Market Analysis

Beyond the Numbers

Futures Pointing To Roughly Flat Open On Wall Street
11/23/2021 8:53 AM

The major U.S. index futures are currently pointing to a roughly flat open on Tuesday, with stocks likely to show a lack of direction after coming under pressure late in the previous session.

A lack of major U.S. economic data may keep some traders on the sidelines ahead of the release of a slew of reports on Wednesday.

Reports on weekly jobless claims, durable goods orders, new home sales and personal income and spending are likely to attract attention.

Some trades may also look to get a head start on the Thanksgiving Day holiday, as the markets will be closed on Thursday and open for just a half-day on Friday.

After turning in a mixed performance for much of the session, stocks came under pressure going into the close of trading on Monday. The Nasdaq slid more firmly into negative territory and the S&P 500 also turned lower, although the narrower Dow managed to cling to a modest gain.

The major averages finished the day mixed for the third consecutive session. While the Dow inched up 17.27 points or 0.1 percent to 35,619.26, the S&P 500 fell 15.02 points or 0.3 percent to 4,682.94 and the Nasdaq tumbled 202.68 points or 1.3 percent to 15,854.76.

The tech-heavy Nasdaq and the S&P 500 both reached new record intraday highs before turning lower as the day progressed.

The mixed close on Wall Street came after President Joe Biden announced his intent to nominate Jerome Powell for a second term as Federal Reserve Chair.

The White House also revealed that Biden intends to nominate current Fed Governor Lael Brainard as Vice Chair of the Federal Reserve System.

"While there's still more to be done, we've made remarkable progress over the last 10 months in getting Americans back to work and getting our economy moving again," Biden said.

He added, "That success is a testament to the economic agenda I've pursued and to the decisive action that the Federal Reserve has taken under Chair Powell and Dr. Brainard to help steer us through the worst downturn in modern American history and put us on the path to recovery."

Biden expressed confidence Powell and Brainard's focus on keeping inflation low, prices stable, and delivering full employment will make the economy stronger than ever before.

"Fundamentally, if we want to continue to build on the economic success of this year we need stability and independence at the Federal Reserve - and I have full confidence after their trial by fire over the last 20 months that Chair Powell and Dr. Brainard will provide the strong leadership our country needs," Biden said.

Powell, who was nominated by former President Donald Trump, took office as Fed Chair in February 2018. His current term was due to end in February 2022.

While the re-nomination of Powell will give the Fed stability as it grapples with the economic recovery and elevated inflation, Brainard was seen as the more dovish choice.

Software stocks moved sharply lower over the course of the session, dragging the Dow Jones U.S. Software Index down by 2 percent. The index ended last Friday's trading at a record closing high.

Considerable weakness was also visible among gold stocks, as reflected by the 1.7 percent drop by the NYSE Arca Gold Bugs Index. The weakness among gold stocks came amid a substantial decline in the price of the precious metal.

Semiconductor and retail stocks also showed significant moves to the downside on the day, while strength remained visible among steel, telecom and banking stocks.

Commodity, Currency Markets

Crude oil futures are slipping $0.25 to $76.50 a barrel after climbing $0.81 to $76.75 a barrel on Monday. Meanwhile, after plummeting $45.30 to $1,806.30 an ounce in the previous session, gold futures are sliding $19.80 to $1,786.50 an ounce.

On the currency front, the U.S. dollar is trading at 114.96 yen compared to the 114.88 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1250 compared to yesterday’s $1.1237.


Asian stocks ended mixed on Tuesday as a worrying jump in coronavirus infections in Europe and uncertainty over the pace of future U.S. interest rate hikes kept underlying sentiment cautious. The Japanese market was closed on account of Labor Thanksgiving Day.

China's Shanghai Composite Index rose 7.01 points, or 0.2 percent, to 3,589.09 amid bets the Chinese central bank still has an easing bias in its policy stance.

Hong Kong's Hang Seng Index slumped 299.76 points, or 1.2 percent, to 24,651.58 as tech stocks fell amid continued regulatory concerns related to online companies.

China Evergrande jumped 6.6 percent and shares of its electric vehicle unit Evergrande New Energy Vehicle Group soared 14.8 percent. The latter said on Friday it would issue about 900 million shares at HK$3 apiece through a top-up placement.

Australian markets rose notably, with mining and energy stocks leading the surge. The benchmark S&P/ASX 200 Index climbed 57.50 points, or 0.8 percent, to 7,410.60, marking its best session since November 12. The broader All Ordinaries Index ended up 53.40 points, or 0.7 percent, at 7,741.70.

BHP Group jumped 4 percent and Woodside Petroleum added 3.5 percent, a day after they gave the final sign-off on their $12 billion Scarborough LNG project.

Iron ore miner Fortescue Metals Group soared 9.8 percent and Rio Tinto advanced 3.6 percent after prices for the steel commodity surged. Santos and Origin Energy climbed 2-3 percent after oil prices rose on Monday.

The manufacturing sector in Australia expanded at a faster pace in November, the latest survey from Markit Economics showed, with a manufacturing PMI score of 58.5, up from 58.2 in October.

The report also showed that the services PMI improved from 51.8 to 55.0 amid easing of Covid-19 restrictions in the country.

Seoul stocks fell as traders booked profits after the recent tech rally. The benchmark Kospi dropped 15.92 points, or 0.5 percent, to 2,997.33.

Top automaker Hyundai Motor declined 1.6 percent, internet portal operator Naver declined 2.4 percent and chemical firm LG Chem lost 3.3 percent.

Consumer confidence in South Korea picked up steam in November, the latest survey from the Bank of Korea showed today, with the sentiment index rising to 107.6 from 106.8 in October.


European stocks are mostly lower on Tuesday as Fed Chair Jerome Powell's nomination provided a little bit more legitimacy to market pricing in terms of policy tightening next year.

Traders have also ramped up their bets on an ECB rate hike next year after ECB policymaker Francois Villeroy de Galhau said on Monday that the central bank is "serious" about ending its emergency bond-buying program in March and may not need to expand regular asset purchases to cover the shortfall.

Separately, board member Isabel Schnabel said today that the risks to inflation are skewed to the upside and that plans to end pandemic emergency bond purchases remain valid.

The German DAX Index is down by 0.7 percent and the French CAC 40 Index is down by 0.3 percent, although the U.K.’s FTSE 100 Index has bucked the downtrend and inched up by 0.1 percent.

Swiss chemicals group Clariant AG has shown a notable move to the downside after it set out new mid-term targets.

British medical technology company Smith & Nephew has also dropped after announcing the launch of CORI handheld robotics, an advanced system for both total and partial knee arthroplasties.

German steelmaker ThyssenKrupp has plunged on news that Swedish activist fund Cevian is cutting its stake in the firm.

Utility E.ON has also tumbled after it announced new financial earnings and growth targets for its core businesses until 2026.

Meanwhile, Telecom Plus, the supplier of utility services, has moved sharply higher after backing its 2022 guidance.

Foodservice company Compass Group has also moved to the upside after it reported an increase in pretax profit for fiscal 2021.

French telecom company Orange SA is also moving higher. Its subsidiary Orange Belgium announced it was selected by Nethys to enter into exclusive negotiations for the acquisition of 75 percent of the capital minus one share of VOO SA.

Aareal Bank has also jumped as U.S.-based companies Advent International and Centerbridge Partners floated plans to launch a takeover offer for the German commercial real estate lender.

U.S. Economic Reports

The Treasury Department is scheduled to announce the results of this month’s auction of $59 billion worth of seven-year notes at 1 pm ET.

Stocks In Focus

Shares of Best Buy (BBY) are moving sharply lower in pre-market trading after the electronics retailer reported better than expected third quarter results but provided holiday sales guidance that disappointed investors.

Life sciences company Agilent Technologies (A) may also move to the downside after reporting fiscal fourth quarter results that exceeded expectations but providing guidance below some analysts’ estimates.

Shares of Zoom (ZM) are also seeing significant pre-market weakness after the video conferencing company reported better than expected fiscal third quarter results but forecast slowing sales growth as workers return to their offices.

On the other hand, shares of J.M. Smucker (SJM) may see initial strength after the food producer reported fiscal second quarter results that beat estimates on both the top and bottom lines and raised its full-year forecast.
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