Nasdaq, S&P 500 Futures Pullback At Start Of New Trading Week As Rate Fears Return To Haunt; AMD, Tesla, Biogen, Eli Lilly, JD In Focus

Zinger Key Points
  • After the inflation euphoria, a Fed speech doused hopes of any let-up in the central bank's hawkish monetary policy stance.
  • Even as bulls hope for a pivot, bears are beginning to price in interest rates continuing to rise for many months, Louis Navellier says.

The major U.S. index futures are pointing to a moderately lower opening on Wall Street on Monday, as optimism following a tamer inflation data gives way to apprehension. The yield on the benchmark 10-year Treasury note was rising modestly, although holding below the 4% level.

U.S. stocks closed the week ended Nov. 11 with solid gains, thanks to the October inflation print that showed the consumer price index rising at a slower pace of 7.7% compared to September’s 8.2%. The data perked up risk appetite, which had remained dormant amid fears that the Fed will raise rates long and hard in a bid to rein in inflation.

The tech-heavy Nasdaq Composite outperformed and in the process settled at the highest level since Sept. 20, while the S&P 500 Index closed at about a two-month high and the Dow Industrials climbed to a three-month high.

U.S. Indices' Performance During Week Ended Nov. 11
Index Performance (+/-)   Value
Nasdaq Composite +8.10%   11,323.33
S&P 500 Index _+5.90%   3,992.93
Dow Industrials +4.15%   33,747.86

It is likely to tug between the bears and bulls in the near term, fund manager Louis Navellier suggested in a note.

“For now, a sentiment shift from value back to growth is in motion as the bulls believe peak inflation has passed, and if the next couple of months confirms it with further falls in inflation trends, the Fed pivot will be sooner rather than later,” the analyst said.

Meanwhile, bears see the Fed goal of 2% inflation still a long way off and even if the Fed moves more slowly, that interest rates will continue to rise for many months, he added.

Here’s a peek into index futures trading:

U.S. Futures' Performance On Monday During Premarket Session
Index Performance (+/-)  
Nasdaq 100 Futures -0.74%  
S&P 500 Futures -0.43%  
Dow Futures -0.31%  
R2K Futures -0.90%  

In premarket trading on Monday, the SPDR S&P 500 ETF Trust SPY moved 0.41% lower to $396.88 and the Invesco QQQ Trust QQQ fell 0.65% to $286.08, according to Benzinga Pro data.

On the economic front, the New York Federal Reserve’s one-year and five-year consumer inflation expectations readings are due at 11 a.m. EST. The Dallas Federal Reserve’s price consumption expenditure index will be released at 10:20 a.m. EST.

Fed Vice Chair Lael Brainard is scheduled to make a public appearance at 11:30 a.m. EST. Federal Open Market Committee member and New York Fed President John Williams would speak at 6:30 p.m. EST.

Federal Reserve Governor Christopher Waller, who spoke at a UBS economic conference in the Asian session, said the Fed is on the right path as its rate increases haven’t “broken anything” thus far.

See Also: Cathie Wood Warns Of 1929 Great Depression Scenario If Fed Doesn't Pivot, Says Inflation Could Turn Negative In 2023

Stocks In Focus:

  • Tesla Inc. TSLA declined in premarket trading following a fatal accident involving its Model Y vehicle in China.
  • Alzheimer’s drug companies Biogen Inc. BIIB and Eli Lilly & Co. LLY rallied after a rival drug candidate from the stable of Swiss pharma giant Roche Holding AG RHHBY failed to meet the endpoints in two late-stage studies. Roche’s licensing partner MorphoSys AG MOR slumped over 32%.
  • Small-cap pharma Nektar Therapeutics NKTR slid close to 18% in reaction to data presentations at the Society for Immunotherapy Of Cancer Annual Meeting.
  • German electric vehicle company Sono Group N.V. SEV climbed more than 16% on a Europe-wide partnership deal with Bosch.
  • Canoo Inc. GOEV was finding follow-through buying interest after last week's rally.
  • Inc. JD rallied over 3%.
  • Advanced Micro Devices Inc. AMD advanced over 2% amid dual upgraded. Baird as well as UBS upgraded shares of the chipmaker to Outperform and Buy, respectively.

Commodities, Other Global Equity Markets:

Crude oil futures traded down moderately after the recovery seen in the previous two sessions. The black gold was holding just above $88-a-barrel level.

The Asia-Pacific markets closed Monday’s session mixed as traders in the region reacted to the hawkish comments from Waller. G20 Heads of Government are meeting on Tuesday and Wednesday in Bali, Indonesia.

The Hong Kong, Singaporean and Taiwanese markets advanced, while most others declined.

European stocks opened higher but have given back some of the gains since then.

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