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)

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