OPENING CALL

Stock futures posted gains and bond yields rose Wednesday with investors on the lookout for clues from Jerome Powell on Federal Reserve interest-rate cuts.

Powell's final publicly scheduled comments before this month's rate-setting meeting coincide with a batch of economic data, including the ADP report on private sector jobs, that are likely to pique investor interest.

Traders also will be casting an eye over to France, wary that a collapse of the government following a no-confidence vote expected Wednesday could rattle European sovereign bond markets.

Meantime, a batch of better-than expected tech earnings from the likes of Okta and Marvell Technology has given investors another reason to believe this stock rally can last.

Dollar Tree, Hormel Foods and Chewy are due to report quarterly results before the opening bell. Earnings from Synopsys and PVH are expected this afternoon.

Premarket Movers

Campbell's reported a decline in quarterly comparable sales and said Chief Executive Mark Clouse would leave at the end of January. Shares slipped.

Marvell Technology got a boost from strong AI demand and its current-quarter outlook was better-than-expected. Shares went up 12%.

Okta raised its annual outlook after its quarterly results topped forecasts. Shares rose 17%.

Pure Storage boosted its annual revenue outlook after a better-than-expected third quarter. Shares rose more than 20%

Salesforce raised its annual revenue outlook, after its AI "agent" system helped drive better-than-expected quarterly sales. Shares rose more than 10%.

Watch For:

ADP National Employment Report for November; ISM Report on Business Services PMI for November; Factory Orders for October; EIA Weekly Petroleum Status Report; Canada Monetary Reserves for November

Today's Top Headlines/Must Reads:

-World Economy to Accelerate in 2025, But Recovery Threatened by Higher Tariffs, OECD Says

-Saudi Arabia Is Losing Its Iron Grip on Global Oil Markets

-Investors Are Lukewarm About Stocks. That Could Be a Good Sign.

MARKET WRAPS

Forex:

Political uncertainty in Europe and South Korea support the argument to hold dollars, ING said.

It will add to confidence that relatively high U.S. rates and liquidity make the dollar the "most compelling currency in which to park cash balances right now."

Germany's government collapsed last month and France's government is facing a similar fate with a no-confidence vote expected to be passed later Wednesday.

Meanwhile, South Korea's opposition parties have filed a motion to impeach the country's President Yoon Suk Yeol after his brief attempt to impose martial law on Tuesday.

UniCredit Research said the dollar might fall if key U.S. data on jobs and services due later are softer than expected.

The euro was little changed ahead of the no-confidence vote in France.

"We may not see a major selloff in single currency if the French government is taken down, as that possibility must be fully priced in by now," Swissquote Bank said.

However, the euro will likely remain below the major 38.2% retracement level of $1.0672. This is justified by expectations for aggressive ECB rate cuts amid gloomy economic fundamentals, political uncertainty in core European countries and Donald Trump's tariff threats, Swissquote added.

Sterling fell against the dollar and pared gains versus the euro after the Bank of England's Andrew Bailey signalled the central bank could deliver four interest-rate cuts next year .

Bonds:

The Treasury yield curve is expected to steepen and Brown Advisory has positioned for that, focusing on the 2-5-year part of the curve.

"From an interest rate risk perspective, we are positioned for a steepener."

The key question is how the curve steepens--via a faster fall of short-end yields than of long-end yields, or by a faster rise of long-end yields compared to short-end yields, Brown Advisory added.

The 10-year OATs yield climbed in the early session, as the market remained wary of French sovereign bonds ahead of the no-confidence vote .

XTB said that if Barnier's government survives there would likely be a big recovery in French bonds, stocks and the euro, though a defeat would see the French-German 10-year yield spread widen further.

Energy:

Oil edged higher, supported by a new wave of U.S. sanctions on Iranian oil exports and expectations that OPEC+ will further delay its planned output hike.

The Treasury Department sanctioned 35 entities and vessels used to transport illicit Iranian oil to foreign markets in an effort to disrupt the use of oil revenue for the country's nuclear program.

Traders wait to see if OPEC+ will prolong voluntary production curbs and for how long, with analysts saying delaying production hikes will only prevent a global oil glut from getting worse, but won't reverse it.

Metals:

Gold futures edged lower but remained in a narrow range as traders awaited key U.S. data later this week for more cues on the Fed's interest-rate cut decision.

Thursday's job openings and labor turnover survey suggested the labor market is cooling.

Markets now await Powell's public remarks later and U.S. nonfarm payrolls data due on Friday.

According to analysts at ANZ Research, the market is currently pricing in a 70% change of a rate cut.

RHB Retail Research said that Comex gold futures remain bullish as long as support at the $2,640/oz level holds, based on the daily chart.


TODAY'S TOP HEADLINES


Nvidia Stock Rises as Amazon Ramps Up Rival Chip Plans. What It Means for the AI Race.

Nvidia was rising early on Wednesday. The chip maker looks to be shrugging off a challenge from Amazon.com when it comes to artificial-intelligence hardware.

Nvidia shares were up 0.9% at $141.53 in premarket trading. The stock rose 1.2% on Tuesday.


Super Micro Stock Falls. What Wall Street Thinks Happens Next as Risks Remain.

Super Micro Computer investors are still nervous, and they have every right to be.

The stock fell 4% Tuesday and edged 0.2% lower to $40.12 ahead of the open Wednesday. The market is still anxiously awaiting the AI server maker's delayed financial reports for the year ended June 30 and the September quarter.


Gap Is Back in Fashion. It's Time to Buy the Stock.

Khakis are making a comeback-and so is Gap stock.

Gap has felt out of fashion for a while now. It's a mall-based retailer in a world dominated by e-commerce where tastes change faster than ever-which caused its four brands to flounder. The rise of work-from-home hit its Banana Republic brand, which specializes in business wear, while its activewear brand Athleta still accounts for less than 10% of the parent company's annual sales, despite playing in one of the fastest-growing clothing niches.


And the Winner Isn't-Behold Intel, CVS, and More of the Ugliest Turnaround Attempts of 2024

Intel might have just taken the lead. Not in chipmaking technology-there, it appears as far behind as ever. With the sudden departure this week of CEO Pat Gelsinger, and shares down 52% year to date, the company is an early favorite for Ugliest Turnaround Attempt of 2024. But Stellantis, down 47%, is a close second, with its own surprise CEO exit this week. Don't count out Boeing, down 39%, or CVS, down 25%, which both changed chief executives earlier this year.

I'm only considering companies with iconic brands and still-substantial stock market values that haven't sought bankruptcy protection, and whose customers don't wear five days worth of clothing to save $55 on baggage fees-sorry, Spirit Airlines.


South Korea Political Tumult Could Sour Appetite for Korean Assets

The unexpected declaration of martial law in South Korea has rattled markets, sending the won and equities lower. While the measure was promptly struck down by parliament, the episode is likely to leave a bad taste in investors' mouths.

President Yoon Suk Yeol declared martial law late Tuesday night, claiming that political opponents had made the country vulnerable to North Korea, but had to walk that back hours later as lawmakers voted down the measure early on Wednesday morning.


China Services Activity Gauge Signals Continued Growth, Optimism

A private gauge of China's services activity suggests that the sector has continued to expand, with firms' optimism at a seven-month high as Beijing's policy support boosted market confidence.

The Caixin services purchasing managers index came in at 51.5 in November, edging down from 52.0 in October but continuing to signal growth for a 23rd consecutive month, said Caixin Media Co. and S&P Global on Wednesday.


Trump Mulls Replacing Pete Hegseth With Florida Gov. Ron DeSantis

President-elect Donald Trump is considering Florida Gov. Ron DeSantis as a possible replacement for Pete Hegseth, his pick to run the Pentagon, according to people familiar with the discussions, amid Republican senators' concerns over mounting allegations about the former Fox News host's personal life.

Picking DeSantis, a 2024 GOP primary rival for the presidency, would amount to a stunning turn for Trump. But he would also find in the governor a well-known conservative with a service record who shares Trump's-and Hegseth's-view on culling what they see as "woke" policies in the military.


President Biden's Growing Worries Spurred Son's Pardon Without Delay

Several of President Biden's close confidants for months said privately that they expected him to pardon his son Hunter, even as he publicly insisted he wouldn't. But a number of recent events clinched his decision to act despite the likely public backlash, people familiar with the matter said.

Momentum for the pardon began building this summer, after a gut-wrenching trial that saw the conviction of Hunter Biden on gun charges and the president's exit from the 2024 contest after a disastrous debate against GOP rival Donald Trump.


Write to gareth.mcpherson@wsj.com TODAY IN CANADA

Earnings:

D2L 3Q

Dollarama 3Q

EQB 4Q

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12-04-24 0632ET