Here are five things you must know for Wednesday, December 8:
1. — Stock Futures Mixed As Inflation Concerns Overtake Omicron
U.S. equity futures traded mixed Wednesday, as investors extended gains amid fading concerns over the impact of the Omicron variant while closely tracking pending jobs and inflation data in anticipation of the Federal Reserve’s next move on tapering heading into the final weeks of the year.
Market volatility has fallen sharply from last week’s levels, the highest in six months, amid reports of vaccine effectiveness against the variant, data showing certain therapy treatments preventing severe infection and comments from top-level experts that it likely isn’t as dangerous as some prior mutations.
That’s allowed investors to shift focus, at least in part, to Friday’s pending November inflation data and its implications for Fed policy following Chairman Jerome Powell’s hawkish turn during Senate Banking Committee testimony last week.
Investors may get a glimpse of that concern later today when the Treasury re-opens its last 10-year bond auction with the sale of $36 billion in new note, particularly given the fact that interest-rate sensitive 2-year paper is trading just shy of the highest levels in two years.
Ahead of all this, futures contracts tied to the Dow Jones Industrial Average are indicating a 75 point opening bell decline while those linked to the S&P 500 are priced for a 2 point dip. Futures tied to the tech-focused Nasdaq Composite are indicating a modest 25 point bump at the start of trading as benchmark 10-year Treasury note yields slip to 1.431% in overnight trading.
2. — Pfizer Vaccine Efficacy Against Omicron Mixed – Studies
Pfizer (PFE) – Get Pfizer Inc. Report shares slumped lower in pre-market trading as investors digested a series of reports showing mixed success of the drugmaker’s coronavirus vaccine against the newly-identified Omicron variant.
An early-stage study from South Africa, where the variant was first identified last last month, suggest a booster shot of the vaccine, which Pfizer developed along with its German partner BioNtech (BNTX) – Get BioNTech SE Report, have at least some efficacy in neutralizing Omicron. A separate report, however, from University Hospital Frankfurt showed much lower efficacy against the variant from a three-shot regime when compared to Delta, and barely any measurable defense from the two-dose base.
Omicron’s emergence, however, has ignited new demand for booster shots in the United States, with government data showing at least 7 million people receiving an additional dose of either Pfizer, Moderna (MRNA) – Get Moderna, Inc. Report or Johnson & Johnson (JNJ) – Get Johnson & Johnson Report last week, the most since the doses were approved earlier this year.
Pfizer shares were marked 2.55% lower in pre-market trading Wednesday to indicate an opening bell price of $50.40 each.
3. — Apple Facing More iPhone Production Cuts – Nikkei Report
Apple (AAPL) – Get Apple Inc. Report shares bumped higher in pre-market trading amid reports that the tech giant fell far short of its iPhone production targets earlier this fall, owing to chip shortages and ongoing disruptions in global supply chains.
The Nikkei business newspaper said Apple is likely to produce between 83 million and 85 million of its new iPhone 13 range before the end of the year, a tally that would fall around 20% shy of its initial target. Its overall goal of making 230 million iPhones is also at risk, the paper reported, even as it prioritizes chips from iPad assemblies in order to meet smartphone demand into the holiday season.
Apple CEO Tim Cook cautioned that holiday quarter sales will be hit by the chip shortage, adding the group is doing everything we can do to get more (chips) and also everything we can do operationally to make sure we’re moving just as fast as possible.”
Apple shares were marked 0.63% higher in pre-market trading to indicate an opening bell price of $172.25 each.
4. — Amazon Web Services Triggers Widespread Disruption
Amazon (AMZN) – Get Amazon.com, Inc. Report shares edged higher in pre-market trading following a major outages at the retailer’s Web Services unit that triggered disruptions in package deliveries, theme parks, trading apps and media streaming.
The outage, which began around mid-day Eastern time and lasted for several hours, was linked to an interface that works with integrating software across the group, affected traffic at Netflix (NFLX) – Get Netflix, Inc. Report and Disney (DIS) – Get Walt Disney Company Report, trading on the Robinhood (HOOD) – Get Robinhood Markets, Inc. Class A Report app and a host of services and delivery capabilities at Amazon itself,
“Many services have already recovered, however we are working towards full recovery across services. Services like SSO, Connect, API Gateway, ECS/Fargate, and EventBridge are still experiencing impact. Engineers are actively working on resolving impact to these services,” Amazon said in a statement on its dashboard. “With the network device issues resolved, we are now working towards recovery of any impaired services. We will provide additional updates for impaired services within the appropriate entry in the Service Health Dashboard.”
Amazon shares were marked 0.11% higher in pre-market trading to indicate an opening bell price of $3,527.00 each.
5. — Kellogg Moves To Replace Striking Workers
Kellogg Co. (K) – Get Kellogg Company Report, in a move reminiscent to Ronald Regan’s firing of striking air-traffic controllers in the early 1980s, made plans to permanently replace some of the 1,400 unionized workers that rejected a five-year labor contract yesterday.
Kellogg said replacement workers were already in pace at plants in Tennessee, Nebraska, Michigan and Pennsylvania, where workers have been on strike over wages and benefits, as well as a tiering system for new hires, since October 5.
Kellogg said the rejection of six different contract offers has left it no choice but to look for permanent replacements, and has no plans to meet with union leaders going forward.
The cereal maker posted stronger-than-expected third quarter earnings of $1.09 per share, on sales of $3.62 billion last month, but cautioned that supply constraints and “labor challenges’ would keep profits near the lower end of its prior guidance.
Kellogg shares fell 0.8% yesterday to end the session at $63.08 each, extending the stock’s six-month decline to around 4.4%, compared to a 26.65% gain for the S&P 500 benchmark.
