Futures edge higher, PCE data ahead, OPEC+ meeting looms – what’s moving markets

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Investing.com — The major stock indices in the U.S. head into the final day of trading in November on pace to post their best months since last year. Markets are also gearing up for the publication of the Federal Reserve’s favored inflation gauge, as traders attempt to suss out the central bank’s future policy plans. Elsewhere, Microsoft (NASDAQ:MSFT) is set to take a position on the board of OpenAI following days of tumult at the celebrated artificial intelligence start-up.

1. Futures point higher before final November session

U.S. stock futures inched up as investors gear up for the last trading day in what has been a largely positive November for equities.

By 04:56 ET (09:56 GMT), the Dow futures contract had added 144 points or 0.4%, S&P 500 futures rose by 6 points or 0.1%, and Nasdaq 100 futures gained 26 points or 0.2%.

The main averages were mixed on Wednesday, but are still on pace to finish the month in the green.

Recent data has buoyed hopes that inflation may be cooling in the U.S., fueling expectations that the Federal Reserve could soon begin to bring interest rates back down from over two-decade highs. Treasury yields, which move inversely to prices, have subsequently slipped, while stocks have jumped.

Heading into the final session of November, the benchmark S&P 500 is up by 8.5% and the tech-heavy Nasdaq Composite has jumped by almost 11%, putting them both on track to post their best monthly performance since July 2022. The 30-stock Dow Jones Industrial Average has advanced by 7.2%, on course for its best month since October last year.

2. PCE ahead

Traders will likely be focusing on Thursday’s release of the October personal consumption expenditures (PCE) price index, the Fed’s preferred measure of inflation.

Economists are expecting a year-on-year figure of 3.0% for the month, which would mark a deceleration from 3.4% in September. On a monthly basis, the gauge is also seen slowing to 0.1%. The core reading stripping out volatile items like food and fuel is projected at 3.5% annually and 0.2% month-on-month.

“Today’s session will […] be all about inflation,” analysts at ING said in a note to clients.

The data could help determine how Fed officials will calibrate interest rates in the coming months. The central bank is widely tipped to leave rates at a range of 5.25% to 5.50% at its meeting next month, although some policymakers have hinted that a pivot away from this unprecedentedly tight monetary policy stance may be coming soon.

Earlier this week, Fed Governor Christopher Waller, a typically hawkish voice, suggested that “we could start lowering the policy rate” if inflation continues to slow for “several more months.” The comments bolstered expectations that the Fed may slash rates as early as May next year.

3. Microsoft to take board seat at OpenAI

Microsoft will take a spot on OpenAI’s board of directors, according to returning Chief Executive Officer Sam Altman.

The tech giant — a key investor in OpenAI — will be a non-voting observer in the artificial intelligence start-up’s revamped board, which will at first include Chair Bret Taylor, former U.S. Treasury Secretary Larry Summers and Quora CEO Adam D’Angelo, Altman said in a blog post on OpenAI’s website. It was not immediately clear who Microsoft would appoint to the board.

D’Angelo is the only remaining member from OpenAI’s previous board, which was ousted earlier this month after its abrupt decision to remove Altman as CEO sparked ire among OpenAI employees and backers.

Meanwhile, Altman, who has become known as one of the leading figures in the debate over the usage of AI, is coming back to the helm of the maker of the megapopular AI chatbot ChatGPT. He was initially offered a role at Microsoft after his sudden departure, as was co-founder Greg Brockman, who had quit in solidarity with Altman.

“We clearly made the right choice to partner with Microsoft and I’m excited that our new board will include them as a non-voting observer,” Altman said.

4. Chinese manufacturing activity contracts

Chinese manufacturing activity shrank for a second straight month in November, as the sector saw increased headwinds from slowing overseas demand.

The official manufacturing purchasing managers’ index (PMI) read 49.4 in November, data from the National Bureau of Statistics showed. The figure was weaker than expectations of 49.7, and contracted from the prior month’s reading of 49.5.

A reading below 50 indicates contraction, with China’s manufacturing PMI now having contracted for six out of the 11 months so far in 2023.

China’s non-manufacturing PMI came in at 50.2 in November, missing projections of 51.1 and declining from 50.6 in October.

The numbers point to weakness in the world’s second-largest economy despite liquidity injections by Beijing aimed at shoring up what has been a sluggish post-pandemic recovery. Investors are now clamoring for more targeted fiscal measures from Chinese authorities to boost growth.

5. Oil prices rise as key OPEC+ meeting looms

Oil prices climbed on Thursday as traders eyed a previously-postponed OPEC+ meeting and the weaker-than-expected Chinese factory activity data.

By 04:56 ET, the U.S. crude futures traded 0.9% higher at $78.58 a barrel, while the Brent contract advanced by 0.9% to $83.62 per barrel.

The Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, meets later Thursday. Although the gathering was delayed from Sunday after disagreements between members over output targets, markets are still expecting news of additional production cuts.

Gains have been limited by signs of slackening growth in China, the world’s top oil importer, while U.S. crude inventories recorded an unexpected 1.6 million-barrel build in the week to Nov. 24.