Monday December 5th


Stock futures fall to start the week as traders look ahead to more economic data

U.S. stock index futures fell Monday as investors awaited more economic data ahead of next week’s Federal Reserve interest rate decision. Dow Jones Industrial Average futures fell by 240 points, or 0.7%. S&P 500 and Nasdaq 100 futures slid 0.7% each. Wall Street is coming off its second positive week in a row, with the S&P 500 and Nasdaq advancing 1.1% and 2.1%, respectively. The Dow advanced 0.2% last week. In other news, Tesla shares slumped more than 4% on reports of an output cut at its Shanghai factory. Macao-linked casino stocks gained on hopes of easing Covid-19 restrictions. Those moves came after Fed Chair Jerome Powell signaled that smaller interest rate hikes could start in December. The Fed is slated to meet Dec. 13-14 and is expected to raise rates by 50 basis points, or 0.5 percentage points. On Friday, stronger-than-expected jobs report initially rattled markets, but traders later shook it off. Despite the recent rally, Morgan Stanley strategist Mike Wilson said the risk-reward for equities has likely reached its cap as it nears the bank’s original tactical target range of 4,000 to 4,150. “As suggested two weeks ago, for this tactical rally to go higher, back end rates would need to fall,” he said in a note to clients Monday. “Fast forward to today and that’s what has happened. However, we are now right into our original upside targets and we recommend taking profits before the Bear returns in earnest.” On the economic front, investors are expecting the November ISM services data at 10 a.m. ET on Monday. Economists polled by the Dow Jones expected a reading of 53.7. Shares in the Asia-Pacific mostly rose on Monday as China relaxed virus testing rules in some cities, signaling more easing may come in the nation, which has been under strict Covid-related restrictions for more than two years. Hong Kong’s Hang Seng index rose 4.51% to close at 19,518.29, leading gains in the region, with the Hang Seng Tech index gaining 9.27%. In mainland China, the Shanghai Composite added 1.76% to 3,211.81 and the Shenzhen Component gained 0.92% to 11,323.35. The Nikkei 225 in Japan gained 0.15% to 27,820.40 and the S&P/ASX 200 in Australia rose 0.33% to 7,325.60. South Korea’s Kospi bucked the trend to fall 0.62% to 2,419.32. Oil prices rose on Monday after OPEC+ nations held their output targets steady ahead of a European Union ban and a G7 price cap which kicked in on Russian crude. At the same time, in a positive sign for fuel demand in the world’s top oil importer, more Chinese cities eased Covid-19 curbs over the weekend. While prices rose as much as 2% earlier in the day, both the Brent and U.S. West Texas Intermediate (WTI) contracts have since pared some gains. Brent crude futures were last up $2.30, or 2.7%, to $87.87 a barrel, while WTI crude futures gained $2.23, also 2.8%, to $82.21 a barrel. Gold pulled back slightly from a five-month high on Monday as the dollar pared some losses but the metal still held near the key $1,800 level, buoyed by news of top bullion consumer China relaxing Covid restrictions. Spot gold ticked 0.1% lower to $1,794.94 per ounce, after touching its highest level since July 5 at $1,809.91. U.S. gold futures were little changed at $1,808.40.