Morning Call: U.S. stocks fall ahead of Nov payrolls report; Dec E-mini S&Ps down -0.58%; Jan WTI crude down -0.12% as OPEC talks remain deadlocked.
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Overnight Markets and News

Dec E-mini S&Ps (ESZ18 -0.46%) this morning are down -0.58% ahead of this morning's U.S. Nov non-farm payroll report. Trade concerns continue to weigh on U.S. equity markets after the arrest of the CFO of China's Huawei in Canada for possible violation of banking laws as Huawei sought to evade sanctions against Iran by routing a series of transactions through HSBC Holdings Plc. Markets are concerned that China may retaliate for her arrest by ending trade talks with the U.S. Weakness in energy stocks is also weighing on U.S. stock indexes with Jan WTI crude oil (CLF19 +0.85%) down -0.12%. Crude oil gave up overnight gains after an OPEC delegate said that talks are deadlocked over crude production cuts as Iran said it will not accept a symbolic output cap. European stocks are up +1.00% as they recover from Thursday's slide to a 2-year low. Asian stocks settled mostly higher: Japan +0.82%, Hong Kong -0.35%, China +0.03%, Taiwan +0.79%, Australia +0.42%, Singapore -0.14%, South Korea +0.41%, India +1.02%. Japanese stocks rallied on stronger-than-expected Oct labor earnings, which may lead to a boost in consumer spending.

The dollar index (DXY00 -0.01%) is down -0.01%. EUR/USD (^EURUSD +0.05%) is up +0.04%. USD/JPY (^USDJPY +0.13%) is up +0.12%.

Mar 10-year T-note prices (ZNH19 -0-025) are down -2 ticks.

Fed Chair Powell said, "our economy is currently performing very well overall, with strong job creation and gradually rising wages. Our labor market is very strong."

Eurozone Q3 GDP was revised downward to +1.6% y/y from the previously reported +1.7% y/y, the slowest pace of growth since Q4 of 2014.

German Oct industrial production unexpectedly fell -0.5% m/m, weaker than expectations of +0.3% m/m.

Japan Oct labor cash earnings rose +1.5% y/y, stronger than expectations of +1.0% y/y, Oct real cash earnings fell -0.1% y/y, stronger than expectations of -0.3% y/y.

U.S. Stock Preview

Key U.S. news today includes: (1) Nov non-farm payrolls (expected +198,000, Oct +250,000) and Nov unemployment rate (expected unch at 3.7%, Oct unch at 3.7%), (2) Nov avg hourly earnings (expected +0.3% m/m and +3.1% y/y, Oct +0.2% m/m and +3.1% y/y), (3) revised Oct wholesale inventories (previous +0.7%), (4) preliminary-Dec University of Michigan U.S. consumer sentiment (expected -0.5 to 97.0, Nov -1.1 to 97.5), (5) Fed Governor Lael Brainard speaks about current financial stability issues at the Peterson Institute in Washington D.C., (6) Oct consumer credit (expected +$15.000 billion, Sep +10.923 billion).

Notable Russell 1000 earnings reports today include: Vail Resorts (consensus $-2.46).

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

Equity conferences during the remainder of this week: none.


Market Comments

Dec S&P 500 E-minis (ESZ18 -0.46%) this morning are down -15.50 points (-0.58%). Thursday's closes: S&P 500 -0.15%, Dow Jones -0.64%, Nasdaq 100 +0.78%. The S&P 500 on Thursday tumbled to a 5-week low but then recovered to close just slightly lower. Stocks opened sharply lower on the arrest of Wanzhou Meng, CFO of Huawei Technologies, for violations of U.S. sanctions on Iran, which could threaten the recent trade truce between the U.S. and China. Energy stocks were undercut by the -2.65% slide in crude oil prices.

Mar 10-year T-notes (ZNH19 -0-025) this morning are down -2 ticks. Thursday's closes: TYH9 +12.50, FVH9 +8.50. Mar 10-year T-notes on Thursday rallied to a contract high and closed higher on the slump in the S&P 500 to a 5-week low, which spurred safe-haven demand for T-notes. T-notes were also boosted by reduced inflation expectations after the 10-year T-note breakeven inflation expectations rate tumbled to an 11-3/4 month low.

The dollar index (DXY00 -0.01%) this morning is down -0.005 (-0.01%), EUR/USD (^EURUSD +0.05%) is up +0.0004 (+0.04%), and USD/JPY (^USDJPY +0.13%) is up +0.14 (+0.12%). Thursday's closes: Dollar Index -0.260 (-0.27%), EUR/USD +0.0030 (+0.26%), USD/JPY -0.51 (-0.45%). The dollar index on Thursday closed lower on weaker-than-expected U.S. economic data on Nov ADP employment and Oct factory orders. In addition, the sharp early sell-off in stocks sent USD/JPY down to a 5-week low on increased safe-haven demand for the yen.

Metals prices this morning are higher with Feb gold (GCG19 +0.24%) +3.0 (+0.24%), Mar silver (SIH19 +0.42%) +0.051 (+0.35%), and Mar copper (HGH19 +0.71%) +0.016 (+0.57%). Thursday's closes: Feb Comex gold (GCG19) on Thursday closed up +1.0 (+0.08%) and Mar Comex silver (SIH19) closed down -0.073 (-0.50%). A weaker dollar and a slump in the S&P 500 to a 5-week low Thursday boosted safe-haven demand for gold and lifted Feb gold prices to a 6-week high. Mar silver moved lower Thursday on fund selling tied to demand concerns. Long silver positions in ETFs fell to a 3-week low of 528.16 mln troy ounces on Wednesday, a sign of fund selling. Meanwhile, U.S. Oct factory orders fell -2.1% m/m, the biggest decline in 15 months, which is negative for industrial metals demand. Gold gave up most of its gains Thursday on reduced inflation expectations after the 10-year T-note inflation expectations rate tumbled to an 11-1/2 month low, which curbs demand for gold as an inflation hedge.

Jan WTI crude oil prices (CLF19 +0.85%) this morning are down -6 cents (-0.12%) and Jan gasoline (RBF19 +1.58%) is up +0.082 (+0.57%). Thursday's closes: Jan WTI crude oil (CLF19) on Thursday closed down by -$1.40 per barrel (-2.65%) and Feb Brent crude (CBG19) closed down -$1.50 (-2.44%). Jan RBOB gasoline (RBF19) closed down by -1.22 cents per gallon (-0.84%). The energy complex sold-off Thursday after OPEC+ producers failed to come to an agreement on a crude production cut. Prices remained lower on concern OPEC+ producers will fail to cut crude production enough to curb oversupply after Saudi Oil Minister Khalid Al-Falih said Thursday that a cut of about 1 million bpd from OPEC+ should be adequate, which is less than estimates from OPEC+ delegates last week for a -1.3 million bpd cut in production to curb global oversupply. Crude prices recovered from their worst levels after the EIA reported that U.S. crude inventories last week fell -7.23 million bbl, a much bigger than decline than expectations of -2.0 million bbl. Also, strong foreign demand for U.S. crude is supportive after U.S. crude exports in the week ended Nov 30 rose +761,000 bpd to a record 3.203 million bpd.

Overnight U.S. Stock Movers

Expeditors International (EXPD -1.64%) was downgraded to 'Sell' from 'Neutral' at Goldman Sachs with a price target of $68.

Broadcom (AVGO -2.07%) climbed more than 6% in after-hours trading after it reported Q4 adjusted EPS from continuing operations at $5.85, better than consensus of $5.56.

Ulta Beauty (ULTA +0.61%) dropped 5% on after-hours trading after it forecast Q4 revenue of $2.085 billion to $2.103 billion, weaker than consensus of $2.12 billion.

WD-40 (WDFC -0.95%) was rated a new 'Buy' at D.A. Davidson with a price target of $209.

Lululemon Athletica (LULU -1.63%) fell 4% in after-hours trading after it forecast Q4 comparable-store sales will rise in the high-single or low-double digits, weaker than the 18% increase in Q3.

Zendesk (ZEN +2.39%) was rated a new 'Outperform' at Wedbush with a price target of $71.

Global Blood Therapeutics (GBT +2.68%) slid nearly 6% in after-hours trading after it announced an agreement to sell $150 million in shares of its common stock in a registered underwritten public offering.

Comtech Telecommunications (CMTL +1.56%) jumped 9% in after-hours trading after it reported Q1 net sales of $160.8 million, above consensus of $129.4 million, and then forecast full-year net sales of $625 million to $640 million, stronger than consensus of $609.8 million.

United Natural Foods (UNFI -2.90%) slid 6% in after-hours trading after it reported Q1 adjusted EPS of 59 cents, well below consensus of 73 cents.

Zumiez (ZUMZ +0.26%) fell 7% in after-hours trading after it forecast Q4 net sales of $295 million to $301 million, weaker than consensus of $312.4 million.

Domo (DOMO -1.14%) rose 4% in after-hours trading after it reported Q3 revenue of $36.8 million, better than consensus of $35.0 million, and then forecast Q4 revenue of $37.5 million to $37.9 million, higher than consensus of $35.7 million.

American Outdoor Brands (AOBC +3.30%) rallied more than 13% in after-hours trading after it reported Q2 net sales of $161.7 million, higher than consensus of $154.1 million, and then forecast full-year net sales of $625 million to $635 million, stronger than consensus of $$624.9 million.

Quotient Ltd (QTNT +0.87%) dropped 6% in after-hours trading after it announced that it intends to sell $50 million of its common stock in an underwritten public offering.