North American Morning Briefing: All Eyes on Nvidia Results

MARKET WRAPS

Watch For:

FOMC Minutes, Existing Home Sales for October, Canadian CPI for October; Earnings from Nvidia, Kohl's, Best Buy, HP, Nordstrom

Today's Top Headlines/Must Reads:

- October Home Sales Likely Fell to New 13-Year Low

- Biden's Electric-Vehicle Push Hits a Speed Bump

- Global platinum market on track to post largest supply deficit on record

Opening Call:

Stock futures were a touch softer on Tuesday, as traders adopted a more cautious stance ahead of potentially market-moving results from Nvidia.

"Their Q1 earnings in May saw markets ride a wave of huge AI momentum so it's becoming an important macro event," Deutsche Bank said.

Options trading suggests Nvidia shares - which are up 245% year to date - could see a positive or negative swing of 8% after the earnings, according to Swissquote Bank.

"Better-than-expected results could send Nvidia to a fresh high, but anything less than stellar is poised to trigger substantial profit-taking. If confidence falters, the $500 psychological benchmark becomes an attractive target for sellers," Swissquote said.

Minutes of the Federal Reserve's rate-setting meeting will be published later, potentially providing more insight into the central bank's thinking.

Markets are pricing in a 99.8% probability that the Fed will leave interest rates unchanged at a range of 5.25% to 5.50% after its next meeting on December 13th, and there is a similar chance of no change at the January meeting, too, according to the CME FedWatch tool.

Premarket Movers

Agilent Technologies posted a higher profit in the fiscal fourth quarter despite a nearly 9% drop in revenue. Its adjusted and unadjusted earnings topped estimates in the quarter. Shares rose 6.2%.

Baidu reported third-quarter earnings that topped analysts' expectations as revenue rose 6%. ADRs of Baidu were up 1.9%.

Keysight Technologies reported fiscal fourth-quarter earnings that beat expectations, and shares were rising after the company said its "strategic customer engagement is high, and we are continuing to capitalize on opportunities across a broad and diverse set of end markets, positioning us well for an eventual recovery." Shares rose 2.3%.

Microsoft rose 0.4% in premarket trading after rising 2% on Monday to a record $377.44 following the announcement that former OpenAI CEO Sam Altman and former OpenAI President Greg Brockman would both be joining the technology giant to lead a new advanced artificial-intelligence research team.

Nvidia was up 0.2% ahead of the earnings report. The key question for investors is what management will say about Nvidia's progress in alleviating supply constraints to meet rising demand, particularly for graphic processing units.

Zoom was up 0.4% after it raised its full-year sales and profit outlook.

Monday's Post-Close Movers

MorphoSys said that its study of a treatment for myelofibrosis, a rare form of blood cancer, met its primary endpoint but did not say it met its key secondary endpoints, with a "strong positive trend" for those metrics. The company has previously said that its secondary endpoint of change in symptoms will be important in seeking regulatory approval. Shares fell 24%.

Symbotic's revenue climbed ahead of expectations in its fourth quarter, leading the company to post its first quarter of adjusted profit. The company expects revenue to rise ahead of estimates in the fiscal first quarter and to post another adjusted profit. Shares rose 22%.

Forex:

The dollar traded weaker as investors pondered the possibility of a first interest-rate cut by the Fed in the first half of 2024, DHF Capital said.

"The dollar began the week with a relatively weak performance, extending its selloff from last week," it said.

Market expectations continued to lean toward no interest-rate hikes in December and a potential rate cut as early as May, and weighed on the currency, as inflation eased and Treasury yields retreated, DHF added.

Donner & Reuschel said the U.S. interest-rate advantage versus the eurozone's could narrow, weighing on the dollar and lifting the euro, if the Fed looks likely to begin interest-rate cuts before the European Central Bank.

Fed rate cuts could start from spring 2024 given economic slowdown and expected further decline in inflation, while a second rate cut could follow in early summer as central bankers aren't expected to implement any monetary policy measures close to elections, it said.

Meanwhile, the ECB isn't likely to follow suit until later. "Even if the imminent run-up to the EUR/USD 1.10 mark prevents further appreciation for the time being, the common currency is expected to strengthen in the coming months."

Bonds:

Core fixed income assets can help balance portfolios through episodes of geopolitical instability and growth volatility, given higher yields can provide a potential buffer, Goldman Sachs Asset Management said in an outlook for 2024.

"And when growth concerns are in check, holding core bonds also makes sense given fixed income once again delivers income."

Following a reset higher in bond yields, the age of "There Is No Alternative" [TINA] to equities or other risks assets has ended, Goldman Sachs AM said.

"We believe we are now in the early phases of 'There Are Reasonable Alternatives' [TARA], such as core fixed income, including high-quality government and corporate bonds, it added.

Energy:

Crude futures were slightly weaker, with the market eyeing Sunday's OPEC meeting in Vienna.

"Speculators will not want to go into this weekend with sizable short positions," ING said.

"Given expectations, we will likely have to see at least Saudi Arabia rolling over their additional voluntary cut into 2024."

The African Energy Chamber said Africa's crude oil production will likely trend lower next year amid output outages in top producers including Nigeria, Angola and Equatorial Guinea.

Monthly crude production is expected to decline from 6.9 million B/D in January 2024 to around 6.62 million B/D in December 2024.

Metals:

Base metals and gold gained, as a weaker dollar helped ease the pressure on commodities backed by the greenback.

BMI expects gold prices to stay firm over the next year, with lower interest rates expected to boost demand for the precious metal.

It maintained its price forecast at $1,950 a troy ounce for 2023 and 2024, saying rate cuts, geopolitical tensions and a weaker dollar were all supporting gold.

TODAY'S TOP HEADLINES

OpenAI's Path Ahead Is Unclear as Employees Threaten to Quit Unless Board Resigns

The future of OpenAI was in jeopardy Monday, as the vast majority of employees threatened to quit if the board that fired the company's CEO, Sam Altman, didn't resign itself and restore him to power.

Microsoft CEO Satya Nadella said late Sunday that the company was hiring Altman and Greg Brockman, OpenAI's president who resigned in protest after Altman was ousted, and was opening its doors to more joining from the company behind viral chatbot ChatGPT.

SEC Charges Kraken With Operating As Unregistered Exchange

The Securities and Exchange Commission on Monday charged cryptocurrency trading platform Kraken with operating as an unregistered securities exchange.

The charges are the latest effort by regulators to crack down on crypto companies, some of which the SEC views as illegally selling securities without registering with the commission.

Elon Musk's X sues Media Matters for defamation over report about antisemitic content

Elon Musk's X Corp. sued Media Matters on Monday, claiming the media watchdog group defamed the social-media company last week with a report that pro-Nazi posts were appearing next to ads by major brands.

The lawsuit, filed in U.S. District Court for the Northern District of Texas, claimed Media Matters "knowingly and maliciously" manufactured misleading images and portrayed them as if they were a typical user experience, and accused the organization of a "smear campaign" against X, the former Twitter.

Chinese Premier Heads New Financial Body, Warns of Risks

Chinese Premier Li Qiang on Monday chaired a meeting as head of the Communist Party's new agency that oversees the nation's financial sector, urging to step up regulation and ward off risks.

Li was named as head of the Central Financial Commission, which was set up earlier this year as part of efforts to enhance the party's supervision and control over the country's financial sector, according to the state-run Xinhua News Agency.

Bonds Could Be the Star Asset Class of 2024 - Talking Markets

Bond investors are increasingly optimistic that 2024 will be a good year for fixed-income assets as interest-rate hikes finally look to have come to an end.

With inflation dropping back and economies faltering, investors are now looking to the prospect of rate cuts as early as in the first half of next year.

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TODAY IN CANADA

Earnings:

George Weston 3Q

Opsens 4Q

Economic Calendar (ET):

0830 Oct CPI

0830 Oct New Housing Price Index

1600 Canadian Finance Minister Chrystia Freeland presents the Fall Economic Statement

Stocks to Watch:

MDA Confirms Plans to Expand in the U.K.; Set to Double U.K. Workforce; Aims to Hire 75 New Employees in the U.K. by End-2024; to Also Expand Operations Across the U.K.

Expected Major Events for Tuesday

07:00/UK: Oct Public sector finances

08:59/JPN: Sep Final Labour Survey - Earnings, Employment & Hours Worked

11:00/FRA: 3Q OECD Quarterly National Accounts: GDP growth

13:30/CAN: Oct CPI

13:30/US: Oct Chicago Fed National Activity Index (CFNAI)

13:30/CAN: Oct New Housing Price Index

13:55/US: 11/18 Johnson Redbook Retail Sales Index

15:00/US: Oct Existing Home Sales

21:30/US: 11/17 API Weekly Statistical Bulletin

All times in GMT. Powered by Kantar Media and Dow Jones.

Expected Earnings for Tuesday

Abercrombie & Fitch Co (ANF) is expected to report $1.10 for 3Q.

Accord Financial (ACD.T) is expected to report for 3Q.

American Eagle Outfitters (AEO) is expected to report $0.48 for 3Q.

Analog Devices (ADI) is expected to report $1.18 for 4Q.

Axcella Health Inc (AXLA) is expected to report for 3Q.

Best Buy Co Inc (BBY) is expected to report $1.19 for 3Q.

Broadway Financial Corp (BYFC) is expected to report for 3Q.

Burlington Stores Inc (BURL) is expected to report $0.96 for 3Q.

Caleres Inc (CAL) is expected to report $1.28 for 3Q.

Chico's FAS Inc (CHS) is expected to report $0.01 for 3Q.

CohBar Inc (CWBR) is expected to report for 3Q.

Dick's Sporting Goods Inc (DKS) is expected to report $2.39 for 3Q.

Digital Media Solutions Inc (DMSL) is expected to report for 3Q.

Dycom Industries Inc (DY) is expected to report $1.76 for 3Q.

ENGlobal (ENG) is expected to report for 3Q.

Embecta Corp (EMBC) is expected to report for 4Q.

Excellon Resources (EXN.T) is expected to report for 3Q.

Greenlane Holdings Inc (GNLN) is expected to report for 3Q.

Hibbett Inc (HIBB) is expected to report $1.11 for 3Q.

Home Capital (HCG-T) is expected to report $0.49 for 3Q.

Jacobs Solutions Inc (J) is expected to report for 4Q.

Kodiak Sciences Inc (KOD) is expected to report $-1.22 for 3Q.

Kohl's Corp (KSS) is expected to report $0.39 for 3Q.

Lordstown Motors Corp (RIDE) is expected to report for 3Q.

Lowe's Cos (LOW) is expected to report $3.03 for 3Q.

Medtronic plc (MDT) is expected to report $0.84 for 2Q.

Movado Group Inc (MOV) is expected to report $0.70 for 3Q.

NVIDIA Corp (NVDA) is expected to report $3.03 for 3Q.

Navidea Biopharmaceuticals Inc (NAVB) is expected to report for 3Q.

New Jersey Resources Corp (NJR) is expected to report $0.30 for 4Q.

Prairie Provident Resources Inc (PPR.T) is expected to report for 3Q.

Quince Therapeutics Inc (QNCX) is expected to report for 3Q.

Reliv International Inc (RELV) is expected to report for 3Q.

SOPerior Fertilizer Corp (SOP.H.V) is expected to report for 3Q.

Spark Networks SE - ADR (LOVLY) is expected to report for 3Q.

StageZero Life Sciences Ltd (SZLS.T) is expected to report for 3Q.

Urban Outfitters (URBN) is expected to report $0.78 for 3Q.

Weston (George) Ltd (WN.T,WNGRF) is expected to report $3.88 for 3Q.

dLocal Ltd (DLO) is expected to report for 3Q.

iMedia Brands Inc (IMBIQ) is expected to report for 3Q.

Powered by Kantar Media and Dow Jones.

ANALYST RATINGS ACTIONS

2seventy bio Cut to Neutral From Outperform by Wedbush

Adtran Cut to Hold From Buy by Argus Research

Arvinas Raised to Buy From Neutral by Guggenheim

Biotricity Cut to Neutral From Buy by HC Wainwright & Co.

Boeing Raised to Buy From Hold by Deutsche Bank

ChargePoint Cut to Hold From Buy by Stifel

Chegg Cut to Underweight From Equal-Weight by Morgan Stanley

Children's Place Cut to Neutral From Buy by B. Riley Securities

Compass Minerals Raised to Neutral From Underweight by JP Morgan

Destination XL Group Cut to Hold From Buy by Craig-Hallum

Dorian LPG Raised to Buy From Hold by Jefferies

Dutch Bros Raised to Overweight From Neutral by JP Morgan

Energizer Holdings Cut to Neutral From Buy by UBS

KB Home Cut to Neutral From Outperform by Wedbush

Kingstone Cut to Underweight From Neutral by Piper Sandler

Krispy Kreme Cut to Neutral From Overweight by JP Morgan

LGI Homes Cut to Neutral From Buy by Seaport Global

Morgan Stanley Cut to Neutral From Outperform by Exane BNP Paribas

NanoString Technologies Cut to Market Perform From Outperform by TD Cowen

PENN Entertainment Raised to Buy From Neutral by B of A Securities

Ryan Specialty Holdings Cut to Neutral From Buy by Goldman Sachs

Six Flags Raised to Buy From Hold by Jefferies

Spectrum Brands Cut to Equal-Weight From Overweight by Wells Fargo

Wingstop Cut to Neutral From Buy by Northcoast Research

WiSA Technologies Cut to Hold From Buy by Maxim Group

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

November 21, 2023 06:06 ET (11:06 GMT)

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