OPENING CALL
Stock futures suggest indexes will open higher ahead of the Federal Reserve's announcement at 2 p.m. ET, when it is overwhelmingly expected to cut interest rates, but what investors really want to know is what are the Fed's plans for next year?
The Fed will also release its quarterly economic projections along with the rate decision and the last time it did it predicted a full percentage point worth of cuts in 2025.
Since then, measures of inflation have been stuck above the central bank's 2% target.
Plus, Trump's election brought the possibility of trade, immigration and tax policies that could boost price growth.
Economists at Deutsche Bank expect the Fed to pencil in three-quarters of a percentage point in cuts for next year.
Stocks to Watch:
CommScope Holding closed a comprehensive refinancing that will enable it to address upcoming debt maturities. Shares climbed 13%.
Corvus Pharmaceuticals said it would announce interim data from a Phase 1 clinical trial of its treatment for moderate to severe eczema. Shares rose 16%.
Heico was down 6.9% after reporting revenue that missed analysts' estimates.
Honda and Nissan confirmed they were exploring a merger or other future collaboration. U.S.-listed shares of Honda were down 3.4%. Nissan rose 11% on Tuesday after the report first surfaced.
Nvidia rose 3.3% after falling 1.2% on Tuesday. The company announced Tuesday it was introducing a $249 version of its Jetson computer for AI applications, down from $499.
Tesla was down 3.2% after closing at another record high in the last session.
Watch For:
Housing Starts for November; EIA Weekly Petroleum Status Report; Interest-rate decision; Fed economic projections, earnings from Micron Technology, Lennar, General Mills, Jabil, Birkenstock, and Toro.
Today's Headlines/Must Reads:
- U.S. Weighs Ban on Chinese-Made Router in Millions of American Homes
- Nippon-U.S. Steel Executives Are Running Out of Time to Save $14 Billion Deal
- Milei Says Trump Backs Argentina's Free-Market Makeover
MARKET WRAPS
Forex:
The dollar was steady and UniCredit expects the Fed decision to have a limited impact on the currency.
Powell is likely to signal that the central bank will pause rate cuts at some point, UniCredit said, adding that the key factor for the foreign exchange market will likely be how he "conveys the idea that an upcoming pause would not represent the end of the current easing cycle."
Sterling fell after data showed the on-month rate of inflation slowed by more than expected in November.
"This suggests the year-on-year rise is less about a resurgence in inflationary pressures and more a reflection of base effects from the previous year," Quilter Investors said.
The BOE has warned inflation could rise toward the year-end before falling sustainably in 2025, but inflation has been less pronounced than anticipated, it added.
Monex Europe said it could fall further as the BOE is unlikely to scale back signals for interest-rate cuts next year after Wednesday's U.K. inflation data.
The BOE has previously steered the market to expect 100 basis points of rate cuts next year and there's little in the data to convince the central bank to step away from this, it added.
Bitcoin eased after hitting a record high when Senator Cynthia Lummis said 2025 would be the year for the crypto sector.
Commerzbank said holding bitcoin reserves would only make sense if the U.S. wants to boost bitcon's price and added that Lummis allegedly owns bitcoins.
This would expose the dollar as the world's reserve currency to a competing product and imports cannot be paid for with bitcoins, it said.
Bonds:
The recent rise in Treasury yields points to renewed investor concerns over how Trump's potential policies might expand government borrowing while putting upward pressure on inflation, UBS said.
"But we see limited room for Treasury yields to rise much further and expect them to move lower over the course of 2025, benefiting quality fixed income."
UBS expects Treasury yields to decline in a lower-rate environment, noting the likelihood of further volatility.
Energy:
Oil edged higher but continued to trade in a narrow range as markets remain cautious ahead of the Fed's rate decision.
Prices are finding some support in stricter EU and U.K. sanctions against Russia's shadow fleet ships, however, gains continue to be capped by persistent concerns over consumption trends in China.
Metals:
Gold was broadly stable as traders awaited signals on the Fed's interest-rate outlook for next year.
"A dovish message, indicating a more flexible stance likely to continue lowering rates, could boost gold's appeal," Pepperstone said.
"Conversely, a hawkish stance, suggesting greater focus on fighting inflation, could exert further pressure on its price."
Investor sentiment toward gold is also dependent on GDP and the PCE index data due on Thursday and Friday respectively.
Meanwhile, geopolitical tensions in Eastern Europe and the Middle East continue to provide support, strengthening the precious metal's role as a safe-haven asset.
TODAY'S TOP HEADLINES
The Firm That Wants to Power AI With Southern Yellow Pine
Power producer Drax is scouting locations in the American pine belt to build electricity generators fueled by burning wood chips.
The plan calls for constructing wood-fired power plants in parts of the U.S. South where pulp and paper mills have closed and left timber growers without buyers for those trees unfit for making lumber or poles.
Nvidia Stock Looks Dead in the Water. Here's When It Comes Back to Life.
Nvidia, we have a problem.
It's difficult to say that about a stock that has been so successful. Shares of Nvidia have risen almost 14-fold since their split-adjusted low of just over $11 in late 2022 to a record intraday high of nearly $153 in November, dwarfing the S&P 500 index's 66% gain and just about everything else over that time frame. And every bit of those gains was deserved as demand for Nvidia's chips, which have the power and speed to handle the data needed for artificial intelligence, shot through the roof.
Micron Earnings Are Coming. What Really Matters for the Stock.
Semiconductor investors are eagerly awaiting the latest commentary from Micron Technology about progress in its AI memory business, due after the market closes today.
The Wall Street consensus estimate is for Micron to report November quarter revenue of $8.7 billion with adjusted earnings of $1.76 a share. Analysts' estimate for the current quarter is $8.96 billion in revenue and $1.92 in adjusted earnings per share.
Japan Exports Continue to Recover Amid Yen Weakness
TOKYO-Japan's exports continued to recover in November thanks to demand for chip-making machines and nonferrous metals, Ministry of Finance data showed Wednesday.
Exports rose 3.8% in November from a year earlier, compared with a 3.1% increase in October. Economists polled by data provider FactSet had forecast a 2.3% rise.
Trump Pledged to Cut Taxes for Expats. This Republican Wants to Make It a Reality.
WASHINGTON-A new proposal in Congress attempts to put meat on one of President-elect Donald Trump's campaign-trail tax promises, detailing how the U.S. could remove income taxes on Americans living abroad.
Rep. Darin LaHood (R., Ill.) would let expatriates pay income taxes only where they live, removing a requirement that U.S. citizens living anywhere owe U.S. taxes on their worldwide income. LaHood, who is introducing the proposal Wednesday, hopes it could be included in broader tax legislation that Congress is likely to pass in 2025.
How Tucker Carlson Killed Mike Pompeo's Hopes of Joining the Trump Administration
WASHINGTON-Shortly before the election, Tucker Carlson approached Donald Trump with an urgent plea: Mike Pompeo had to go.
Many in Trump's inner circle believed that Pompeo, who served as secretary of state during Trump's first term, was the clear front-runner to be the next defense secretary. The day before the election, Trump praised Pompeo during a campaign rally, marveling at his recent weight loss and twice calling him handsome.
Write to clare.kinloch@wsj.com
TODAY IN CANADA
Earnings:
OrganiGram Holdings 4Q
Economic Calendar $(ET)$:
0830 Oct Employment Insurance
Stocks to Watch:
Global Uranium Corp Announces Upsized Private Placement for Gross Proceeds Up to C$2.45M; To Price Offering at C$0.75 Per Unit; Offering Expected to Close on or About Dec. 31; Proceeds to Be Used for Canadian Exploration Expenses including the North Athabasca Project
GreenFirst Forest Products in Agreement With Mahogany Investors to Sell Entitlements to Refunds, Including Accrued Interest, Related to Duties Imposed on Softwood Lumber Exports to U.S.; Agreed Sale Price for Entitlements Is About $17.5M; Duties Pertain to Deposits Totaling About $60M During Company's Ownership of Six Softwood Lumber Mills in Ontario and Quebec
Patriot Battery Metals : Volkswagen to Buy 9.9% Stake in Canadian Lithium Company Patriot for $48M
Expected Major Events for Wednesday
07:00/UK: Nov UK producer prices
07:00/UK: Nov CPI
09:30/UK: Oct UK House Price Index
11:00/UK: Dec CBI Industrial Trends Survey
12:00/US: 12/13 MBA Weekly Mortgage Applications Survey
13:30/US: Nov New Residential Construction - Housing Starts and Building Permits
13:30/CAN: Oct Employment Insurance
13:30/US: 3Q International Transactions
15:30/US: 12/13 EIA Weekly Petroleum Status Report
19:00/US: Federal Reserve economic projections
19:00/US: U.S. interest rate decision
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Wednesday
ABM Industries Inc $(ABM)$ is expected to report $0.75 for 4Q.
Enerpac Tool Group Corp (EPAC) is expected to report $0.38 for 1Q.
General Mills Inc $(GIS)$ is expected to report $1.22 for 2Q.
Jabil Inc $(JBL)$ is expected to report $1.41 for 1Q.
(MORE TO FOLLOW) Dow Jones Newswires
December 18, 2024 06:11 ET (11:11 GMT)
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