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4:01 p.m. ET: Stocks end higher after choppy trading day
Here’s where markets settled at the end of regular trading Thursday:
S&P 500 (^GSPC): +0.15%, or 4.68 points
Dow (^DJI): +0.1%, or 28.01 points
Nasdaq (^IXIC): +0.05%, or 4.03 points
10-year Treasury yield (^TNX): +2.1 bps to 1.802%
Gold (GC=F): +0.07% to $1,481.20 per ounce
1:47 p.m. ET: Saudi Aramco shares priced at top of range in world's biggest IPO
Saudi Arabia’s state-owned oil giant Saudi Aramco priced its initial public offering at the top of its previously indicated range, AFP reports, raising $25.6 billion in the world’s largest ever IPO.
1:38 p.m. ET: Trump says China talks are ‘moving along well’
U.S. President Donald Trump said China trade talks are “moving along well” and that “something could happen on Dec. 15, but that “we are not discussing that yet,” Bloomberg reports.
12:37 p.m. ET: BAC: Holiday spending set for more than 2% jump
Last week was the official start to the holiday shopping season. Bank of America data expects early holiday sales to rise 2.2% from 2018, and the best since 2013. The bulk of those gains will come from — you guessed it — online shopping, which the bank estimates at 14% year-over-year and comprising 38% of total holiday shopping.
That said, BAC had some caveats:
What does it mean for the full season? The predictive power is not great. Remember last year where the holiday season started off fine but ended down as consumers cut back significantly at the end of December amid a sharp sell-off in the stock market? The weakness last year should help boost the YOY rate for total holiday sales this year (Nov plus Dec). Indeed, translating our data into the official numbers derived from the Census Bureau, we would not be surprised if we end up seeing total holiday sales up as much as 4% YOY.
12:30 p.m. ET: Aramco huge, but no help for soft IPO market
Refinitiv points out that the Saudi Aramco IPO boosts the global floatation market’s proceeds to nearly $159 billion in 2019. Overall, however, the global IPO market is tracking 7% lower year-over-year — even though the Aramco offering “would raise more than all of this year’s 117 IPOs on Nasdaq, currently the most active exchange so far during 2019, by value.”
11:35 a.m. ET: Black Friday not entirely a bust for brick-and-mortar?
New data from Placer.ai shows that, contrary to some reports showing Black Friday offline foot traffic was down, their performance was decidedly mixed:
We analyzed 16 top retail brands and found that overall, traffic to these stores was up 0.4%. Yet, these numbers were buoyed by a handful of strong performances from 5 brands including Nike and Dick’s Sporting Goods. The general picture was more accurately defined as one of slight decline. In fact, removing Nike and Dick’s from the group reduced the overall picture to a decline of 1.3% Year-over-Year on Black Friday. The biggest decline came from Bed, Bath & Beyond which saw a decline of over 11%. This was likely due to a combination of closed stores and the brand’s decision to open on Thanksgiving for the first time ever – diluting the single day urgency.
Two noteworthy performers were Nike (NKE) and Dick’s Sporting Goods (DKS), which Placer.ai called two of “the most notable brands of 2019 for their strong offline retail performance...Nike saw a Year-over-Year increase of over 11% while Dick’s enjoyed a jump of over 12% on Black Friday 2018.”
11:30 a.m. ET: Gundlach not as negative on Powell as Trump is, but still...
Bond king Jeff Gundlach weighs in on the job he thinks Fed Chair Jerome Powell is doing. In a long sit-down interview with Yahoo Finance’s Julia LaRoche, he likens the central banker to an NFL coach who’s team is losing:
...the heads of losing teams "all say the same thing, 'Got to watch the tape, got to play better, not good enough.' Now Jay Powell does the same sort of boilerplate. He just says, 'data-dependent, don't know we're going to do, we might.' He basically wants to say as little as possible."
He went on to describe the Fed as "rudderless" and "shamelessly following the bond market [more] than ever before."
10:05 a.m. ET: Saudi Aramco said to top IPO expectations
Saudi Aramco, the Saudi Arabian oil giant, has priced its initial public offering (IPO) at the top of its indicative range, sources told Reuters and The Wall Street Journal — raising $25.6 billion and booting China's Alibaba from its perch as the world’s biggest stock float.
The IPO’s outperformance comes in spite of a chilly reception from international investors. Aramco is targeting a valuation of somewhere around $1.7 trillion, but just shy of the “aspirational” $2 trillion price tag the kingdom sought at the outset.
9:45 a.m. ET: The dollar and U.S. growth
In a morning note, Morgan Stanley says the “narrative on U.S. data may be starting to shift” — and not in a good way, considering this week’s soft service sector data and private payrolls data:
Yesterday’s data only furthered this momentum, with US November non-manufacturing ISM surprising to the downside. Importantly, the business activity subcomponent fell to 51.6, the lowest level since 2010. Meanwhile, the ADP employment change also missed to the downside, bringing the 3-month moving average near multi-year lows, even though some of the weakness was due to the UAW strike. The combination of a softening US outlook and stabilization abroad is a recipe for [U.S. dollar] weakness.
However, the firm’s analysts say they’re skeptical that softer U.S. growth is bad for the entire world:
First, the US’s share of global output is shrinking, not rising, and it is one of the most insensitive economies to international trade, suggesting relatively little pass-through via trade channels and slowing US demand. Second, a weakening USD in response to softer US data is a positive for much of the rest of the world, not a negative. A weaker USD tends to bolster trade volumes and makes supply chain financing easier, not to mention that it eases the cost of USD-denominated liabilities, which are often held by EMs. This is particularly true if US data weaken sufficiently to result in a “material change” in the outlook for [the Federal Reserve], prompting it to ease policy further. Easing by the Fed tends to have a global as well as a local effect – even policy speeches alone can have a material international spillover effect, as the BIS recently concluded.
...Thus, while the US data narrative may continue to shift, we are less convinced that this means the end of the global growth recovery. Accordingly, we continue to expect USD weakness.
9:30 a.m. ET: Stocks rise on hopes of US-China trade breakthrough
Stocks were poised to add to the prior day’s gains in early trading, amid growing hopes for a breakthrough in U.S.-China trade negotiations. Markets were also underpinned by a drop in jobless claims and a narrowing in the U.S. trade deficit, the latter which is positive for U.S. growth.
Here’s where major benchmarks began trading:
S&P 500 (^GSPC): +0.08%, or 2.56 points
Dow (^DJI): +0.12%, or 34.26 points
Nasdaq (^IXIC): +0.13%, or 10.63 points
Crude (^CL=F): +0.8% to $58.90
10-year Treasury yield (^TNX): +0.031 to 1.812%
Gold (GC=F): -0.40% to $1,479.80 per ounce
Markets largely ignore news that House Speaker Nancy Pelosi has asked the House Judiciary Committee to proceed with articles of impeachment against President Donald Trump, a move that was all but a foregone conclusion.
8:30 a.m. ET: Jobless claims, trade data fan hopes for the economy
The Labor Department reported initial claims of 203,000, which was less than Wall Street expected, while the Commerce Department showed the trade deficit narrowed sharply to a 16-month low. The latter is more significant, given that:
It was partly distorted by the General Motors strike, which was a drag on auto imports
It’s a shot in the arm for U.S. fourth quarter GDP, which Wall Street expects to check in somewhere under 2%.
Capital Economics estimates that Q4 growth will print 1.5%. Meanwhile, veteran market watcher Peter Boockvar broke it down this way:
“The trade deficit in October narrowed to $47.2b from $51.1b in September but for the wrong reasons as imports fell more sharply than exports which dropped too. Imports fell by 1.7% after a 1.6% decline in September at sit at the least since November 2017 with particular weakness in the imports of auto’s and consumer goods. Exports also fell for a 2nd month by .2% m/o/m to the lowest since April with declines in capital goods, auto’s and consumer goods.
Bottom line, the smaller trade deficit actually helps the math of the Q4 GDP calculation...”