December S&P 500 E-Mini futures (ESZ25) are up +0.04%, and December Nasdaq 100 E-Mini futures (NQZ25) are up +0.16% this morning, pointing to a muted open on Wall Street as cautious sentiment prevails ahead of the Federal Reserve’s final monetary policy committee meeting of the year.
While the Fed is widely expected to deliver another interest rate cut later in the week, uncertainty over the pace of easing in 2026 keeps sentiment in check.
In Friday’s trading session, Wall Street’s major equity averages ended in the green. Ulta Beauty (ULTA) surged over +12% and was the top percentage gainer on the S&P 500 after the retailer reported stronger-than-expected Q3 results and raised its full-year guidance. Also, chip stocks gained ground, with Micron Technology (MU) rising more than +4% and GlobalFoundries (GFS) advancing over +3%. In addition, Warner Bros. Discovery (WBD) climbed more than +6% and was the top percentage gainer on the Nasdaq 100 after Netflix agreed to acquire the company for about $72 billion. On the bearish side, DocuSign (DOCU) slumped over -7% after the software company issued soft Q4 revenue guidance.
Data from the U.S. Department of Commerce released on Friday showed that the core PCE price index, a key inflation gauge monitored by the Fed, rose +0.2% m/m and +2.8% y/y in September, compared to expectations of +0.2% m/m and +2.9% y/y. Also, U.S. September personal spending rose +0.3% m/m, in line with expectations, and personal income grew +0.4% m/m, stronger than expectations of +0.3% m/m. In addition, the University of Michigan’s preliminary U.S. consumer sentiment index rose to 53.3 in December, stronger than expectations of 52.0. Finally, U.S. consumer credit rose by $9.18 billion in October, weaker than expectations of $11.8 billion.
“Overall, the [PCE Inflation] data was consistent with another 25 basis point Fed cut [in December], but it doesn’t suggest any urgency for the Fed to accelerate the pace of cuts in 2026,” said BMO’s Ian Lyngen.
The Federal Reserve’s interest rate decision and Chair Jerome Powell’s post-policy meeting press conference will take center stage this week. The central bank is widely expected to cut the Fed funds rate by 25 basis points to a range of 3.50% to 3.75%, especially after last week’s ADP payroll report pointed to falling private-sector jobs. “Momentum is now firmly behind a third 25 basis-point easing for the year. While there is some nervousness about the potential for inflation to remain elevated due to tariff-induced price hikes, the news on the jobs market is increasingly concerning,” according to ING economist James Knightley. With next year’s rate path uncertain, Mr. Powell’s remarks will be closely monitored. Market watchers will also scrutinize the Fed’s quarterly “dot plot” in its Summary of Economic Projections, as they look to gauge how quickly and how far interest rates will fall next year.
Investors will also keep an eye on U.S. economic data this week. The U.S. JOLTs Job Openings for October and weekly jobless claims will provide investors with additional insight into the health of the labor market. Notably, the October JOLTs report will include figures for September. Other noteworthy data releases include the Employment Cost Index, Unit Labor Costs (preliminary), Nonfarm Productivity (preliminary), and Trade Balance.
In addition, several prominent companies, including Broadcom (AVGO), Oracle (ORCL), Adobe (ADBE), Costco (COST), and AutoZone (AZO), are slated to release their quarterly results this week.
On Friday, the Fed’s blackout period ends, with central bank officials Paulson, Hammack, and Goolsbee set to deliver remarks.
The U.S. economic data slate is largely empty on Monday.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.151%, up +0.27%.
The Euro Stoxx 50 Index is up +0.02% this morning, kicking off a busy week on a cautious note. Defense stocks gained ground on Monday. At the same time, automobile and consumer stocks underperformed. Data from the statistics agency Destatis released on Monday showed that Germany’s monthly industrial production rose far more than expected in October, as the sector awaits major government investment. Separately, the Sentix Index measuring investor sentiment in the Eurozone improved slightly in December. Meanwhile, European Central Bank Executive Board member Isabel Schnabel said she is comfortable with investor expectations that the central bank’s next interest-rate move will be a hike, though she noted this is unlikely to happen in the near term. She also indicated that the ECB could revise up its growth forecasts at the December meeting. Investor focus this week is on the final November inflation readings from Germany, France, and Spain, along with comments from ECB President Christine Lagarde. Investors also await the Fed’s final meeting of the year. The Swiss National Bank will take center stage among a slew of monetary decisions in the region this week, with the central bank widely expected to maintain its policy rate at zero. In corporate news, L’Oreal SA (OR.P.DX) fell over -1% after the French cosmetics giant announced it will boost its stake in Swiss skincare company Galderma to 20%.
Germany’s Industrial Production and Eurozone’s Sentix Investor Confidence Index were released today.
The German October Industrial Production rose +1.8% m/m, stronger than expectations of +0.2% m/m.
The Eurozone December Sentix Investor Confidence Index came in at -6.2, in line with expectations.
Asian stock markets today settled in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.54%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.18%.
China’s Shanghai Composite Index closed higher today as stronger-than-expected export data and a pledge from top policymakers that they would support the economy boosted sentiment. Insurance and brokerage stocks led the gains on Monday after Wu Qing, chairman of the China Securities Regulatory Commission, said on Saturday that the regulator will allow major financial firms to ease capital requirements and leverage limits to operate more efficiently. That followed the insurance sector regulator’s announcement on Friday that it would reduce the risk factor for insurers holding certain stocks. Goldman Sachs said both announcements signaled a loosening regulatory stance, which “will encourage incremental money from institutions into the equity market.” Semiconductor and other AI-related stocks also advanced as optimism surrounding domestic chips continued to boost sentiment. Meanwhile, the Politburo, the ruling Communist Party’s top decision-making body, said in a Monday meeting that it will introduce additional supportive policies next year to boost domestic demand, pledging to continue to implement a “‘more proactive’ fiscal policy and maintain a ‘moderately loose’ monetary stance,” according to the official Xinhua News Agency. On the economic front, data showed that China’s exports rose more than anticipated in November, rebounding from October’s decline on the back of strong shipments to non-U.S. markets. In corporate news, Baidu rose over +3% in Hong Kong after the company said it was considering a potential spinoff and listing of its AI chip unit. Investor focus now shifts to China’s November inflation data, scheduled for release on Wednesday, as the nation’s economy continues to grapple with persistent deflationary pressures. Investors also look ahead to the Central Economic Work Conference later this month, where senior officials will outline their policy priorities and discuss key economic targets for the coming year.
The Chinese November Trade Balance stood at $111.68 billion, stronger than expectations of $105 billion.
The Chinese November Exports rose +5.9% y/y, stronger than expectations of +3.8% y/y.
The Chinese November Imports rose +1.9% y/y, weaker than expectations of +2.8% y/y.
Japan’s Nikkei 225 Stock Index closed higher today, buoyed by a pause in the yen’s recent strength and a rebound in property stocks. Real estate and industrial stocks led the gains on Monday. Revised data from the Cabinet Office on Monday showed that Japan’s economy contracted more than initially estimated in the third quarter, mainly due to new data dragging down capital spending figures. Still, economists said the contraction is likely to be reversed in the fourth quarter and that the data will have little impact on the Bank of Japan’s upcoming policy decision, where it is widely expected to raise interest rates. Separate government data showed that Japan’s real wages, a key gauge of consumer purchasing power, fell 0.7% in October from a year earlier, marking the 10th straight month of decline. Meanwhile, the China-Japan diplomatic spat escalated over the weekend after Chinese fighter jets targeted their fire-control radar systems at Japanese military aircraft for the first time. Goldman Sachs’ Japan economists estimate that the number of tourists traveling to Japan from mainland China and Hong Kong could fall by half amid escalating tensions between the two countries, dragging on Japan’s growth by roughly 0.2 percentage points. Investor attention is now squarely on BOJ Governor Kazuo Ueda’s speech at a Financial Times event on Tuesday. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +0.11% to 28.35.
The Japanese Q3 GDP Annualized was revised downward to -2.3% q/q from the initial estimate of -1.8% q/q.
The Japanese October Current Account n.s.a. stood at 2.834 trillion yen, weaker than expectations of 3.109 trillion yen.
The Japanese November Economy Watchers Current Index came in at 48.7, weaker than expectations of 49.5.
Pre-Market U.S. Stock Movers
Tesla (TSLA) fell over -1% in pre-market trading after Morgan Stanley downgraded the stock to Equal Weight from Overweight with a price target of $425.
Confluent (CFLT) soared more than +28% in pre-market trading after the Wall Street Journal reported that IBM was in advanced talks to buy the company for about $11 billion.
Carvana (CVNA) climbed over +8% in pre-market trading after S&P Dow Jones Indices announced that the online used‑car dealer would be added to the S&P 500 index on December 22nd.
Netflix (NFLX) rose more than +1% in pre-market trading after President Trump said the streaming giant’s $72 billion acquisition of Warner Bros. Discovery “could be a problem,” citing concerns about how large Netflix’s market share would become if the deal goes through.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Monday - December 8th
Toll Brothers (TOL), Phreesia (PHR), Compass Minerals (CMP), Mama’s Creations (MAMA), Ooma Inc (OOMA), Elauwit Connection (ELWT).
On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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