Thursday December 9th

9-12-2021

Stock futures are lower after major averages post third straight day of gains

U.S. stock index futures dipped early Thursday, after the major averages posted a third straight day of gains as traders bet that the omicron variant’s economic impacts won’t be as severe as initially thought. Futures contracts tied to the Dow Jones Industrial Average slid 148 points, or 0.4%. S&P 500 futures and Nasdaq 100 futures were off by 0.4%. Stocks were set to give back some of their gains in recent days, with the moves higher spurred by the belief that the omicron variant of Covid looks less severe than earlier forms. Several travel-related stocks, which led the market higher throughout the week, were lower Thursday morning. Shares of Carnival and Norwegian Cruise Line fell more than 1% premarket, although both stocks are still outperforming for the week. Casino stocks Wynn Resorts and Las Vegas Sands fell 2% and 1%, respectively. Airlines were inched lower too. Separately, shares of Rent The Runway tumbled by 10% in the premarket after reporting swelling losses and lower than pre-pandemic subscriber growth for its most recent quarter. Still, there were some positive morning moves as well. CVS gained 3% in early morning trading after it issued upbeat guidance ahead of its Investor Day. Home retailer RH soared about 8% premarket after it reported blowout earnings and lifted the low end of its revenue outlook. The moves come a day ahead of important inflation news as the Labor Department on Friday releases the consumer price index for November. Economists surveyed by Dow Jones expect the year-over-year growth rate to be 6.7%. If that is the case, it will mark the biggest move since June 1982. Federal Reserve officials are expected to react to the burst in inflation by announcing next week that it will begin pulling back on its economic aid. The first step will be accelerating the reduction in the central bank’s monthly bond purchases, with markets expecting the Fed to double the taper to $30 billion. That in turn could pave the way for interest rate hikes as soon as the spring of 2022 and mark the latest Fed policy pivot under Chairman Jerome Powell. During regular trading Wednesday, the Dow and S&P 500 advanced 0.1% and 0.3%, respectively, with each registering a third straight day of gains. The S&P’s gain over the last three days is the strongest of the year, according to MKM Partners. The Nasdaq Composite advanced 0.64%, also registering a third day of gains. Apple had the most positive impact on the index, while Nvidia was the biggest drag. Equities got a boost after Pfizer and BioNTech said Wednesday morning that a booster dose of their vaccine provides a high level of protection against the new omicron variant. “The range of possibilities is still wide, but in the bigger picture, we think the odds are still very much in favor of the pandemic phase winding down,” Bank of America wrote in a note to clients following the announcement. “In our view, COVID is here to stay, but a shift to the endemic phase is approaching where infections are common but severe outcomes / lockdowns / travel restrictions are not,” the firm added. With Wednesday’s gain, the S&P 500 is now just 0.9% below its all-time intraday high from Nov. 22. Ed Moya, senior market analyst with Oanda, said that the market is in a wait-and-see mode ahead of Friday’s inflation report, which could “fuel further Fed rate hike bets.” Economists are expecting the report to show that prices rose 0.7% in November month-over-month, according to estimates from Dow Jones. “While growth and labor markets have provided reasons to be optimistic about the economy, inflation is also running hot and sits at a 30-year high,” UBS wrote in a recent note to clients. “With the omicron variant entering the picture, investors are now questioning what monetary policy will look like going forward. The pandemic has already greatly increased the uncertainty over the economic outlook,” the firm added, noting that its base case is that the Fed will be patient. There are some notable earnings reports on Thursday, including from Oracle, Broadcom and Lululemon, all of which report after the market closes. Asia-Pacific markets traded mixed Thursday as investors assessed risks surrounding the omicron Covid variant. The Nikkei 225 in Japan declined 0.47% to 28,725.47 while the Topix index fell 0.57% to 1,990.79. South Korean shares advanced, with the benchmark Kospi gaining 0.93% to 3,029.57 and the Kosdaq higher by 1.67% to 1,022.87. Chinese mainland shares also traded higher. The Shanghai composite rose 0.98% to 3,673.04 and the Shenzhen component added 1.23% to 15,147.87. Hong Kong shares also advanced as the main Hang Seng index added 1.08% to 24,254.86 while the tech-focused Hang Seng Tech index rose 2.23% to 6,103.16. Oil prices extended gains on Thursday on confidence that the omicron coronavirus variant would not dent global growth, even as some governments stepped up curbs to stop its rapid spread. U.S. West Texas Intermediate (WTI) crude futures rose 28 cents, or 0.4%, to $72.64 a barrel at 0201 GMT, adding to a 0.4% gain in the previous session. Brent crude futures rose 22 cents, or 0.3%, to $76.04 a barrel, adding to a 0.5% gain on Wednesday. Gold prices were flat on Thursday, as the U.S. dollar and Treasury yields firmed ahead of key inflation data that could provide clues on the Federal Reserve’s next policy move. Spot gold was flat at $1,782.65 per ounce, as of 0236 GMT. U.S. gold futures fell 0.1% to $1,784.50. Benchmark 10-year Treasury yields were hovering close to their highest level since Nov. 29 scaled on Wednesday. The dollar index strengthened 0.1%, further weighing on bullion by raising its cost to buyers holding other currencies.