little changed on Wednesday heading into the
last full trading day of the week as Nvidia shares dip after
earnings.
The reaction to Nvidia's results may have capped investors' AI
enthusiasm, SPI Asset Management said.
"Put another way, specific market sectors, especially Mega-Tech,
are now perceived to be a tad overbought," it added.
Meanwhile, minutes from the Federal Reserve's meeting were
providing little reason for investors to change their view on
bonds.
Given that a sharp drop in Treasury yields in recent weeks has
helped propelled stocks higher of late, the relative lack of a
reaction to the minutes was a contributor to the stasis early on
Wednesday.
Premarket Movers
Autodesk's third-quarter earnings and revenue beat analysts'
estimates, and the software company raised its forecast for the
fiscal year ending in January. Shares fell 5%.
DLocal said its CFO would be stepping down and the company
reported third-quarter revenue that missed analysts' forecasts. The
stock was dropping 14%.
Guess' third-quarter adjusted earnings were lower than expected
and it cut its fiscal-year profit and revenue outlooks. The stock
fell 15% premarket.
HP fell about 3% before the bell after the company reported a
decline in revenue.
Microsoft shares were up 0.4% in premarket trading after the
announcement that Sam Altman would be returning to OpenAI as chief
executive.
Nvidia reported record sales, pointing to strong demand for
chips that underpin artificial intelligence applications. But
shares slipped premarket, in a sign of heady investor expectations
for a stock that has more than tripled in 2023.
Urban Outfitters fell 5% premarket. The company said it is
sitting on a large amount of inventory after disappointing sales at
its namesake brand.
Economic Insight
Current market hopes of rapid and significant interest-rate cuts
in 2024 are exaggerated, DZ Bank Research said.
In the eurozone, with core inflation remaining high, the
European Central Bank is unlikely to initiate an interest-rate
turnaround until the fourth quarter of 2024, with two rate cuts of
25 basis points each, it said.
"Monetary policy will remain at its currently restrictive level
for a long time to come due to persistently high inflation, and
specifically the slow decline in core inflation."
In the U.S., meanwhile, the Fed is expected to only embark on a
cautious course of rate cuts in the run-up to the presidential
election, DZ Bank added.
Forex:
After rising above $1.25, sterling could build on its gains
against the dollar as the market awaits the U.K. autumn budget
later in the day, UniCredit Research said.
"GBP/USD might further consolidate above 1.25 ahead of the
presentation of the U.K. Chancellor's Autumn Statement today, after
Bank of England Governor Bailey warned against upside inflation
risks from wages," UniCredit said.
Energy:
Oil prices were broadly muted due to mixed news on the supply
front and after Israel and Hamas reached a deal to release hostages
and pause fighting.
OPEC is expected to continue restraining production and
stabilizing oil inventories around current levels going forward,
Morgan Stanley said.
Demand growth is likely to decelerate next year to around 1.2
million barrels a day on muted economic growth from around 2.2
million B/D in 2023, it said.
Non-OPEC supply is still likely to increase by 1.4 million B/D
next year, enough to meet all global demand growth. "As a result,
there is little room in the market for additional OPEC oil."
MS said it already assumed an extension of voluntary cuts into
the first quarter, but now expects cuts to be further extended to
the end of the second quarter of next year.
Metals:
Base metals prices were falling while gold ticked higher as a
weaker dollar battled against uncertain industrial demand
signals.
TODAY'S TOP HEADLINES
The Trade That Backfired for America's Biggest Wood-Pellet
Exporter
A wrong-way bet on the price of wood pellets has jeopardized
America's biggest exporter of the fuel, even though demand has
never been higher among the European and Asia power plants burning
wood instead of coal.
Enviva said its gambit to buy pellets from a customer, and
resell them for more, backfired when prices fell, and that
nine-figure losses could trigger a default with its lenders by
year-end.
Blackstone to Buy U.K. Software Developer Civica
Blackstone agreed to buy U.K.-based software developer Civica,
placing its second multibillion-dollar bet in Europe in as many
days, in a sign that private-equity deal making in the region is
picking up.
The value of the transaction wasn't disclosed. The Wall Street
Journal earlier reported it valued Civica at close to $2.5 billion
including debt.
A year after market turmoil, the U.K.'s chancellor is back in
the spotlight
U.K. finance minister Jeremy Hunt will present his Autumn budget
on Wednesday. He'll be hoping it goes a lot better than his
predecessor's a little over a year ago.
In September 2022, Kwasi Kwarteng, the new Chancellor of the
Exchequer - as the position is known - delivered a seasonal budget
statement at the behest of freshly-installed Prime Minister Liz
Truss, that proposed a GBP45 billion package of unfunded tax
cuts.
Problems Mount for DeSantis as Haley Rises and Trump
Dominates
Tough new polling in Iowa and New Hampshire. A rising Nikki
Haley. And an ever dominant Donald Trump.
Ron DeSantis's campaign is heading in the wrong direction, and
time is running out.
Israel, Hamas Reach Deal to Release 50 Hostages
Israel and Hamas agreed to free 50 civilian hostages held by
militants in Gaza in return for the release of Palestinian
prisoners from Israeli jails and a four-day pause in fighting.
The Israeli cabinet approved the deal after a long deliberation
that started Tuesday and went into the early morning hours of
Wednesday in Jerusalem. It capped weeks of painstaking negotiations
brokered by Qatar, Egypt and the U.S., marking the first major
diplomatic breakthrough since the war began on Oct. 7. Hamas
confirmed the deal in a statement.
Write to ina.kreutz@wsj.com
TODAY IN CANADA
Earnings:
Nothing major scheduled
Economic Calendar (ET):
1145 Bank of Canada Governor Tiff Macklem speech at Saint John
Region Chamber of Commerce event
Stocks to Watch:
Lophos Pharmaceuticals Receives Health Canada Approval for
Expanded Controlled Substance Ops Following HVAC Revisions
Expected Major Events for Wednesday
05:00/JPN: Oct Steel Production
05:00/JPN: Oct Supermarket sales
08:59/JPN: Nov Monthly Economic Report
11:00/UK: Nov CBI Industrial Trends Survey
12:00/US: 11/17 MBA Weekly Mortgage Applications Survey
13:30/US: Oct Advance Report on Durable Goods
13:30/US: 11/18 Unemployment Insurance Weekly Claims Report -
Initial Claims
15:00/US: Nov University of Michigan Survey of Consumers -
final
15:30/US: 11/17 EIA Weekly Petroleum Status Report
17:00/US: 11/17 EIA Weekly Natural Gas Storage Report
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Wednesday
AYRO Inc (AYRO) is expected to report for 3Q.
Air T Inc (AIRT) is expected to report for 2Q.
Caldwell Partners International Inc (CWL.T) is expected to
report for 4Q.
Celularity Inc (CELU) is expected to report for 3Q.
Deere & Co (DE) is expected to report $7.43 for 4Q.
Essential Energy Services Ltd (EEYUF,ESN-T) is expected to
report $0.02 for 3Q.
Ideanomics Inc (IDEX) is expected to report for 3Q.
Inspired Entertainment (INSE) is expected to report $-0.12 for
3Q.
Near Intelligence Inc (NIR) is expected to report for 3Q.
Ocean Biomedical Inc (OCEA) is expected to report for 3Q.
RespireRx Pharmaceuticals Inc (RSPI) is expected to report for
3Q.
TVI Pacific Inc (TVI.V,TVIPF) is expected to report for 3Q.
Talis Biomedical Corp (TLIS) is expected to report for 3Q.
Theseus Pharmaceuticals Inc (THRX) is expected to report for
3Q.
Powered by Kantar Media and Dow Jones.
ANALYST RATINGS ACTIONS
agilon health Cut to Hold From Buy by Deutsche Bank
AIG Raised to Buy From Hold by Argus Research
Black Hills Corp Raised to Neutral From Underperform by
Mizuho
https://urldefense.com/v3/__http://C3.ai__;!!F0Stn7g!Bo0g9th3CnXFlm1yBmRn8yf7Pz1GnGxCb-sLyHuyhX0LW0NcLxNXBL2wdCHGykWeWD9MV_btoXMp_ux7nfbhyasVN22BB0PCl_uFwqAQT34$
Raised to Outperform From Perform by Oppenheimer
Celanese Raised to Neutral From Underweight by Piper Sandler
Cloudflare Raised to Outperform From Perform by Oppenheimer
Devolver Digital Resumed at Buy From Hold by Berenberg
DigitalOcean Raised to Outperform From Perform by
Oppenheimer
Entergy Raised to Buy From Neutral by B of A Securities
Equinix Raised to Outperform From Perform by Oppenheimer
Exelon Cut to Neutral From Buy by Mizuho
Foot Locker Cut to Neutral From Buy by BTIG
Gen Digital Raised to Overweight From Equal-Weight by Morgan
Stanley
Hershey Cut to Sector Perform From Outperform by RBC Capital
Incyte Cut to Neutral From Buy by Goldman Sachs
NanoString Technologies Cut to Neutral From Outperform by
Baird
Six Flags Cut to Neutral From Buy by Rosenblatt
Western Digital Raised to Neutral From Sell by Goldman Sachs
Xylem Raised to Buy From Hold by Deutsche Bank
Zions Bancorp Cut to Neutral From Buy by Citigroup
This article is a text version of a Wall Street Journal
newsletter published earlier today.
(END) Dow Jones Newswires
November 22, 2023 06:15 ET (11:15 GMT)
Copyright (c) 2023 Dow Jones & Company, Inc.
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