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Dow futures rise as inflation data is due; Tesla, Lululemon, 2 Chip Giants in focus




Dow Jones futures rose modestly Friday morning, along with S&P 500 futures and Nasdaq futures, as a wholesale inflation report came out.


The stock market rebounded somewhat on Thursday, with the Nasdaq rebounding from near its 50-day moving average. But the major indices have only recouped a fraction of recent losses, with the S&P 500 staying a distance from its 200-day moving average.

apple (AAPL) chip maker Taiwan Semiconductor (TSM), Boeing (BA), Tesla (TSLA), China EV maker Lee Otto (L.I), United Airlines (UAL), Lululemon Athletica (Lulu) And the from Broadcom (AVGO) were all in focus Friday morning.


Taiwan Semiconductor reported strong revenue growth in November, despite Apple iPhone production issues. Boeing is set to announce a major deal to sell its planes to United Air. There are other reports of Tesla production cuts in China. EV startup Li Auto reported mixed third-quarter results, but is seeing booming deliveries in December. Lululemon gave weak guidance for the holiday while Broadcom outperformed Views and headed higher in the current quarter.

Dow jones futures today

Dow futures rose 0.55% against fair value. S&P 500 futures rose 0.7%. Nasdaq 100 futures rose 0.8%.

Crude oil futures rose about 1%.

The 10-year Treasury yield fell 2 basis points, to 3.47%.

The Labor Department will release the Producer Price Index for November at 8:30 a.m. ET. The PPI inflation report should show a significant decline in headline inflation and core wholesale inflation. But it is clear that commodity prices are cooling.


The Fed’s focus has been on service prices. The November CPI report is set for December 13, with the Fed’s year-end meeting decision set for December 14.

Remember to work in overnight Dow Jones futures contracts and elsewhere that does not necessarily translate into actual trading in the next regular session Stock market session.

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Main earnings

Broadcom earnings Earnings were better than expected. The chip and software giant also led to higher revenue for the current quarter and AVGO’s earnings increased. AVGO stock rose slightly before the open, indicating a move above the 200-day line.

Lululemon’s earnings topped the views, too. But the yoga apparel and retail index fell slightly in the main holiday quarter. LULU stock fell 7% before the open, indicating a pullback below a buy point.


Top five Chinese stocks to watch now

Tesla stock

Reuters reported Friday that Tesla Shanghai will suspend Model Y production for the last week of the year, only producing 20,000 Y crossovers in the last three weeks of December. That would be about half of Shanghai’s typical Model Y production during that period. It comes amid widespread reports of production cuts, and shorter shifts at Tesla’s largest assembly plant.

A major expansion in Shanghai was completed in August, but Tesla’s backlog has fallen to zero. Tesla cut prices in late October and announced a series of rebates and incentives to boost demand before government support ends on December 31.

Tesla stock rose more than 1% Friday morning. TSLA stock is down 11% so far this week, just above the bear market’s lows.

Tesla vs. BYD: Which EV giant is the best to buy?


me stock cars

Li Auto reported a larger-than-expected loss in the third quarter while revenue growth fell short. The hybrid SUV maker has faced Covid-related issues as well as a shift to newer models.

But Li Auto speeds up production and delivery. And you see Q4 deliveries of 45,000 to 48,000 hybrids. Li Auto delivered 10,052 and 15,034 units in October and November. This implies December delivery of 19,914 to 22,914.

Li Auto shares fell 1% before the open. LI stock has been rallying along with other China makers and Chinese stocks in general over the past few weeks.

Apple Chipmaker Taiwan Semiconductor

Taiwan Semiconductor reported November revenue jumped 50% year-over-year to $7.27 billion, outpacing a slowdown in much of the semiconductor business Taiwan Semi is one of the world’s largest contract manufacturers, making chips for other companies. including Apple, nvidia (NVDA) And the Qualcomm (QCOM).

Apple iPhone production has been hit by Covid shutdowns and disruptions at Foxconn’s massive assembly plant in China. China Covid restrictions are being eased, as Foxconn has ended the “closed loop” process at the iPhone factory.


TSM stock rose 1% before the open, near the 200-day line. Apple shares rose 1%.

Boeing and United Airlines deal

Boeing and United Airlines said late Thursday that they plan to make a “historic announcement” on Tuesday. This appears to confirm a recent report in the Wall Street Journal that United Airlines will order dozens of 787 Dreamliners.

Boeing shares rose 1% early Friday, while United Airlines rose. BA stock closed in a buy range, while UAL stock pulled back again from a buy point amid broader travel concerns.

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The Fed’s 2% inflation target may be historic – or else

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Stock, bond and cryptocurrency investors remain on edge after a rough year for the markets





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Dow Jones losses are heading towards the closing bell as US stocks approach their worst year since 2008





US stocks were trimming losses heading towards the closing bell on Friday, but were still on track to post their worst annual loss since 2008, as the harvest of tax losses combined with concern over the outlook for US corporate and consumer earnings took its toll.

How are stock indices traded?
  • Dow Jones Industrial Average

    It fell about 182 points, or 0.6%, to 33,039 points.

  • S&P 500 index

    It fell nearly 26 points, or 0.7%, to about 3,824.

  • The Nasdaq Composite Index fell 72 points, or 0.7%, to about 10,406 points.

Stocks posted their biggest gains of the month on Thursday, with the Dow Jones rising 345 points, or 1.05%, to 33,221 as major stock indexes rebounded after losses incurred earlier in the week that pushed the Nasdaq Composite to a new closing low for the year. . The S&P 500 was on track on Friday to wrap up its fourth consecutive losing week, the longest streak of weekly losses since May, according to FactSet data.

What drives the markets

US stocks traded lower on Friday afternoon, on pace to close the last trading session of 2022 with weekly and monthly losses.

Stocks and bonds have been crushed this year as the Federal Reserve raised its benchmark interest rate more aggressively than many expected, as it sought to crush the worst inflation in four decades. The S&P 500 is on track to end the year with a loss of nearly 20%, its worst annual performance since 2008.

“Investors were on edge,” Mark Heppenstahl, chief investment officer at Penn Mutual Asset Management, said in a phone interview Friday. “It seems as if being able to bring prices down might be a little easier given how bad the year has been.”

Stock indices have fallen in recent weeks as the recent rally inspired by hopes in the Fed’s policy focus faded in December after the central bank indicated it would likely wait until 2024 to cut interest rates.

On the last day of the trading year, the markets were also hit by selling to capture losses that could be written off from tax bills, a practice known as tax harvesting, according to Kim Forrest, chief investment officer at Bouquet Capital Partners. .


Forrest added that an uncertain outlook for 2023 has also weighed in, as investors worry about the strength of corporate earnings, the US economy and consumer as the fourth-quarter earnings season approaches early next year.

“I think the Fed, and then earnings in mid-January — they’ll set the tone for the next six months. Until then, it’s anyone’s guess.”

The US central bank has raised its benchmark interest rate by more than four percentage points since the start of the year, pushing borrowing costs to their highest levels since 2007.

The timing of the first Fed rate cut will likely have a significant impact on markets, according to Forrest, but the outlook remains uncertain, even as the Fed tries to signal that it plans to keep interest rates higher for longer.

On the economic data front, the Chicago PMI for December, the latest major data release for the year, Came stronger than expected. Climbing to 44.9 from 37.2 in the previous month. Readings below 50 indicate contraction.


In the coming year, Heppenstahl said, “we are likely to shift toward concerns about economic growth rather than inflation.” “I think the decline in growth will eventually lead to an even greater drop in inflation.”

Read: Stock market investors face 3 recession scenarios in 2023

Eric Sterner, chief information officer at Apollon Wealth Management, said in a phone interview on Friday that he expects the US to fall into a recession next year and that the stock market could see a new bottom as companies likely review their earnings. “I think the earnings outlook for 2023 is still very high,” he said.

The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite were all on pace Friday afternoon posting weekly losses of around 1%, according to FactSet data, at last check. For the month, the Dow was down about 5%, the S&P 500 was down about 7% and the Nasdaq was about to crash down about 10%.

Read: Value stocks are outperforming growth stocks in 2022 by a large margin historically


As for bonds, Treasury yields rose on Friday as the US sovereign debt market was set to post its worst year since at least the 1970s.

The yield on the 10-year Treasury note

It rose about four basis points on Friday at 3.88%, according to FactSet data, in the latest check. Ten-year yields jumped about 2.34 percentage points this year through Thursday, on track for the biggest annual gain ever based on data going back to 1977, according to market data from Dow Jones.

Meanwhile, the yield on the two-year note

Up about 3.64 percentage points in 2022 through Thursday to 4.368%, 30-year return


It jumped 2.03 percentage points over the same period to 3.922%. That marks the largest increase in a calendar year for each based on data going back to 1973, according to market data from Dow Jones.

Outside the US, European stocks capped their biggest percentage drop in a calendar year since 2018, with the Stoxx Europe 600
And the
It is an index of euro-denominated stocks, down 12.9%, according to market data from Dow Jones.

Read: A downturn in the US stock market is trailing these international ETFs as 2022 draws to a close

Companies in focus

Steve Goldstein contributed to this article.

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Fed’s reverse repo facility reaches $2.554 trillion by Reuters





© Reuters. FILE PHOTO: The Federal Reserve Building in Washington, US, January 26, 2022. (Reuters)/Joshua Roberts/File Photo

Written by Michael S Derby

NEW YORK (Reuters) – A key facility used by the Federal Reserve to help control short-term interest rates saw record inflows on Friday, the last trading day of the year.

The New York Fed said its reverse repo facility took in $2.554 trillion in cash from money market funds and other eligible financial firms, beating the previous high seen on Sept. 30, when inflows totaled $2.426 trillion.

The cash rally was almost certainly tipping into record territory in the usual end-of-quarter pattern that could worsen further towards the end of the year. On those dates, for a variety of reasons, many financial firms prefer to deposit money in the central bank rather than in the private markets.


The Fed’s reverse repo facility has been very active for some time. After seeing almost no absorption for a long time, money began to gravitate toward the central bank in the spring of 2021 and then grew steadily. Daily reverse repo usage has been steadily above the $2 trillion mark since June.

The reverse repo facility takes cash from qualified financial firms in what is an actual loan from the Federal Reserve. The current rate is 4.3%, a yield that is often better than rates for short-term private sector lending.

The reverse repo facility is designed to provide a soft floor for short-term rates and the federal funds target rate, and is the Fed’s primary tool for achieving its function and inflationary mandates. To mark the higher end of the range, the Fed is also pushing deposit-taking banks to deposit cash at the central bank, where the interest rate on reserve balances is now 4.4%.

The federal funds rate is currently set between 4.25% and 4.5% and is trading at 4.33% as of Friday, sandwiched between the reverse repo rate and interest on reserve balances.

There are no signs of shrinkage


Even with the heavy use of reverse repo, Fed officials have always remained unconcerned about large outflows, even as some in financial markets worried about the potential for the Fed to drain the borrowing and lending lives of private money markets.

Fed officials also expected that as the central bank continues to raise interest rates with the goal of bringing down very high levels of inflation, the use of the reverse repo facility should decrease. But that hasn’t happened yet, and some in the markets now believe that the consistently high utilization of the Fed facility will be around for some time to come.

Research by the Federal Reserve Bank of New York indicated that banking regulation issues make demand for the Fed’s reverse repo instrument high. Meanwhile, the Kansas City Fed added its view that large inflows are related to limited private market investment opportunities and policy uncertainty.

Strong cash flows to the central bank may not have alarmed central banks, but they have driven their operations to an actual loss. The Federal Reserve finances itself through interest on the bonds it owns as well as the services it provides to the financial community. It usually makes a noticeable profit and by law returns it to the treasury.

Currently, the cost of paying interest on reverse repo agreements and reserve balances outweighs income. The Fed reported Thursday that as of Dec. 28, the accounting metric it uses to track losses was $18 billion. Many observers expect that the Fed’s plans to raise interest rates further and keep them at high levels will mean fairly large losses for the central bank over time, even if these losses will not affect the action of the Fed’s monetary policy.


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