U.S. Stock Market Outlook | Three Major Index Futures Decline, Market Focuses on PPI Data

1. As of December 12th (Thursday) before the US stock market opens, the three major US stock index futures are all down. As of the time of writing, Dow futures are down 0.19%, S&P 500 index futures are down 0.18%, and Nasdaq futures are down 0.27%.

1. As of the time of writing, the German DAX index is up 0.06%, the UK FTSE 100 index is up 0.11%, the French CAC 40 index is down 0.04%, and the Euro Stoxx 50 index is down 0.03%.

1. As of the time of writing, WTI crude oil is down 0.06%, priced at $70.25 per barrel. Brent crude oil is down 0.07%, priced at $73.47 per barrel.

Market News

November US CPI data meets expectations, market focuses on PPI data. The US Department of Labor reports that the November CPI month-on-month increase is the largest in seven months. Although overall inflation remains high, price pressures in areas such as rent and vehicle insurance have eased, leading to a slowdown in service sector inflation. The cooling trend in the labor market is being monitored by the Federal Reserve, and the market expects a third consecutive 25 basis point rate cut next week. The market has already priced in expectations for US rate cuts, with investors focusing on US PPI data and changes in initial jobless claims. At the same time, the direction of Trump's policies and geopolitical risks are also under close scrutiny. The global economic situation is complex, and central bank decisions are influenced by multiple factors, requiring investors to make investment decisions based on economic data and policy dynamics.

US fiscal "pressure mountain"! November budget deficit reaches $366.8 billion, a year-on-year surge of 17%. The US Treasury Department reported on Wednesday that the budget deficit in November surged, causing the deficit expansion rate for fiscal year 2025 (October 1, 2024, to September 30, 2025) to be much faster than a year ago, when the deficit was $1.8 trillion. On an unadjusted basis, the total US deficit in November was $366.8 billion, 17% higher than in November 2023. The total deficit for the first two months of this fiscal year is over 64% higher than the same period last year. Total revenue in November reached $301.8 billion, an increase of about $27 billion compared to the same period last year. Total expenditures amounted to $668.5 billion, nearly $80 billion higher than the same period last year. As of the end of November, the increase in the deficit has caused US debt to reach $36.1 trillion. The adjusted deficit for November was $286 billion, with a total deficit of $544 billion for the year, an increase of 19% U.S. inflation remains strong, U.S. Treasury yields rise slightly. U.S. Treasury prices fell on Wednesday, failing to maintain the gains triggered by inflation data—there are expectations that the inflation data will allow the Federal Reserve to cut interest rates next week, but the long-term outlook remains uncertain. With rising oil prices, the sell-off pushed the 2-year U.S. Treasury yield up by as much as 5 basis points, ultimately narrowing to a 1 basis point increase. Earlier in the U.S. market, following the alignment of the November CPI with economists' expectations, short-term Treasury yields led the decline before gradually rebounding. The inflation data reinforced traders' views that the Federal Reserve will cut rates by 25 basis points on December 18 local time, marking the third rate cut this year. The easing reflected in swap contracts related to this decision is close to 23 basis points, up from 20 basis points before the report was released. Even as U.S. Treasury yields retraced their declines, this pricing remained unchanged.

Wealth skyrockets like a rocket! Musk becomes the world's first person with a net worth exceeding $400 billion. Since Donald Trump won the U.S. election last month, Elon Musk's wealth has surged, making him the first person to reach a net worth of $400 billion, marking the latest milestone for the world's richest person. The recent catalyst was the internal stock sale of Musk's Space Exploration Technologies Corp (SpaceX), which, according to the Bloomberg Billionaires Index, increased Musk's net worth by approximately $50 billion. Tesla's (TSLA.US) stock price also hit an all-time high on Wednesday, bringing Musk's wealth to $447 billion. According to the Bloomberg Billionaires Index, Musk's wealth increased by $62.8 billion in a single day, marking the largest single-day increase ever and helping push the total wealth of the world's top 500 billionaires to exceed $10 trillion for the first time.

A significant "small essay" reveals the Bank of Japan's policy direction for next week: leaning towards no interest rate hike. Today, media released a significant "small essay"—indicating that the Bank of Japan is inclined to keep interest rates stable next week. Media cited five informed sources familiar with the thoughts of Bank of Japan policymakers, revealing that most committee members prefer to maintain stable rates next week, as policymakers are more willing to take additional time to carefully study overseas market risks and clues regarding next year's wage growth prospects in Japan. The Bank of Japan's decision is crucial for the fate of the recently revived yen "arbitrage trading," the "Black Monday," and the widespread "global stock market sell-off wave" that occurred this summer, triggered by the large-scale unwinding of yen "arbitrage trading."

Individual Stock News

Adobe (ADBE.US) earnings "explode": FY2025 guidance falls short of expectations, AI "job-stealing" concerns come true? Adobe's Q4 revenue was $5.61 billion, an 11% year-over-year increase, better than the market expectation of $5.54 billion; the non-GAAP earnings per share were $4.81, also better than the market expectation of $4.67. Adobe's annual recurring revenue (ARR) for digital media in the quarter was $17.3 billion, slightly above analysts' average expectations. In the fourth quarter, the digital media segment, including Adobe's flagship creative and document processing software, saw revenue grow by 12% year-over-year, reaching $4.15 billion Revenue from the department, including marketing and analytics software, increased by 10% year-on-year to $1.4 billion. Adobe expects revenue to reach approximately $23.4 billion in the fiscal year ending November 2025, with non-GAAP earnings per share projected to be between $20.20 and $20.50.

High costs of autonomous taxi lead General Motors (GM.US) to abandon Cruise, gaining Wall Street's approval. Most Wall Street analysts believe that American traditional automaker General Motors should exit its autonomous taxi business, Cruise, emphasizing that this latest move by General Motors is a positive catalyst for long-term shareholder value and the long-term trend of GM's stock price. However, the decision to exit this once-promising business has disappointed some investors, as General Motors had boasted that its autonomous driving business (i.e., Robotaxi) could generate up to $50 billion in revenue by 2030. Executives at General Motors stated that after evaluating the ongoing investments required in the competitive field of autonomous taxis, the company decided on Tuesday to officially terminate and exit the Cruise business.

Apple (AAPL.US) reportedly collaborates with Broadcom (AVGO.US) to develop internal AI chips. Apple is working with Broadcom to develop the company's first internally designed server chip specifically for artificial intelligence. Sources revealed that this internally named chip, Baltra, may be ready for mass production by 2026. Media reports added that the new AI chip could be used for inference, capable of processing new data and then passing it to large language models to generate outputs, which is a task different from training models. Insiders indicated that the chip will be manufactured by TSMC (TSM.US) and may utilize its 3-nanometer process. According to previous reports, the plan to bring Apple's chips into its own servers accelerated after OpenAI's ChatGPT chatbot took the world by storm in December 2022.

Food giant merger dreams shattered? Reports say Hershey (HSY.US) major shareholder rejects Mondelez (MDLZ.US) initial offer. Sources revealed that the major owner of American chocolate manufacturer Hershey (HSY.US) rejected an initial acquisition offer from Mondelez (MDLZ.US). This deal was expected to create a food giant with total sales of nearly $50 billion and become one of the largest acquisitions in the history of the packaged food industry. Insiders stated that the Hershey Trust Co., which holds about 80% of the voting rights in Hershey, rejected the acquisition offer on the grounds that the bid was too low. Earlier this week, it was reported that Mondelez had preliminary discussions with Hershey. As of last weekend, Mondelez's market capitalization was approximately $84 billion, while Hershey's was $35 billion. The Hershey Trust has previously used its voting power to block deals. In 2016, Mondelez withdrew from negotiations after Hershey rejected a $23 billion acquisition offer NVIDIA (NVDA.US) will increase its employees in China to 4,000, vigorously promoting research in autonomous driving technology. NVIDIA (NVDA.US) has significantly strengthened its research team in China this year, particularly in the field of autonomous driving technology, by adding hundreds of new employees. According to informed sources, by the end of this year, NVIDIA's total number of employees in China is expected to increase from about 3,000 at the beginning of 2024 to about 4,000, with approximately 200 new employees added in the Beijing area to enhance autonomous driving research. In addition, the company has also expanded its after-sales service and network software development teams, reflecting its comprehensive expansion strategy in China. NVIDIA's total number of employees in China is nearing 600, and it has established a new office in the Zhongguancun Science and Technology Center. Recently, NVIDIA China stated that rumors circulating on social media about NVIDIA cutting supply to China are false, emphasizing that China is an important market for NVIDIA, and it will continue to provide high-quality services to Chinese customers in the future.

EU price comparison websites jointly criticize Google's (GOOGL.US) search reforms, calling for heavy penalties from regulators. On Wednesday, over 20 European price comparison websites jointly voiced strong criticism against Google's proposed changes to its search results, pointing out that these adjustments still do not comply with EU technical rules and strongly urging regulators to initiate charges against the relevant departments of Google. This action stems from a series of reform measures proposed by Google to comply with the Digital Markets Act (DMA), which aims to prohibit Google from giving undue preference to its products and services on its platform. Last month, Google announced its latest proposal, which includes expanded and uniformly formatted units designed to provide users with the opportunity to choose between comparison websites and vendor websites. At the same time, Google also stated that if it fails to reach a consensus with competitors, it may revert to the "ten blue links" model from a few years ago as an alternative.

Important Economic Data and Event Forecasts

Beijing time 21:30: Initial jobless claims in the U.S. for the week ending December 7 (10,000), U.S. November PPI year-on-year (%).

Beijing time 21:15: European Central Bank announces interest rate decision.

Beijing time 21:45: European Central Bank President Lagarde holds a monetary policy press conference.

The next day at 02:00 Beijing time: The Federal Reserve announces the flow of funds for the third quarter of 2024.

Earnings Forecast

Friday morning: Broadcom (AVGO.US), Costco (COST.US)