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Futures

U.S. Stock Futures and Market Dynamics in Pre-Market Hours

2024-11-27

In premarket hours, U.S. stock futures faced a decline as traders processed new cabinet appointments by President-elect Donald Trump. A plethora of data is anticipated to be released today, aiming to offer a clearer view of the direction interest rates are heading.

Unraveling the Pre-Market Stock Trends

Stock Futures and Their Movements

The futures for the three major U.S. indices showed a downward trend. The S&P 500 futures dropped by 0.16%, while the Dow Jones futures declined by 0.06%. However, the broader small-cap index Russell 200 futures was trading higher during this period. Additionally, the U.S. Dollar Index neared the 106.5 level. The two-year and 10-year U.S. Treasuries also slipped to 4.21% and 4.26% respectively. According to CME Group’s FedWatch tool, the expectations of a further 25 basis point rate cut in December rose to just 66.3%.In premarket trading on Wednesday, the SPDR S&P 500 ETF Trust SPY was down 0.09% to $600.07, and the Invesco QQQ ETF QQQ fell 0.27% to $507.96, as per Benzinga Pro data.

Cues from the Last Session

On Tuesday, the Dow Jones closed higher by around 124 points, reaching 44,860.31. The S&P 500 rose 0.57% to 6,021.63, and the Nasdaq Composite rose 0.63% to close at 19,175.58. Both the Dow Jones and S&P 500 surged to new record levels during the session. Most sectors on the S&P 500 closed on a positive note, with utilities, communication services, and consumer discretionary stocks recording the biggest gains. Nevertheless, energy and materials stocks defied the overall market trend and closed lower.In terms of economic data, the S&P CoreLogic Case-Shiller home price index rose 4.6% year-over-year in September compared to an 5.2% increase in August. Sales of new single-family homes in the U.S. dipped by 17.3% to an annualized rate of 610,000 in October.

Index Performance and Values

The Nasdaq Composite showed a performance of 0.63% and closed at 19,175.58. The S&P 500 had a 0.57% increase and closed at 6,021.63. The Dow Jones rose 0.28% and closed at 44,860.31. The Russell 2000, on the other hand, declined by 0.73% and closed at 2,424.31.Also read: Dow, S&P 500 Settle At Record Highs, Best Buy Reports Weaker Than Expected Earnings: Fear Index Remains In ‘Greed’ Zone

Insights from Analysts

Comparing the average performance per day of the S&P 500 Index from 1950 to 2023, Ryan Detrick, CMT and chief market strategist at Carson Group LLC stated in an X (formerly Twitter) post that “now is one of the stronger times of the year for stocks.” The chart he shared showed that the average returns on the index from November 23 to November 30 have been consecutively positive over the last 73 years.Speaking about Tuesday’s cross-asset volatility, Mark Newton, CMT, Managing Director and global head of technical strategy at Fundstrat Global Advisors LLC said that the markets “got the long-awaited 10-year Treasury and U.S. Dollar rollover while Crude and Precious metals all fell more than 3% today.” He added that “despite a +0.91% equal-weighted $SPX advance today (Tuesday), some might have felt like the market “got killed” Not quite, but important to pay close attention given the Cross-asset Volatility that kicked in today.”

Upcoming Economic Data

Here are the key events scheduled for Wednesday. Initial jobless claims, advanced durable goods orders, U.S. trade balance, retail and wholesale inventories, and the first revision of GDP will be released at 8:30 a.m. ET. The Chicago Business Barometer (PMI) will be released at 9:45 a.m. ET. Nominal personal income and spending data will be released at 10 a.m. ET. PCE index and pending home sales data will also be released at 10 a.m. ET.

Stocks to Watch

Crowdstrike Holdings Inc CRWD dropped over 6% in premarket after reporting a GAAP loss of $16.8 million in the third quarter, compared to a $26.7 million income in the third quarter of fiscal 2024. The loss from operations as per GAAP standards was $55.7 million, compared to an income of $3.2 million in the third quarter of fiscal 2024.Dell Technologies Inc DELL declined 13.22% in premarket as the third-quarter revenue came in at $24.37 billion, missing the consensus estimate of $24.65 billion.HP Inc HPQ dipped 10% in pre-market trading. HP reported in-line earnings for its fourth quarter, while sales topped estimates.Rigetti Computing, Inc RGTI jumped over 11% in pre-market trading after dipping 20% on Tuesday. The company announced a registered direct offering of 50 million shares at $2 per unit.HWH International Inc HWH rose 100% in premarket after Alset Inc. bought 4,411,764 of its shares for a total of approximately $2.99 million. It was priced at 0.68 each, according to SEC filing.

Commodities, Gold and Global Equity Markets

Crude oil futures rose in the early New York session, advancing 0.25% to hover around $68.96. The Gold spot rose 1% to 2,673.01 per ounce. Japanese and Korean markets fell on Tuesday, while Chinese, Australian, Indian and Hong Kong markets ended in green. Most European markets declined.Image Created Using MidjourneyMarket News and Data brought to you by Benzinga APIs© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Market trends and price movements in various commodities play a crucial role in the global economy. On November 27, 2024, several key futures markets saw significant changes. Let's take a closer look at the closing prices of different assets.

Uncover the Dynamics of November 27's Commodity Market

Cattle/Beef

December live cattle closed at $188.00, showing an increase of $1.10. This indicates a positive trend in the cattle market, potentially reflecting factors such as increased demand or supply constraints. January feeder cattle also closed at $258.77, with a gain of $.67. These movements suggest that the cattle and beef sector is experiencing some level of stability and growth.

Looking at the broader livestock market, it's important to consider how these prices impact the entire supply chain. From ranchers to processors and retailers, changes in live cattle prices can have ripple effects on various aspects of the industry.

Commodities

December corn closed at $4.15 and 3/4, down 4 and 1/4 cents. This decline in corn prices might be influenced by factors such as increased production or changes in global demand. Jan. soybeans closed at $9.88 and 3/4, up 5 and 1/4 cents, indicating a more positive trend in the soybean market. The fluctuations in corn and soybean prices have implications for farmers, traders, and consumers alike.

Commodity markets are highly sensitive to various economic and geopolitical factors. Understanding these trends is essential for making informed decisions in the agricultural and trading sectors.

Crops

December wheat closed at $5.37 and 3/4, down 1 and 3/4 cents. Fluctuations in wheat prices can be affected by factors such as weather conditions, global trade policies, and agricultural productivity. These factors can have a significant impact on farmers' incomes and the overall supply of wheat in the market.

Alongside corn and wheat, other crops also contribute to the agricultural landscape. The performance of different crops in the market reflects the complex interplay of various factors and provides valuable insights into the health of the agricultural sector.

Dairy

Dec. Class III milk closed at $18.48, down 32 cents. The dairy market is subject to various influences, including changes in consumer demand, production levels, and international trade. These price movements can have implications for dairy farmers and the dairy processing industry.

Monitoring dairy prices is crucial for stakeholders in the dairy sector to adapt to market conditions and ensure the sustainability of their operations.

Gold

Dec. gold closed at $2,637.20, up $15.90. Gold is often seen as a safe-haven asset, and its price movements can be influenced by factors such as economic uncertainty, inflation expectations, and geopolitical tensions. The increase in gold prices on November 27 suggests that investors may be seeking refuge in this precious metal.

The performance of gold in the market provides valuable insights into investor sentiment and global economic conditions.

Grains/Oilseeds

As we've seen, both grains and oilseeds have shown distinct price movements. December soybean meal closed at $290.50, up $2.40, while December soybean oil closed at 40.75, down 184 points. These fluctuations highlight the complexity and volatility of the grains and oilseeds market.

Soybean products, including meal and oil, are widely used in various industries, and their price dynamics have implications for sectors such as food processing and animal feed production.

Hogs/Pork

Dec. lean hogs closed at $82.40, down 70 cents. The pork market is influenced by factors such as consumer demand, production levels, and disease outbreaks. These price movements can have a significant impact on pork producers and the overall pork supply chain.

Monitoring hogs and pork prices is essential for industry participants to manage risks and make strategic decisions.

Rice

Jan. rice closed at $15.17, up 04 cents. Rice is an important staple crop, and its price movements can have implications for food security and global trade. The increase in rice prices on January indicates some level of market activity and potential demand factors.

Understanding the dynamics of the rice market is crucial for countries and regions that rely on rice as a major food source.

Fed-funds futures traders have shown a significant shift in their expectations regarding rate cuts. According to the CME FedWatch Tool, the probability of a 25 basis point rate cut next month has risen from just shy of 60% on Thursday to roughly 70%. This indicates a growing belief among traders that the Federal Reserve may take action to stimulate the economy.

Greg Wilensky's Perspective

Greg Wilensky, head of U.S. fixed income at Janus Henderson Investors, argues that the current probability of a rate cut is still too low. In an email, he stated, "We still believe that a 25-basis point reduction to the policy rate is extremely likely. The odds of a cut are still higher than the 70% currently implied in the futures market." Wilensky believes that a combination of a very strong NFP (nonfarm payrolls) print and a higher than expected core CPI release is needed to cause a pause at the December meeting. 1: Wilensky's analysis is based on his in-depth understanding of the economic landscape. He closely monitors various economic indicators and believes that the current data does not fully reflect the need for a rate cut. His expertise in fixed income markets gives him valuable insights into the potential impact of rate changes on different asset classes. 2: By emphasizing the importance of specific economic data points, Wilensky is highlighting the complexity of forecasting policy rates. The interaction between different economic factors makes it difficult to predict with certainty the direction of interest rates. However, his view suggests that there is still a significant chance of further rate cuts in the near future.

The Difficulty in Forecasting Policy Rates

Wilensky also pointed out that the path for policy rates over the next year is more challenging to predict. The economy and markets will be influenced by governmental policy decisions not only in the U.S. but also around the world. These external factors add an additional layer of uncertainty to the already complex task of forecasting interest rates. 1: The global nature of the economy means that events in one country can have ripple effects on others. For example, changes in trade policies or geopolitical tensions can impact economic growth and inflation, which in turn affect interest rate decisions. Wilensky's recognition of this global interdependence is crucial in understanding the potential trajectory of policy rates. 2: Additionally, internal factors such as domestic fiscal policies and consumer sentiment also play a significant role in shaping the economic outlook. Wilensky's expertise allows him to consider these various factors and provide a more comprehensive analysis of the future path of policy rates.

The Market's Pricing and Treasury Curve Outlook

With the market pricing in a little less than 75 basis points of easing by the Fed over the next year, Wilensky believes that the odds favor more cuts. This has a positive impact on the short to intermediate part of the U.S. Treasury curve. 1: The pricing of interest rate futures reflects the market's expectations and sentiment. A lower probability of a rate hike and a higher probability of a rate cut can lead to a flattening or even an inversion of the Treasury curve. Wilensky's view suggests that the market is anticipating a more accommodative monetary policy in the coming months. 2: The implications of a more dovish monetary policy for the Treasury market are significant. Lower interest rates can stimulate borrowing and investment, which can have a positive impact on economic growth. However, it also poses challenges for fixed income investors who rely on higher yields. Wilensky's analysis helps investors navigate these complex market dynamics.