US equities slip on divergent economic data

U.S. equity markets ended Tuesday’s session mixed as investors weighed a batch of delayed economic data that sent conflicting signals about the strength of the economy. The Dow Jones Industrial Average fell 0.6 percent as declines in healthcare and energy equities weighed on the index, while the S&P 500 slipped 0.2 percent. In contrast, growth focused areas such as technology, consumer discretionary and communication services outperformed, helping the Nasdaq Composite rise 0.2 percent on the day. Bond markets reflected a more cautious tone, with Treasury yields moving lower, while oil prices dropped sharply. Elsewhere, Asian markets weakened and European equities also closed lower despite improving economic sentiment in Germany.

The focus was firmly on employment and consumer data. Nonfarm payrolls rose by 64,000 in November, exceeding expectations, though the unemployment rate climbed to 4.6 percent, its highest level in over two years, suggesting some cooling in labour market conditions. Wage growth was softer than forecast, adding to the mixed picture. On the consumer side, headline retail sales were flat in October, but underlying demand appeared healthier as core retail sales recorded a solid increase. Taken together, the data left investors divided on the outlook, reinforcing expectations that economic growth is slowing but remains resilient enough to support selective strength in equities.

Latest market and economic update

• Most Asian equities edged higher on Wednesday, led by a modest rebound in technology shares, though gains were capped by uncertainty over the U.S. outlook. South Korea and Hong Kong advanced, while China was mixed. Japanese markets rose slightly on strong trade data, with investors cautious ahead of inflation data and a Bank of Japan meeting.

• U.S. equity futures dipped on Wednesday, with S&P 500 and Nasdaq 100 futures down 0.2% and Dow futures down 0.1%, as investors looked ahead to Fed officials’ remarks and Thursday’s November consumer inflation report. Broad market sentiment remains cautious, with recent economic data underscoring uncertainty over the outlook for interest rates.

• European equities fell on Tuesday, with the STOXX 50 down 0.5% and the STOXX 600 down 0.4%. Defense shares, led by Rheinmetall, and major tech giants like ASML and SAP dragged markets lower, while LVMH gained 1.7%. Flash PMI data highlighted slowing eurozone private-sector activity, particularly in Germany and France, signalling mixed economic momentum.

• The U.S. dollar remained steady on Wednesday, near its lowest since early October, as soft labour market data left rate cut timing uncertain. The euro traded at $1.1751, close to a 12-week high, supported by expectations that the ECB will keep rates steady, highlighting continued euro strength against a weakening dollar.

• Oil prices rebounded in early Asian trade today after President Trump ordered a blockade of sanctioned Venezuelan oil tankers, lifting Brent and WTI by about 1%. The bounce followed a five-year low, though prices remain pressured by supply glut concerns, possible Russia Ukraine peace progress and mixed U.S. inventory data.

Equities on the move

• The following companies experienced moves in their share price driven by analyst ratings, quarterly earnings, or other news:

• Apple plans to expand its iPhone lineup to at least seven models by fall 2027, including the first foldable iPhone in 2026 and a 20th-anniversary edition with curved edges. The company is also in early talks with Indian chipmakers to assemble components, diversifying supply amid U.S.-China trade tensions and supporting India’s semiconductor ambitions.

• Amazon is in talks to invest around $10 billion in OpenAI, potentially valuing the AI firm at over $500 billion, ahead of a planned IPO. The discussions are fluid and may involve OpenAI using Amazon’s Trainium chips, while also exploring enterprise ChatGPT integration, following its restructuring and existing Microsoft partnership.

• Jared Kushner’s Affinity Partners has withdrawn from Paramount Skydance’s $108.4 billion bid for Warner Bros. Discovery. The latter’s board may decide today, likely urging shareholders to reject Paramount’s $30-per-share offer and stick with Netflix’s $27 billion non-cable deal. Paramount’s $41 billion equity and $54 billion debt bid still vies for the studio’s content library.

• Robinhood will let customers bet on individual NFL player performances, such as touchdowns and yardage, through new sports-focused event contracts. The platform also introduced “preset combos” combining multiple bets. While critics liken the contracts to sports betting, Robinhood says they comply with CFTC rules amid a rapidly growing $13 billion prediction market.

• Guggenheim upgraded ServiceNow to Neutral from Sell, citing valuation rather than improving prospects. While the company posts solid results, AI revenue has been limited and acquisition risks are rising. Growth lags peers, and deal-driven expansion may not offset slowing organic momentum. Execution remains key, and downside risks persist if growth falters.

• Jefferies upgraded Okta to Buy from Hold, raising its price target to $125, citing trough valuation, improving execution, and AI-driven growth catalysts for 2026. Identity security is a fast-growing area within cybersecurity budgets. Jefferies expects resilient demand, steady growth across cybersecurity, and favours Okta, Palo Alto, Zscaler, AvePoint, and CrowdStrike.

• Morgan Stanley upgraded Accenture to Overweight, citing a compelling entry point after a 21% share decline. With shares trading at 18x 2027 earnings, AI adoption, IT services budgets, M&A, and ecosystem partnerships support upside. Analysts set a $320 price target, expecting FY26–27 growth above consensus and a rebound in valuation relative to the market.

• Bank of America named Estee Lauder its top beauty equity for 2026, reiterating a Buy rating and raising the price target to $130. The turnaround strategy, “Beauty Reimagined,” alongside cost savings and reinvestment, positions the company to benefit from a recovering beauty market, particularly in China and the U.S., driving stronger revenue and profit growth.

• Morgan Stanley views U.S. defense shares as attractive for 2026, citing undervaluation versus rising budgets. L3Harris and General Dynamics were upgraded to Overweight, Lockheed Martin downgraded to Equal-weight, and Northrop Grumman remains the top pick. Demand is expected to outpace supply, supporting sector growth despite political uncertainty.

• Jefferies initiated coverage of quantum computing, rating D-Wave and IonQ Buy ($45/$100) and Rigetti Hold ($30). D-Wave benefits from adoption and strong finances, IonQ from trapped-ion architecture, while Rigetti faces execution risks. Enterprise experimentation and ecosystem support are driving emerging commercial opportunities.

Upcoming data and events

Today, key economic events include the UK inflation rate for November, Germany’s Ifo Business Climate for December, and a series of US data releases, including retail sales, inventories, and EIA oil and gasoline stock changes. Fed officials Waller, Williams, and Bostic are speaking, while Micron Technology, Raymond James, General Mills, and Jabil report earnings.