Morning Call: Weakness in energy stocks drags U.S. stock indexes lower; Dec E-mini S&Ps down -0.35%; Jan WTI crude oil down -0.56% at a 13-1/2 month low.
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 ESZ18 - S&P 500 E-Mini
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ESZ182,626.25-19.25-0.73%
CLF1952.40-0.18-0.34%
DXY0097.115+0.051+0.05%
ZNZ18120-130+0-040+0.10%
GCZ181,241.7-1.0-0.08%
SIZ1814.729s+0.004+0.03%
HGZ182.7520-0.0105-0.38%
RBF191.4654-0.0128-0.87%
ELLI65.02-1.29-1.95%
BKNG1,833.07-23.08-1.24%
VEEV92.11+0.07+0.08%
ATO99.50+0.91+0.92%
PS24.34-0.40-1.62%
MTCH42.15-0.56-1.31%
LZB26.25-0.65-2.42%
WMB23.86+0.01+0.04%
GES19.99-1.91-8.72%
TLYS10.60-0.18-1.67%
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NDLS7.35-0.31-4.05%
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PIXY2.35+0.01+0.43%

Overnight Markets and News

Dec E-mini S&Ps (ESZ18 -0.22%) this morning are down -0.35% due to weakness in energy stocks as signs of oversupply pushes Jan WTI crude oil (CLF19 +1.53%) down -0.56% to a 13-1/2 month low. U.S. crude inventories on Wednesday unexpectedly rose for a tenth consecutive week to a 1-year high and Russian President Putin said oil prices at $60 a barrel is "absolutely fine." European stocks moved higher on signs of economic strength and are up +0.28% after German unemployment unexpectedly fell to a record low of 5.0% and Eurozone Nov economic confidence fell less than expected. Gains in European stocks were limited as Deutsche Bank fell -3% after prosecutors raided the company's headquarters in Frankfurt in a money-laundering probe. Asian stocks settled mostly higher: Japan +0.39%, Hong Kong -0.87%, China -1.32%, Taiwan +0.01%, Australia +0.58%, Singapore +0.48%, South Korea +0.26%, India +1.27%. Chinese stocks erased an early rally and closed lower on trade concerns ahead of Saturday's meeting between U.S. President Trump and China's President Xi Jinping. Japan's Nikkei Stock Index climbed to a 2-1/2 week high on signs of economic strength after Japan Oct retail sales rose more than expected.

The dollar index (DXY00 +0.04%) is up +0.14%. EUR/USD (^EURUSD +0.11%) is up +0.07%. USD/JPY (^USDJPY -0.31%) is down -0.30%.

Dec 10-year T-note prices (ZNZ18 +0-045) are up +5.5 ticks at a 2-1/2 month high on positive carry-over from Wednesday's speech from Fed Chair Powell who opened the door for a potential pullback in rate hikes next year after he said rates are "just below" the range of neutral estimates.

Eurozone Nov economic confidence fell -0.2 to 109.5, stronger than expectations of -0.7 to 109.1 but still a 1-1/2 year low. The Nov business climate indicator unexpectedly rose +1.08 to 1.09, stronger than expectations of -0.05 to 0.96.

German Nov unemployment change fell -16,000, stronger than expectations of -10,000. The Nov unemployment rate unexpected fell -0.1 to 5.0%, stronger than expectations of no change at 5.1% and the lowest since German reunification in 1990.

UK Oct net consumer credit rose +0.9 billion pounds, weaker than expectations of +1.0 billion pounds.

UK Oct mortgage approvals rose 67,100, stronger than expectations of 64,600 and the most in 9 months.

Japan Oct retail sales rose +1.2% m/m, stronger than expectations of +0.4% m/m.

U.S. Stock Preview

Key U.S. news today includes: (1) weekly initial unemployment claims (expected -4,000 to 220,000, previous +3,000 to 224,000) and continuing claims (expected -5,000 to 1.663 million, previous -2,000 to 1.668 million), (2) Oct personal spending (expected +0.4%, Sep +0.4%) and Oct personal income (expected +0.4%, Sep +0.2%), (3) Oct PCE deflator (expected +0.2% m/m and +2.1% y/y, Sep +0.1% m/m and +2.0% y/y) and Oct core PCE deflator (expected +0.2% m/m and +1.9% y/y, Sep +0.2% m/m and +2.0% y/y), (4) Oct pending home sales (expected +0.5% m/m and -2.8% y/y, Sep +0.5% m/m and -3.4% y/y), (5) minutes of the Nov 7-8 FOMC meeting, (6) Cleveland Fed President Loretta Mester (voter), Chicago Fed President Charles Evans (non-voter), Philadelphia Fed President Patrick Harker (non-voter), Minneapolis Fed President Neel Kashkari (non-voter) and Dallas Fed President Robert Kaplan (non-voter) participate at a Boston Fed Conference on “Collaboration for Inclusive Economic Development.”

Notable Russell 1000 earnings reports today include: HP (consensus $0.54), VMware (1.50), Dollar Tree (1.14), Dell Technologies Class V (1.50), Palo Alto Networks (1.05).

U.S. IPO's scheduled to price today: none.

Equity conferences during the remainder of this week: Piper Jaffray Health Care Conference on Tue-Thu, Credit Suisse Industrials Conference on Wed-Thu, Deal Economy Conference on Thu, Inside FinTech with Blockchain Agenda Conference on Thu.

Market Comments

Dec S&P 500 E-minis (ESZ18 -0.22%) this morning are down -9.50 points (-0.35%). Wednesday's closes: S&P 500 +2.30%, Dow Jones +2.50%, Nasdaq 100 +3.17%. The S&P 500 on Wednesday rallied to a 1-week high and closed sharply higher on an upbeat forecast from Fed Chair Powell who said he and the FOMC are forecasting "continued solid growth, low employment and inflation near 2%," and on Mr. Powell's dovish comment that interest rates are "just below" the range of neutral policy, which fueled speculation the Fed is close to pausing its rate hike cycle. Stocks were undercut by the unexpected -8.9% decline in U.S. Oct new home sales to a 2-1/2 year low of 544,000, weaker than expectations of +4.0% to 575,000.

Dec 10-year T-notes (ZNZ18 +0-045) this morning are up +5.5 ticks at a 2-1/2 month high. Wednesday's closes: TYZ8 +4.50, FVZ8 +3.25. Dec 10-year T-notes on Wednesday closed higher on the unexpected decline in U.S. Oct new home sales to a 2-1/2 year low, which is dovish for Fed policy and on dovish comments from Fed Chair Powell who said the fed funds rate is "just below" the neutral level, which bolstered speculation the Fed may be near the end of its rate hike cycle. T-note prices were undercut by reduced safe-haven demand with the sharp rally in the U.S. stock market.

The dollar index (DXY00 +0.04%) this morning is up +0.133 (+0.14%), EUR/USD (^EURUSD +0.11%) is up +0.0008 (+0.07%), and USD/JPY (^USDJPY -0.31%) is down -0.34 (-0.30%). Wednesday's closes: Dollar Index -0.583 (-0.60%), EUR/USD +0.0077 (+0.68%), USD/JPY -0.11 (-0.10%). The dollar index on Wednesday fell back from a 2-week high and closed lower on Fed Chair Powell's dovish comment that the fed funds rate is "just below" the neutral range, which signals the Fed may be near the end of its rate-hike cycle. The dollar was also undercut by the unexpected decline in U.S. Oct new home sales to a 2-1/2 year low.

Metals prices this morning are mixed with Dec gold (GCZ18 +0.21%) +0.1 (+0.01%), Dec silver (SIZ18 -0.45%) -0.110 (-0.77%), and Dec copper (HGZ18 -0.23%)-0.012 (-0.41%). Wednesday's closes: Dec Comex gold (GCZ18) on Wednesday closed up +10.20 an ounce (+0.84%) and Dec Comex silver (SIZ18) closed up +0.241 (+1.71%). Dec gold recovered from a 1-1/2 week low Wednesday and moved higher after the dollar index retreated from a 2-week high and closed lower. The dollar shed its gains and moved lower after Fed Chair Powell said the fed funds rate level was "just below" neutral, which signals the Fed may be close to pausing its interest rate increases. Fund buying of gold is also supporting prices after long gold positions in ETFs rose to a 3-3/4 month high Tuesday of 2,144 MT. On the negative side, the jump in the S&P 500 to a 1-week high reduces safe-haven demand for precious metals.

Jan WTI crude oil prices (CLF19 +1.53%) this morning are down -28 cents (-0.56%) at a 13-1/2 month low and Jan gasoline (RBF19 +1.52%) is -0.47 (-0.34%). Wednesday's closes: Jan WTI crude oil (CLF19) on Wednesday closed down -$1.27 per barrel (-2.46%) and Jan Brent crude (CBF19) closed down -$1.45 (-2.41%). Jan RBOB gasoline (RBF19) closed down -2.56 cents a gallon (-1.82%). Crude prices moved lower Wednesday after EIA crude inventories unexpectedly rose +3.58 million bbl to a 1-year high, more than expectations of a -1.0 million bbl decline and the tenth consecutive weekly increase. Also, crude supplies at Cushing, the delivery point of WTI futures, rose +1.18 million bbl to a 6-month high. On the positive side, EIA gasoline inventories unexpectedly fell -764,000 bbl to an 11-month low, weaker than expectations of a +1.0 million bbl increase. Also, crude oil output in Russia declined as Russia Nov crude production of 11.0 million bpd was -40,000 bpd less than in Oct. Russian President Putin will meet Saudi Crown Prince Mohammed Bin Salam this weekend in Buenos Aires and may discuss oil markets before OPEC and its allies meet next week in Vienna. Market expectations are for OPEC+ to announce a cut of 1.1 million bpd in crude production. Crude prices plunged last week with Jan WTI crude slumping to a 13-month low Friday and Jan Brent crude dropping to a 1-year low on global oversupply concerns. Reports last week indicated that Saudi Arabian oil output has increased to a record 11.2 million bpd from 10.8-10.9 million bpd earlier in November.

Overnight U.S. Stock Movers

Ellie Mae (ELLI +2.31%) was rated a new 'Negative' at Susquehanna Financial with a price target of $53.

Booking Holdings (BKNG +2.46%) was rated a new 'Outperform' at Telsey Advisory Group with a price target of $2,100.

Veeva Systems (VEEV +8.91%) climbed more than 6% in after-hours trading after it reported Q3 adjusted EPS of 45 cents, above consensus of 38 cents, and then forecast full-year adjusted EPS of $1.58, higher than consensus of $1.48.

Atmos Energy (ATO -0.80%) lost more than 2% in after-hours trading after it announced that it plans to make a public offering of $650 million of shares of its common stock.

Pluralsight (PS +9.22%) was rated a new 'Outperform' at Baird with a price target of $28.

Match Group (MTCH +4.94%) was rated a new 'Outperform' at Macquarie with a price target of $52.

La-Z-Boy (LZB +3.59%) rallied 9% in after-hours trading after it reported Q2 sales of $439.3 million, better than consensus of $434.3 million.

Williams Cos (WMB +1.40%) was rated a new 'Buy' at Mizuho Securities USA with a price target of $32.

Guess? (GES +1.86%) dropped 8% in after-hours trading after it reported Q3 adjusted EPS of 13 cents, weaker than consensus of 16 cents, and then forecast full-year adjusted EPS of 96 cents to $1.03, the midpoint below consensus of $1.02.

Tilly's (TLYS +2.07%) slumped more than 13% in after-hours trading after it reported Q3 net sales of $146.8 million, weaker than consensus of $149.7 million, and then forecast Q4 EPS of 22 cents to 26 cents, below consensus of 27 cents.

Box Inc (BOX +4.48%) gained 2% in after-hours trading after it reported Q3 revenue of $155.9 million, higher than consensus of $154.8 million, and then forecast full-year revenue of $608.2 million to $609.2 million, above consensus of $607.5 million.

Noodles & Co (NDLS +1.42%) fell nearly 3% in after-hours trading after it announced a secondary underwritten public offering of 5.58 million shares of its common stock via Morgan Stanley.

Falcon Minerals (FLMN +1.86%) was rated a new 'Buy' at Citigroup with a price target of $11.

ShiftPixy (PIXY +1.84%) jumped 10% in after-hours trading after it reported Q4 gross billing more than doubled to $73.4 million from $33.1 million y/y and rose +21.9% from Q3.