Morning Call: U.S. stocks rebound slightly from Wednesday's plunge; Mar E-mini S&Ps up +0.40%; Feb WTI crude down -3.43% on demand concerns.
Related Stocks
 ESH19 - S&P 500 E-Mini

Overnight Markets and News

Mar E-mini S&Ps (ESH19 +0.19%) this morning are up +0.40% as they recover from a contract low posted in the overnight session. U.S. stocks indexes slumped Wednesday afternoon, with the S&P 500 falling to a 1-1/4 year low, after the FOMC signaled additional rate hikes next year. The sell-off in U.S. equities spread around the world with European stocks down -1.16% at a 2-year low. The sell-off in European stocks boosted safe-haven demand for government debt as the 10-year German bund yield fell to a 6-1/2 month low of 0.204%. The slump in global equity markets has stoked demand concerns for crude with Feb WTI crude oil (CLG19 -2.89%) down -3.43%. Asian stocks settled lower: Japan -2.84%, Hong Kong -0.94%, China -0.52%, Taiwan -1.11%, Australia -1.34%, Singapore -0.26%, South Korea -0.94%, India -0.14%. Asian stock markets followed the plunge in U.S. equity markets as China's Shanghai Composite fell to a 2-month low and Japan's Nikkei Stock Index slid to a 14-1/2 month low. A sell-off in Japanese exporters led losses in Japanese stocks after USD/JPY tumbled to a 1-3/4 month low, which curbs the earnings prospects of exporters. Losses in Japanese stocks accelerated after the BOJ kept monetary policy unchanged.

The dollar index (DXY00 -0.69%) is down -0.72% at a 1-month low. EUR/USD (^EURUSD +0.76%) is up +0.76%% at a 1-1/2 month high. USD/JPY (^USDJPY -0.63%) is down -0.66% at a 1-3/4 month low.

Mar 10-year T-note prices (ZNH19 -0-015) are down -1.5 ticks.

The BOJ as expected kept its benchmark interest rate at -0.1% and its target for the 10-year Japanese government bond yield at around 0%. The BOJ also maintained its JGB purchase pace of about 80 trillion yen a year.

The BOE as expected voted 9-0 to keep its benchmark interest rate unchanged at 0.75% and to maintain its asset purchase target at 435 billion pounds.

UK Nov retail sales ex auto fuel rose +1.2% m/m, stronger than expectations of +0.2% m/m. Nov retail sales including auto fuel rose +1.4% m/m, stronger than expectations of +0.3% m/m and the biggest increase in 6 months.

UK Dec CBI retailing reported sales fell -32 to a 14-month low of -13, weaker than expectations of -4 to 15.

U.S. Stock Preview

Key U.S. news today includes: (1) weekly initial unemployment claims (expected +9,000 to 215,000, previous -27,000 to 206,000) and continuing claims (expected +2,000 to 1.663 million, previous +25,000 to 1.661 million), (2) Dec Philadelphia Fed business outlook index (expected +2.1 to 15.0, Nov -9.3 to 12.9), (3) Nov leading indicators (expected unch m/m, Oct +0.1%), (4) Treasury auctions $14 billion of 5-year TIPS.

Notable Russell 1000 earnings reports today include: NIKE (consensus $0.46), Carnival (0.70), Accenture (1.86), Walgreens (1.43), Conagra (0.56), Cintas (1.71).

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

Equity conferences during the remainder of this week: none.

Market Comments

Mar S&P 500 E-minis (ESH19 +0.19%) this morning are up +10.00 points (+0.40%). Wednesday's closes: S&P 500 -1.54%, Dow Jones -1.49%, Nasdaq 100 -2.29%. The S&P 500 on Wednesday slumped to a new 14-1/2 month low and closed lower on the hawkish interpretation of the FOMC meeting where the Fed dots only reduced the forecast to two rate hikes in 2019 from three rate hikes, versus market hopes for a more clear cut signal that the Fed would be firmly on pause in early 2019. Stocks found some support from the unexpected +1.9% increase in U.S. Nov existing home sales to 5.32 million, stronger than expectations of -0.4% to 5.20 million.

Mar 10-year T-notes (ZNH19 -0-015) this morning are down -1.5 ticks. Wednesday's closes: TYH9 +10.0, FVH9 +4.25. Mar 10-year T-notes on Wednesday rallied to a contract high and closed higher on ideas that the Fed will raise interest rates by too much in 2019 and cause a recession. T-note prices were also boosted by the slump in stocks, which boosted the safe-haven demand for T-notes.

The dollar index (DXY00 -0.69%) this morning is down -0.703 (-0.72%) at a 1-month low, EUR/USD (^EURUSD +0.76%) is up +0.0086 (+0.76%) at a 1-1/2 month high, and USD/JPY (^USDJPY -0.63%) is down -0.74 (-0.66%) at a 1-3/4 month low. Wednesday's closes: Dollar Index -0.069 (-0.07%), EUR/USD +0.0015 (+0.13%), USD/JPY -0.04 (-0.04%). The dollar index on Wednesday dropped to a 1-week low and closed lower on the sell-off in stocks that boosted the safe-haven demand for the yen and caused a drop in USD/JPY to a 1-1/2 month low. The dollar was also undercut by the FOMC's cut in its U.S. 2019 GDP estimate to 2.3% from a Sep estimate of 2.5%.

Metals prices this morning are mixed with Feb gold (GCG19 +0.19%) +2.9 (+0.23%), Mar silver (SIH19 -0.05%) -0.003 (-0.02%), and Mar copper (HGH19 -0.85%) -0.022 (-0.79%). Wednesday's closes: Gold and Silver Market News and Commentary - Feb Comex gold (GCG19) on Wednesday closed up +2.8 (+0.22%), and Mar Comex silver (SIH19) closed up +0.117 (+0.80%). A slide in the dollar index to a 1-week low Wednesday pushed metals prices higher with Feb gold at a 5-month high and Mar silver at a 1-1/2 month high. Gold prices were boosted by technical buying after prices climbed above the 200-day average. Also, recent stock market turmoil that pushed the S&P 500 to a 14-1/2 month low Tuesday has been a bullish factor for gold on increased demand for gold as a store of wealth after long gold positions in ETFs rose to a 5-1/4 month high Tuesday. A positive for silver prices was the unexpected increase in U.S. Nov existing home sales (+1.9% vs expectations of -0.4%), which is positive for industrial metals demand. A negative for silver is increased fund selling as long positions in ETFs fell for a fifth consecutive session to a 5-3/4 month low on Tuesday.

Feb WTI crude oil prices (CLG19 -2.89%) this morning are down -$1.65 per barrel (-3.43%) and Feb gasoline (RBG19 -2.43%) is -4.04 cents per gallon (-2.94%). Wednesday's closes: Feb WTI crude oil (CLF19) on Wednesday closed up by +$1.57 per barrel (+3.37%) and Feb Brent crude (CBG19) closed up +$0.98 (+1.74%). Feb RBOB gasoline (RBF19) closed up by +2.75 cents per gallon (+2.04%). A decline in the dollar index on Wednesday to a 1-week low spurred short-covering in the energy complex following Tuesday's plunge. Also, comments from Saudi Arabian Energy Minister prompted additional short-covering in crude futures when he said he is "certain" that OPEC+ will extend its 2019 crude production cuts when they meet in April. The energy complex also found support from an increase in the crack spread to a 1-month high, which gives incentive to refiners to purchase crude to refine it into gasoline. A bearish factor was weekly EIA data that showed a +1.09 million bbl increase in crude supplies at Cushing, the delivery point for WTI futures, to an 11-month high. In addition, U.S. crude oil inventories fell by only -497,000 bbl, which was bearish relative to expectations of -2.5 mln bbl. Gasoline inventories rose +1.76 mln, slightly above expectations of +1.6 mln bbl. The energy complex sold off sharply Tuesday with Feb WTI crude oil at a 1-1/4 year low, Feb Brent crude at a 14-month low, and Feb RBOB gasoline at a 2-year low on global supply concerns. The EIA late Monday forecast that U.S. Jan shale-oil crude production will climb to 8.166 million bpd, up +136,000 bpd (+1.7% m/m) from 8.030 million bpd forecast for Dec.

Overnight U.S. Stock Movers

Occidental Petroleum (OXY -1.43%) was rated a new 'Overweight' at KeyBanc Capital Markets with a price target of $75.

Phillips 66 (PSX +0.51%) was upgraded to 'Buy' from 'Hold' at Jeffries with a price target of $105.

ShotSpotter (SSTI +0.36%) was rated a new 'Buy' at B Riley FBR with a price target of $53.

Celanese (CE -0.84%) may open higher initially this morning after it was announced that it will replace Express Scripts in the S&P 500 before the open of trading on Monday, December 24.

Bluebird Bio (BLUE -2.22%) was rated a new 'Strong Buy' at Raymond James with a price target of $165.

Tilray (TLRY -7.19%) rallied 16% in after-hours trading after Anheuser-Busch InBEv SA joined into a research partnership with Tilray where both companies will invest $50 million each into a partnership to develop non-alcoholic, cannabis-infused beverages.

Halliburton (HAL -4.62%) was upgraded to 'Buy' from 'Hold' at Societe Generale with a price target of $34.

Cal-Maine Foods (CALM -0.54%) was downgraded to 'Sell' from 'Hold' at Goldman Sachs with a 6-month price target of $32.

G1 Therapeutics (GTHX +0.88%) tumbled 23% in after-hours trading after it said a Phase 2 trial of its Trilaciclib in patients with small cell lung cancer failed to show a benefit over chemotherapy in response rate and progression-free survival.

Herman Miller (MLHR -1.43%) jumped 7% in after-hours trading after it reported Q2 net sales of $652.6 million, better than consensus of $647 million, and then forecast Q3 sales of $615 million to $630 million, stronger than consensus of $602.5 million.

Limoneira (LMNR +0.86%) fell 5% in after-hours trading after it forecast 2019 adjusted EPS of 75 cents to 85 cents, weaker than consensus of 89 cents.

Spectrum Pharmaceuticals (SPPI -1.51%) plunged nearly 30% in after-hours trading after the FDA did not grant Breakthrough Therapy Designation status to its Poziotinib drug for the treatment of patients with metastatic non-small cell lung cancer.