EU FCCI flash consumer confidence indicator; U.K. retail sales, public sector finances
Opening Call:
European stock futures were mixed as traders await U.S. inflation data. Asian stock benchmarks largely fell; the dollar and Treasury yields steadied; oil futures fell and gold edged higher.
Equities:
Stock futures traded mixed early Friday as markets shift their attention to the release of the Federal Reserve's preferred inflation gauge later in the day.
Major U.S. stock indexes stabilized Thursday but failed to hold onto early gains, even as investors initially cheered fresh data showing the U.S. economy remains resilient.
"A Fed that's keeping rates stable because the economy is continuing to move forward at an above trend pace-it's hard for me to draw a really negative conclusion to that," said Steve Wyett, chief investment strategist at BOK Financial.
Speculative corners of the market struggled, as bitcoin dipped back below $100,000. "You have skepticism and fear starting to grip a little bit. This is going to lead to a little more volatility" going forward, said Ryan Dykmans, chief investment officer at Dunham & Associates.
Forex:
The Fed may have opened the door for an even stronger dollar, said Spartan's Peter Cardillo. The Fed cut rates and projected a slower pace of easing for 2025, but Cardillo said they may be done cutting. Other developed-economies central banks, meanwhile, are likely to ease further.
The resulting wider interest rate spread would be "very positive for the dollar," Cardillo said. He sees the ICE DXY dollar index soon reaching 110 for the first time since when the Fed was hiking in 2022. A stronger dollar could hurt U.S. exports "but it contains imported inflation," Cardillo said.
Bonds:
The risk premium for owning corporate bonds rather than nearly risk-free Treasuries is at a historically low point. Yet they are a relatively sound investment in fixed income when considering that stocks are expensive, trading at a historically high multiple of 22 times the next 12 months' earnings, and money-market returns are expected to dwindle as the Fed cuts rates further.
Margaret Patel, head of the Capital Allocation team at Allspring Global Investments, favors corporate bonds over Treasuries in fixed income. "We think Treasuries are really just in a trading range, you know, say, 3.5% to 4.5% for the 10-year treasury, we don't see a big breakdown [at] the lower levels, and we don't see a big break up," she said.
Energy:
Oil prices fell in Asia on a stronger dollar and a tepid demand outlook in China. A stronger greenback after the Fed's hawkish outlook has weighed on investor sentiment, ANZ said. A stronger dollar also makes oil more expensive.
Meanwhile, China's biggest oil refiner, Sinopec, warned that gasoline demand in the country has likely peaked, ANZ said. Much of this weakness is driven by China's EV boom, it added. China's EV sales have reached a tipping point, overtaking conventional combustion-engine vehicles for the first time in July.
Metals:
There could be more downside in the cards for gold after the precious metal's plunge in the wake of the Fed's hawkish rate cut, TD Securities' Bart Melek said.
The head of commodity strategy said that at around $2,589/oz, gold is some $45 lower than before the Fed cut and the rollback of expectations on future cuts. A further $50/oz drift lower is possible amid a now more restrictive interest-rate environment and a less robust physical demand trajectory, though a rout doesn't look likely, Melek said.
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From a fundamentals perspective, iron ore prices remain supported by stable demand and supply, Nanhua Futures said. Short-term prices have slightly overcorrected, making a continued decline unlikely, it added.
Higher macroeconomic expectations are also likely to provide price support, Galaxy Futures said.
TODAY'S TOP HEADLINES
Why Treasury Yields Are Rising Again and What to Do With Bonds Now
Bond investors dumped their long-term Treasuries as the Federal Reserve lowered interest rates this year. But now the Fed has rolled back its expectations for 2025 rate cuts, and investors are still fleeing 10-year debt, with even greater urgency. What gives?
The yield, on the U.S. 10-year government note-a benchmark that sets interest rates on mortgages, and credit cards-rose to near 4.6% during intraday trading on Thursday. It closed at 4.569%, its highest since May.
More Men Are Addicted to the 'Crack Cocaine' of the Stock Market
A new type of addict is showing up at Gamblers Anonymous meetings across the country: investors hooked on the market's riskiest trades.
At Gamblers Anonymous in the Murray Hill neighborhood of Manhattan, one man called options "the crack cocaine" of the stock market. Another said he faced hundreds of thousands of dollars in trading losses after borrowing from a loan shark to double down on stocks. And one young man brought his mom and girlfriend to celebrate one year since his last bet.
Why the Tech Stock Selloff Isn't a Buying Opportunity
Before investors go on a shopping spree after tech stocks' big selloff, they should practice some caution.
The Federal Reserve cut interest rates by a quarter of a percentage point on Wednesday, and Fed Chair Jerome Powell signaled that policymakers will be more cautious on rate cuts next year.
Novo Is Ready to Ramp Up GLP-1 Manufacturing Following $11B Factory Deal
Henrik Wulff, the man in charge of product supply at Novo Nordisk, just spent $11 billion to try to fill an ocean.
Novo has handed Wulff one of the most complex jobs in all of pharmaceuticals. He is responsible for overseeing the globe-spanning effort to meet the tremendous demand for semaglutide, the GLP-1 drug Novo sells to treat obesity under the brand name Wegovy, and as a Type 2 diabetes treatment under the name Ozempic.
What's Behind Micron's Stock Stumble-and What Comes Next
Micron stock closed down 16.2% after it posted quarterly revenue and earnings in line with analyst estimates but spooked investors with its soft forward guidance.
Micron earnings always get a lot of attention. It reports off cadence to other chip makers, so it has the stage to itself. It is one of three large non-Chinese memory manufacturers, and the only one domiciled in the U.S. Memory sales can also reveal clues about the broader ecosystem.
Thousands of Amazon Workers Strike During Pre-Christmas Rush
Thousands of Amazon.com workers went on strike Thursday during the crucial run-up to Christmas over contract negotiations and the company's refusal to recognize the Teamsters labor union.
The International Brotherhood of Teamsters, the union that represents the Amazon employees, called the action the largest ever strike against Amazon by U.S. workers.
00:01/UK: Nov UK monthly automotive manufacturing figures
09:30/UK: 3Q Bank of England statistics on UK banks' external claims
15:00/EU: Dec FCCI Flash Consumer Confidence Indicator
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This article is a text version of a Wall Street Journal newsletter published earlier today.