Stock futures edge higher ahead of Thanksgiving break; Fed minutes in focus as inflation messaging begins to fray; HP gains on cost cut plans, solid Q4 earnings; Nordstrom slumps after lowering profit outlook after Q3 earnings beat and Manchester United surges as Glazer family explores sales of famous football club.
Five things you need to know before the market opens on Wednesday November 23:
1. — Stock Futures Edge Higher Ahead of Thanksgiving Break
U.S. equity futures moved modestly higher Wednesday, following on from last night’s rally that lifted stocks to the highest levels in more than two months, as investors looked to the release of minutes from the Fed’s November policy meeting before the Thanksgiving holiday lull.
Another overnight surge in China’s Covid infection rate, alongside its spread to other major cities in the world’s second-largest economy, has failed to dent investor sentiment his week as investors sell the U.S. dollar and move cautiously into riskier assets heading into the final weeks of the year.
Today’s Fed minutes, which will detail discussions of its November policy meeting, could alter that move, but market consensus appears to suggest that traders expect an easing of the central bank’s tightening stance as inflation recedes and the economy slows.
The U.S. dollar index, which tracks the greenback against a basket of its global peers, was marked 0.12% lower in overnight trading at 107.099, although its decline was tempered by a bigger-than-expected rate hike from the central bank of New Zealand, which took its benchmark rate to a 14-year high of 4.25%.
Treasury yields were also on the move, and flashing further warning signs of a near-term recession, as benchmark 2-year notes rose to 4.533% overnight while 10-year paper held at 3.759%
The gap between 1 month Treasury bills, and 30-year bonds, widened to 5.6 basis points, a move that puts the entire Treasury complex into inversion for only the second time in three years.
Oil prices extended gains, as well, with WTI futures for January delivery rising 54 cents to $81.49 per barrel amid reports that the European Union is considering a cap on the sale of Russian crude of between $65 and $70 per barrel. China’s Covid crisis is also upending demand bets as lockdowns are likely to accelerate heading into the winter months.
Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500, which is now up 3.4% for the month and closed above the 4,100 point level for the first time since early September, are priced for a 5 point opening bell gain.
Futures linked to the Dow Jones Industrial Average are indicating a 35 point bump. The tech-heavy Nasdaq is priced for a modest 5 point advance.
2. — Fed Minutes In Focus As Inflation Messaging Begins to Fray
The Federal Reserve will publish minutes of its November policy meeting later today, with investors and analysts likely to focus on the differences that appeared to emerge between the statement released after its fourth-consecutive jumbo rate hike, and the message delivered shortly after by Chairman Jerome Powell.
Markets were left in confusion after the Fed lifted its benchmark interest rate by 0.75% to a range of between 3.75% and 4% and hinted that future hikes would take into account their ‘cumulative’ impact on the broader domestic economy.
Powell quickly tamped-down expectations of smaller rate hikes, or indeed a lower terminal rate, when he told reporters that it was “premature” to consider a pause in future hikes, adding that “”if you under-tighten, it is a year or two down the road you realize you haven’t got inflation under control.”
The minutes, which are set to be released at 2:00 pm Eastern time, could shed light on any difference in opinion from Fed officials on the Open Markets Committee, which ultimately decides interest rate policy, and how that might influence the central bank’s upcoming meeting in December.
3. — HP Gains On Cost Cut Plans, Solid Q4 Earnings
HP Inc. (HPQ) – Get Free Report shares moved higher in pre-market trading after the PC and peripherals maker unveiled plans for sweeping job cuts over the next two years amid a downturn in global demand.
HP, which published modestly-better-than-expected fiscal fourth quarter earnings after the close of trading Tuesday, said it will eliminate as many as 6,000 jobs, or around 12% of its workforce, by 2025.
The new ‘Future Ready’ strategy we introduced this quarter will enable us to better serve our customers and drive long-term value creation by reducing our costs and reinvesting in key growth initiatives to position our business for the future,” said CEO Enrique Lores.
For the three months ending in October, HP said revenues fell 12% from last year to $14.8 billion, just ahead of the Street consensus, with adjusted earnings of 85 cents per share, down 9.5% from last year and a penny ahead of analysts’ estimates.
HP shares were marked 1.1% higher in pre-market trading to indicate an opening bell price of $29.71 each.
4. — Nordstrom Slumps After Lowering Profit Outlook After Q3 Earnings Beat
Nordstrom (JWN) – Get Free Report shares slumped lower in pre-market trading after the retailer posted better-than-expected third quarter earnings but trimmed its profit outlook for the final months of the year.
Nordstrom, which targets a higher-income consumer base than many of its department store rivals, said adjusted profits will likely range between $2.13 and $2.43 per share, down from its prior forecast of between $2.45 to $2.75 per share, as it takes another hit from deeper markdowns to clear out inventory.
For the three months ending in October, Nordstrom said sales fell 2.5% to $3.55 billion, just ahead of Street forecasts, with adjusted profits of 20 cents per share, down 48 from last year but ahead of analysts’ estimates of a 14 cents per share.
“We believe that unseasonably warm temperatures in certain geographies contributed to the decelerating trends, along with delayed holiday shopping,” Nordstrom’s chief accounting officer Michael Maher told investors late Tuesday.
“As for holiday shopping expectations, we believe that this year’s calendar, which has an extra Saturday between Thanksgiving and Christmas, will lead some customers to wait until closer to Christmas to make their purchases,” he added. “We continue to expect an elevated promotional environment across retail in the fourth quarter.
Nordstrom shares were marked 9.85% lower in pre-market trading to indicate an opening bell price of $20.42 each.
5. — Manchester United Surges As Glazer Family Explores Sales of Famous Football Club
The Glazer family, which also owns the NFL’s Tampa Bay Buccaneers, first purchased its majority stake in Manchester United in 2005 for around $940 million. Around 10% of that holding was floated on the NYSE in 2012. However, while the club has had tremendous success under their leadership, its last league title came in 2013 during the final year of manager Sir Alex Ferguson’s historic career.
“As we seek to continue building on the club’s history of success, the board has authorized a thorough evaluation of strategic alternatives,” said co-executive directors Avram Glazer and Joel Glazer in a statement published Wednesday. “We will evaluate all options to ensure that we best serve our fans and that Manchester United maximizes the significant growth opportunities available to the club today and in the future,” the statement said.
Manchester United’s U.S.-listed shares were marked 10% higher in pre-market trading to indicate an opening bell price of $13.03 each, a move that would value the club at around $2.5 billion.