Early Look

Friday, November 25, 2022

U.S. stocks hold steady in thin holiday trading overnight with S&P futures rising +0.15% to 4,040, middle of its overnight range (4,049.25 and lows 4,032.25) ahead of Black Friday shopping, a big day for US retailers. Stocks not deterred yet after China reported another single-day record-high number of COVID-19 infections, as cities across the country enforced measures and curbs to try to control outbreaks. Also, China said it would cut the amount of cash that banks must hold as reserves for the second time this year, releasing about 500 billion yuan ($69.8 billion) in long-term liquidity to prop up the faltering economy. In Asian markets, The Nikkei Index fell -100 points to 28,283, the Shanghai Index rose 12 points to 3,101, and the Hang Seng Index fell -87 points to 17,573. In Europe, the German DAX is up about 10 points to 14,550, while the FTSE 100 rises 20 points to 7,488. No economic data, Fed speakers or earnings on this holiday shortened trading session as equity markets close at 1:00 PM. Oil prices rise more than 2% while Treasury yields are steady and the dollar edges higher.

Market Closing Prices Yesterday

·     The S&P 500 Index climbed 23.68 points, or 0.59%, to 4,027.26

·     The Dow Jones Industrial Average rose 95.96 points, or 0.28%, to 34,194.06

·     The Nasdaq Composite gained 110.91 points, or 0.99%, to 11,285.32

·     The Russell 2000 Index advanced 3.08 points, or 0.17% to 1,863.52

World News

·     China said on Friday it would cut the amount of cash that banks must hold as reserves for the second time this year, releasing about 500 billion yuan ($69.8 billion) in long-term liquidity to prop up the faltering economy as COVID cases hit record highs. The People’s Bank of China (PBOC) said it would cut the reserve requirement ratio for banks by 25 bps effective from Dec. 5. That would lower the weighted average ratio for financial institutions to 7.8%

·     China’s daily Covid infections climbed to a record high, exceeding the previous peak in April, as it battles an outbreak that has grown since the country adopted a more targeted approach to containing the virus. The country reported 29,754 new cases for Wednesday, more than the 28,973 infections recorded in mid-April

·     Germany’s Ifo business-climate index rose to 86.3 points in November from a revised reading of 84.5 points in October, data from the Ifo Institute showed Thursday (ests 85.0)

·     Japan Nov flash manufacturing PMI 49.4 vs 50.7 prev, non-manufacturing 50.0 vs 53.2

·     The weekly AAII sentiment data showed Bulls down 4 to 28.9 and bears unchanged at 40.2

Sector News Breakdown

Consumer

·     Wal-Mart (WMT), Target (TGT), as well as department stores Macy’s (M), Kohl’s (KSS), Nordstrom and apparel and footwear retailers all in focus ahead of the unofficial start of the holiday shopping season for Black Friday today and Cyber Monday

·     Tesla (TSLA) to recall 67,698 units of imported Model S, Model X in China, Chinese Regulator said, Dow Jones reported; to Recall 2,736 units of imported Model 3 in China, and recall 10,127 units of domestically made Model 3 in China

·     The EU market for new commercial vehicles continued to struggle, declining for the sixteenth month in a row with a decrease of 8.5%, reported the European Automobile Manufacturers Association

·     Lucid Diagnostics Inc. (LUCD) files for mixed shelf offering of up to $125M

·     Adidas (ADDYY) launches investigation into Ye conduct claims

Energy, Industrials and Materials

·     BHP Group (BHP) downgraded to Neutral from Buy at Goldman Sachs

·     Cathay Pacific Airways Ltd is in talks with aircraft manufacturers about orders for medium-haul aircraft and dedicated freighters, a senior executive said on Friday. “Overall, we have enough long-haul aircraft to fulfil Cathay Pacific’s growth plan,” Ronald Lam said during an analyst briefing, citing existing orders for Airbus SE and Boeing Co 777X planes.

·     Rocket Lab (RKLB) said it has been selected by NASA to launch the Time-Resolved Observations of Precipitation Structure and Storm Intensity with a Constellation of Smallsats as part of the agency’s Venture-class Acquisition of Dedicated and Rideshare launch services contract.

Financials

·     Visa (V) disclosed November U.S. payments volume on a year-over-year basis was up 9%. Credit grew 10% and Debit grew 8%. Compared to 2019, November U.S. payments volume was 147%, with Credit at 138% and Debit at 157%

Healthcare

·     Spectrum Pharmaceuticals Inc. (SPPI) said the FDA rejected its new drug application for its experimental treatment for metastatic non-small cell lung cancer; said that it will de-prioritize program activities for the drug, called poziotinib, and accelerate cost cutting, including reducing its research-and-development workforce by about 75%

Technology, Media & Telecom

·     Production of Apple Inc’s (AAPL) iPhones could slump by at least 30% at Foxconn’s factory in China’s city of Zhengzhou after worker unrest disrupted operations, Reuters reported on Friday. The estimate was an upward revision of an October internal forecast for production impact of up to 30% at the world’s largest iPhone factory https://reut.rs/3U4ghDe

·     The U.S. Federal Trade Commission (FTC) is likely to file an antitrust lawsuit to block Microsoft Corp’s (MSFT) $69 billion takeover bid for video game publisher Activision Blizzard Inc (ATVI), Politico reported on Wednesday. A lawsuit challenging the deal is not guaranteed, and the FTC’s four commissioners have yet to vote out a complaint or meet with lawyers for the companies, the report said, citing two of the three people with knowledge of the matter.