Breaking News
Get 40% Off 0
Is NVDA a 🟢 buy or 🔴 sell? Unlock Now

Fed meeting in focus, Cigna ends Humana pursuit - what's moving markets

Published Dec 11, 2023 05:12AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.
 
CI
+0.18%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
HUM
+1.46%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

Investing.com -- Markets gear up for an all-important Federal Reserve policy meeting this week, with comments from Fed Chair Jerome Powell likely to play a key role in expectations for possible future interest rate cuts by the U.S. central bank. Elsewhere, Cigna (NYSE:CI) reportedly ends talks to merge with rival Humana (NYSE:HUM), abandoning a deal that would have created a $140 billion insurance giant.

1. Futures mostly hug flatline

U.S. stock futures were widely muted on Monday as investors looked ahead to a much-anticipated Federal Reserve policy meeting later in the week.

By 05:02 ET (10:02 GMT), the Dow futures contract and S&P futures were broadly unchanged, while Nasdaq 100 futures had shed 17 points or 0.1%.

Both the benchmark S&P 500 and tech-heavy Nasdaq Composite posted their highest closing levels since early 2022 in the prior session, while the 30-stock Dow Jones Industrial Average notched its sixth consecutive weekly gain -- its longest streak of positive weeks since 2019.

A batch of jobs market data on Friday buoyed hopes that the Fed might be able to engineer a so-called "soft landing" for the U.S. economy. In this scenario, the central bank's aggressive string of interest rate hikes -- which have pushed borrowing costs up to more than two-decade highs -- would succeed in quelling elevated inflation without triggering a broader economic meltdown.

Figures showed that nonfarm payrolls increased by more than anticipated in November, average hourly earnings growth inched up on a monthly basis, and the unemployment rate dipped. Although the numbers pointed to a resilient labor market that could push up wages and inflation, they were more widely interpreted as a signal that the Fed's tightening cycle may not plunge the world's largest economy into recession.

2. Goldman estimates two Fed rate cuts in 2024

Analysts at Goldman Sachs have predicted that Fed policymakers will slash interest rates twice by the end of next year and advanced the anticipated timing of the first cut to the third quarter.

Citing "better inflation news," the brokerage said in a note to clients dated Dec. 10 that the reductions could now "come a bit earlier." Goldman had previously estimated that the initial cut would take place next December.

In the wake of last week's jobs data and separate figures showing the slowest annual rise in underlying price gains in two years in October, markets are now pricing in a nearly 50% chance of a quarter-point rate decrease in borrowing costs from their current range of 5.25% to 5.50% as soon as May, according to Investing.com's Fed Rate Monitor Tool. The probability of a cut at the Fed's March meeting stands at a little under 43%, down from 53% in the prior week.

The Federal Open Market Committee is tipped to keep rates steady on Wednesday following its final two-day gathering of 2023. Much of the focus will likely be on comments from Fed Chair Jerome Powell, as he faces pressure to lay out a timeline for future rate cuts. Powell, who has stressed that the Fed will only move "carefully," is expected to attempt to give the bank some flexibility with its upcoming decisions.

3. Cigna abandons Humana merger plans

U.S. health insurer Cigna has ended its drive to acquire peer Humana, according to multiple media reports, pulling the plug on a deal that would have created an insurance behemoth worth over $140 billion.

The reports said neither Cigna nor Humana could agree on financial arrangements, while concerns also swirled around the intense regulatory scrutiny that the tie-up would likely have raised. Competition authorities have quashed similar moves to consolidate the U.S. health insurance industry in the past.

The abandoned talks come as Connecticut-based Cigna announced that it is aiming to roll out an additional $10B in share buybacks. In a statement, Chairman David Cordani argued that the company's shares are "significantly undervalued and repurchases represent a value-enhancing deployment of capital."

Shares in Cigna were higher in U.S. premarket trading on Monday.

4. Chinese stocks mixed amid deflation concerns

China’s blue chip Shanghai Shenzhen CSI 300 index rose 0.6% on Monday after touching its weakest level since early-2019, while the Shanghai Composite edged up and Hong Kong’s Hang Seng dipped by 0.9%.

Data released over the weekend showed that Chinese consumer prices fell at their fastest pace in three years in November, weighed down in particular by declining food costs. Producer prices also sank for a 14th consecutive month.

The readings suggested that a post-pandemic rebound in Chinese spending remained sluggish despite continued liquidity measures from Beijing -- a trend that bodes poorly for the world's second-largest economy. China has now been in deflationary territory for two consecutive months, heralding little pick-up in growth in the coming months.

Officials have vowed to do more to provide both fiscal and monetary support, with China's leader Xi Jinping warning in recent days that the country's recovery is now at a "critical stage."

5. Oil prices slip with Fed meeting ahead

Oil prices moved slightly lower on Monday, in a sign of caution among traders prior to the Fed's gathering.

By 05:01 ET, Brent oil futures expiring February were down 0.3% at $75.59 a barrel, while West Texas Intermediate crude futures had slipped by 0.4% to $71.17 per barrel.

Crude prices were nursing seven straight weeks of losses after disappointing production cuts by the Organization of the Petroleum Exporting Countries and its allies including Russia, while weak economic prints from top importer China also exacerbated worries over demand.

But the strong U.S. nonfarm payrolls data on Friday spurred some optimism over the outlook for crude demand in the world's largest fuel importer.

Upgrade your investing with our groundbreaking, AI-powered InvestingPro+ stock picks. Use coupon code PROPLUSBIYEARLY to get a limited time discount on our Bi-Yearly subscription plan. Click here to find out more, and don't forget to use the discount code when checking out.

Fed meeting in focus, Cigna ends Humana pursuit - what's moving markets
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Byron Ortega
Byron Ortega Dec 11, 2023 12:21PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
White Haired demons back at it
Nawal Ali
Nawal Ali Dec 11, 2023 12:21PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
UAE
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email