Closing Stock Market Summary
The S&P 500 and Nasdaq Composite closed near their lows of the day, registering slim declines due to relative weakness in the mega cap space. The Dow Jones Industrial Average, meanwhile, eked out a 0.04% gain while the Russell 2000 and S&P Mid Cap 400 rose 0.6% and 0.4%, respectively.
There was an underlying positive bias throughout the session, but buyer enthusiasm faded somewhat as the session progressed. Shortly after the open, advancers led decliners by a better than 9-to-2 margin at the NYSE and a better than 3-to-1 margin at the Nasdaq. At the close, advancing issues had a less than 2-to-1 lead at the NYSE and a 3-to-2 lead at the Nasdaq. The equal-weighted S&P 500 logged a 0.4% gain, but had been up as much as 1.1% at its high.
Six of the S&P 500 sectors closed higher while five of them declined. The real estate sector (+0.7%) led the gainers while the communication services sector (-1.1%) saw the biggest decline due to its lagging mega cap constituents.
A drop in Treasury yields provided a measure of support for stocks in this seasonally strong period for the market. The 2-yr note yield settled seven basis points lower than yesterday at 4.66% and the 10-yr note yield declined seven basis points to 4.27%.
Those moves were partially a reaction to some pleasing inflation data out of Germany, Spain, and Australia, and the notion that the Fed could cut rates in the first half of 2024. Notably, however, Richmond Fed President Barkin (2024 FOMC voter) said today at the CNBC CFO Council Summit that he thinks it is premature to talk rate cuts and that he is not taking the possibility of further rate hikes off the table, as he believes inflation is likely to be more stubborn than he would like it to be.
Still, the fed funds futures market is still pricing in a 79.8% probability of a rate cut at the May FOMC meeting versus a 54.7% probability one week ago, according to the CME FedWatch Tool.
Other factors that helped to drive today's positive bias included an upward revision to Q3 real GDP to 5.2% from 4.9%, General Motors (GM 31.60, +2.71, +9.4%) announcing an accelerated $10 billion share buyback program and 33% increase in its dividend, and the favorable response to earnings results from CrowdStrike (CRWD 234.44, +22.09, +10.4%), NetApp (NTAP 89.54, +11.43, +14.6%), Intuit (INTU 577.23, +12.16, +2.2%), Workday (WDAY 263.49, +26.16, +11.0%), and Foot Locker (FL 27.67, +3.83, +16.1%).
Market participants were also digesting the Fed's November Beige Book, which did not move the stock or bond markets that much. The main point from the release was that, on balance, economic activity slowed since the previous report and demand for labor continued to ease.
- Nasdaq Composite: +36.2%
- S&P 500: +18.5%
- Dow Jones industrial Average: +5.7%
- S&P Midcap 400: +4.9%
- Russell 2000: +2.4%
Reviewing today's economic data:
- Weekly MBA Mortgage Applications Index 0.3%; Prior 3.0%
- Q3 GDP - Second Estimate 5.2% ( consensus 4.9%); Prior 4.9%; Q3 GDP Deflator - Second Estimate 3.6% ( consensus 3.8%); Prior 3.5%
- The key takeaway from the report is that the U.S. economy was effectively booming in the third quarter despite higher interest rates, aided by a strong labor market and disinflation that fueled healthy consumer spending activity.
- October Adv. Intl. Trade in Goods -$89.8 bln; Prior was revised to -$86.8 bln from -$85.8 bln
- October Adv. Retail Inventories 0.0%; Prior was revised to 0.4% from 0.9%
- October Adv. Wholesale Inventories -0.2%; Prior was revised to 0.1% from 0.0%
Looking ahead, Thursday's economic calendar features:
- 8:30 ET: Weekly Initial Claims ( consensus 215,000; prior 209,000), Continuing Claims (prior 1.840 mln), October Personal Income ( consensus 0.2%; prior 0.3%), Personal Spending ( consensus 0.2%; prior 0.3%), PCE Prices ( consensus 0.1%; prior 0.4%), and Core PCE Prices ( consensus 0.2%; prior 0.3%)
- 9:45 ET: November Chicago PMI ( consensus 45.0; prior 44.0)
- 10:00 ET: October Pending Home Sales (consensus -2.3%; prior 1.1%)
- 10:30 ET: Weekly natural gas inventories (prior -7 bcf)