Stocks decline on PPI report 13/12/2024

HOT stories for today


 

US market wrap:

• Stocks declined on Thursday, pressured by a hotter-than-anticipated U.S. inflation report, as earlier momentum in tech shares faltered. All major indices ended the session in negative territory. For those hoping for a quieter period heading into the holiday season, the steady stream of market-moving news offers little reprieve.
• Tech stocks were among the notable laggards, with Nvidia slipping over 1%, and Adobe plunging more than 13% following a disappointing 2025 outlook. Despite these setbacks, the S&P 500 has gained approximately 27% this year, hovering near record highs. However, the question remains whether this bullish sentiment will persist as the market transitions into the New Year.

Nasdaq-100 Reconstitution: New Additions and Removals

• Nasdaq is set to announce changes to its Nasdaq-100 Index, an annual reconstitution that could significantly impact certain stocks and their shareholders. Funds tracking the index will adjust their holdings to include newly added companies, potentially boosting their stock prices while selling shares of companies removed from the index. The Nasdaq-100, comprising the largest 100 non-financial companies on the Nasdaq Composite, is recalibrated each December based on November 30 market capitalization data. This year, 11 companies, including Palantir Technologies (PLTR), MicroStrategy (MSTR), and Axon Enterprise (AXON), could be added to the index. Palantir, which transitioned to Nasdaq recently, leads the list with a market cap of $146 billion, reflecting its explosive 2024 performance.
• On the removal side, companies like Moderna (MRNA), Biogen (BIIB), and Super Micro Computer (SMCI) may exit the index due to lower market capitalizations. Moderna, once a pandemic standout, has struggled in 2024 as vaccine demand declined, halving its stock value. The announcement, expected on Friday, will take effect later in December, marking a pivotal moment for investors and the involved companies.

Stocks on the move:

• Broadcom (AVGO): Despite mixed results, the chipmaker hit new highs after reporting adjusted earnings per share that exceeded expectations, though revenue fell short. Management cited rising demand from the growth of generative AI infrastructure. Its first-quarter revenue forecast was slightly above estimates.
• Costco Wholesale (COST): Shares declined in after-hours trading Thursday as the warehouse retailer posted mixed results. Sales missed Wall Street projections for the second consecutive quarter, but gains were noted among affluent shoppers and in a sector disrupted by Amazon.
• Riot Platforms (+6%): The Bitcoin miner, the third-largest corporate holder of the cryptocurrency, rose after completing a $525 million senior note offering to acquire more Bitcoin.
• RH (+18%): The luxury home retailer's stock surged despite third-quarter earnings falling short of expectations. Revenue rose 8.1% year-over-year, slightly exceeding forecasts, while the company raised its full-year revenue and operating margin guidance, lifting investor sentiment.

Today’s action

• China stocks led losses in Asia on Friday after Beijing reaffirmed its recent policy directions and emphasized plans to stimulate growth during a high-profile meeting on Thursday. Hong Kong’s Hang Seng Index dropped 1.39%, while mainland China’s CSI 300 fell 0.94%. Other Asia-Pacific markets also saw declines, mirroring Wall Street losses following an unexpectedly strong producer price inflation report.
• Overnight, Dow futures hovered near flat, while S&P 500 futures edged up 0.2%, and Nasdaq-100 futures gained 0.5%. Friday is expected to be a quiet day for economic updates, with November’s import and export data among the few scheduled releases.

Wahtclist: AVGO, COST, RH, RIOT, INTC, GOOGL, META

Bitcoin

• Bitcoin surged to $102,500 early Thursday after President-elect Donald Trump reiterated his commitment to advancing the adoption of crypto assets in the U.S., including plans to establish a strategic bitcoin reserve. While ringing the opening bell at the New York Stock Exchange, Trump declared, "We're going to do something great with crypto," fueling optimism in the market.
• At the same time, the European Central Bank reduced its benchmark interest rate by 25 basis points and signaled the possibility of further cuts in a dovish policy announcement. Many cryptocurrencies outpaced bitcoin’s performance, with Avalanche (AVAX) and Chainlink (LINK) posting gains of 9% and 13%, respectively, over the past day.
  Watchlist: Bitcoin: 90 000-104 000, Ethereum: 3500-4100, Solana: 200-250

Forex

• USD/JPY stalls near 152.90 as traders await further U.S. economic data. The pair’s recovery paused with bulls failing to extend gains beyond this level. Support for the pair comes from dovish remarks by Bank of Japan (BoJ) officials and robust U.S. economic data, keeping the immediate bias positive. Downside risks appear limited, with bears capped above 152.00.
• EUR/USD weakened, sliding below 1.0500 after the European Central Bank (ECB) announced a 25 basis point rate cut, reducing the Deposit Facility Rate to 3% and the Main Refinancing Operations Rate to 3.15%. This marks the ECB’s third consecutive 25 bps cut and the fourth of the year. With no surprises in U.S. CPI data, expectations for a Federal Reserve rate cut at next week’s meeting remain solid. EUR/USD touched a weekly low of around 1.0470 during Thursday’s North American session following the ECB policy update.
  Watchlist: EUR/USD: 1.0300-1.0650, USD/JPY: 149-157

Basic Materials

• The U.S. national average price of gasoline has dropped below $3 per gallon for the first time in over three and a half years, offering relief ahead of the holiday season as inflation data shows signs of rising. OPEC’s oil production increased in November, driven by a jump in Libyan output. The OPEC+ group recently postponed the easing of its 2.2 million bpd production cuts to April 2025, extending the full unwinding of cuts until September 2026.
• Gold prices fell over 1% on Thursday, breaking a four-day winning streak as mixed U.S. economic data clouded the market outlook. While a weaker-than-expected jobs report suggested economic softness, a surprising rise in producer prices countered the disinflation narrative. Investors remain focused on next week’s Federal Reserve meeting, where a 25 basis point rate cut is widely expected. Treasury yields edged higher, adding pressure to gold, with XAU/USD trading at $2,684.
  Watchlist: GOLD 2530-2790, US Oil: 65.00-73.00

The TEFS Analyst team wishes you a successful day!