December S&P 500 E-Mini futures (ESZ24) are up +0.03%, and December Nasdaq 100 E-Mini futures (NQZ24) are up +0.04% this morning after three major U.S. benchmark indices finished the regular session lower as investors grew more cautious ahead of Wednesday’s release of a key U.S. inflation report.

In yesterday’s trading session, the benchmark S&P 500 and tech-heavy Nasdaq 100 retreated from record highs, while the blue-chip Dow dropped to a 1-1/2 week low. Omnicom Group (OMC) plunged over -10% and was the top percentage loser on the S&P 500 after agreeing to acquire Interpublic Group in a deal valued at $13.3 billion, excluding debt. Also, Comcast (CMCSA) slid more than -9% after the head of its cable business said the company expects a Q4 broadband subscriber loss of just over 100,000. In addition, Nvidia (NVDA) fell over -2% after China Central Television reported that the State Administration for Market Regulation had launched an investigation into the chipmaker over alleged violations of anti-monopoly laws. On the bullish side, Hershey (HSY) climbed more than +10% and was the top percentage gainer on the S&P 500 after Bloomberg reported that Mondelez International was exploring an acquisition of the chocolate maker.

Economic data released on Monday showed that U.S. wholesale inventories rose +0.2% m/m in October, in line with expectations.

Meanwhile, market participants are awaiting the U.S. consumer inflation report for November, due on Wednesday, that will help shape the outlook for Federal Reserve monetary policy. The CPI is expected to pick up slightly to +2.7% y/y from +2.6% y/y in October, while the core CPI is projected to remain unchanged from October at +3.3% y/y. 

“This Wednesday’s inflation data may hold the key to the Fed’s next move,” said Jay Woods at Freedom Capital Markets. “So far results have been in line with economists’ expectations and haven’t scared the market. However, an upward surprise should raise eyebrows at the Fed and could put another rate cut on pause.”

U.S. rate futures have priced in an 86.1% chance of a 25 basis point rate cut and a 13.9% chance of no rate change at December’s policy meeting.

Today, investors will focus on U.S. Unit Labor Costs and Nonfarm Productivity data, set to be released in a couple of hours. Economists forecast final Q3 Unit Labor Costs to be +1.3% q/q and Nonfarm Productivity to be +2.3% q/q, compared to the second-quarter numbers of +0.4% q/q and +2.5% q/q, respectively.

Investors will also keep an eye on earnings reports from several notable companies today, including AutoZone (AZO), Ferguson (FERG), and GameStop (GME).

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.217%, up +0.41%.

The Euro Stoxx 50 futures are down -0.38% this morning, snapping an eight-day winning streak as optimism over China’s recent stimulus pledge waned following disappointing trade data. Mining stocks led the declines on Tuesday as investors digested weaker-than-expected trade data from China. At the same time, healthcare and automobile stocks advanced. Final data from the Federal Statistical Office confirmed on Tuesday that Germany’s annual inflation rate was 2.2% in November, up from 2.0% in October. Meanwhile, investors are bracing for key U.S. inflation data on Wednesday and the European Central Bank’s monetary policy decision on Thursday. The ECB is widely expected to lower its policy rate by 25 basis points for the fourth time this year amid a deteriorating economic outlook and ongoing political instability in France and Germany. In corporate news, Teamviewer Se (TMV.D.DX) plunged over -12% after agreeing to buy employee experience software maker 1E from Carlyle Group for $720 million. Also, Ashtead Group Plc (AHT.LN) slumped more than -13% after proposing moving its primary listing to the U.S. from London.

Germany’s CPI and Italy’s Industrial Production data were released today.

The German November CPI arrived at -0.2% m/m and +2.2% y/y, in line with expectations.

The Italian October Industrial Production stood at 0.0% m/m, stronger than expectations of -0.1% m/m.

Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.59%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.53%.

China’s Shanghai Composite Index ended higher today after the nation’s top leaders signaled strong policy support next year to revive the struggling economy. Retail stocks outperformed on Tuesday. President Xi Jinping’s decision-making Politburo pledged to adopt a “moderately loose” monetary policy in 2025, as reported by the official Xinhua News Agency on Monday, signaling further rate cuts and marking a shift from the “prudent” strategy maintained for nearly 14 years. The body also vowed a “more proactive” fiscal policy at its monthly meeting, fueling expectations that Beijing will widen the fiscal deficit from 3% at the annual parliamentary session in March. Meanwhile, trade data released on Tuesday pointed to softening demand in the world’s second-largest economy. China’s exports grew at a slower pace in November, while imports unexpectedly slipped into contraction. Still, Chinese President Xi Jinping voiced confidence on Tuesday that the country will achieve its annual growth target. Investors are now turning their attention to the Central Economic Work Conference, set to begin on Wednesday, which will outline China’s economic priorities and targets for 2025. In corporate news, State Grid Information & Communication climbed over +4% after announcing plans to acquire SGCC Yili Technology in cash.

The Chinese November Trade Balance stood at $97.44B, stronger than expectations of $94.00B.

The Chinese November Exports came in at +6.7% y/y, weaker than expectations of +8.5% y/y.

The Chinese November Imports arrived at -3.9% y/y, weaker than expectations of +0.3% y/y.

Japan’s Nikkei 225 Stock Index closed higher today. The rally was fueled by optimism following China’s pledge to embrace a “moderately loose” monetary policy and a “more proactive” fiscal policy in 2025, lifting market sentiment across the region. Electronics stocks led the gains on Tuesday. Export-oriented stocks also gained ground thanks to a softer yen. However, the benchmark index’s rise was capped as investors cautiously awaited next week’s Federal Reserve and Bank of Japan monetary policy meetings. Market expectations are split on the timing of the next BOJ rate hike, with forecasts ranging between December and January. Meanwhile, HSBC Global Research economists stated on Tuesday that the BOJ could raise rates at the December meeting, citing recent hawkish-leaning remarks from officials. Investors are also looking ahead to Japanese business sentiment data, set to be released later in the week, to gain further insight into the health of the economy. In corporate news, Bloomberg reported that Japan’s major banks, including Mitsubishi UFJ, Sumitomo Mitsui, and Mizuho, are considering expansions in the U.S. and India amid record earnings. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +5.27% to 22.56.

Pre-Market U.S. Stock Movers

Oracle Corporation (ORCL) slumped over -8% in pre-market trading after the IT giant reported weaker-than-expected FQ2 results and issued below-consensus FQ3 EPS guidance.

C3.ai Inc. (AI) climbed more than +6% in pre-market trading after the enterprise software company posted upbeat FQ2 results and raised its full-year revenue guidance.

Norwegian Cruise Line (NCLH) gained over +3% in pre-market trading after Goldman Sachs upgraded the stock to Buy from Neutral with a price target of $35.

MongoDB (MDB) slid more than -4% in pre-market trading despite reporting better-than-expected Q3 results and raising its full-year guidance.

General Motors (GM) rose over +1% in pre-market trading after Morgan Stanley upgraded the stock to Equal Weight from Underweight with a price target of $54.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Tuesday - December 10th

AutoZone (AZO), Ferguson (FERG), GameStop Corp (GME), Ollie's Bargain Outlet (OLLI), Academy Sports (ASO), United Natural Foods (UNFI), Dave & Buster’s Entertainment (PLAY), G-III Apparel (GIII), Stitch Fix (SFIX), Johnson Outdoors (JOUT), Mama’s Creations (MAMA), Designer Brands (DBI), Huize (HUIZ), Sportsmans (SPWH), Vince (VNCE).