Markets Climb as Optimism Surrounds Treasury Secretary Nomination

The S&P 500 Index ($SPX) (SPY) today is up +0.77%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +1.04%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.94%.

Stocks are rising, with the S&P 500 and Dow Jones reaching all-time highs while the Nasdaq 100 hits a one-week high. This rally is driven by optimism over President-elect Trump’s nomination of Scott Bessent, a former hedge fund manager, for U.S. Treasury Secretary. Many believe his Wall Street experience will help ease worries about Trump’s potential inflationary policies involving tax cuts and high tariffs. Bessent is likely to support Trump’s policies but is expected to focus on economic and market stability as well as reducing deficits.

The U.S. Chicago Fed national activity index for October dropped -0.13 to a nine-month low of -0.40, falling short of expectations that it would hold steady at -0.28.

This week’s U.S. economic news is heightened as a result of Thursday’s Thanksgiving Day holiday. Tuesday will feature new home sales data for October (anticipated to fall -1.8% month-over-month to 725,000) and the Conference Board’s consumer confidence index for November (expected to rise +3.1 to 111.8). Additionally, minutes from the FOMC meeting on November 6-7 will be released on Tuesday afternoon. Wednesday is set to bring revised Q3 GDP numbers (projected to remain unchanged at 2.8% annualized) and the October core PCE price index, which is the Fed’s preferred inflation measure (forecasted to increase +0.3% month-over-month and +2.8% year-over-year).

The markets are currently pricing in a 56% chance of a -25 basis point rate cut at the December 17-18 FOMC meeting.

International stock markets today showed mixed results. The Euro Stoxx 50 rose to a week-high, gaining +0.30%. In contrast, China’s Shanghai Composite Index fell to a five-week low, declining -0.11%. Japan’s Nikkei Stock 225, however, climbed to a week-high, ending up +1.30%.

Interest Rates

December 10-year T-notes (ZNZ24) were up +23 ticks today. The yield on the 10-year T-note decreased -11.0 basis points to 4.2912%. T-notes climbed to a two-week high, with the yield on 10-year T-notes dropping to a low of 4.285%. The positive trend in T-notes follows the nomination of Scott Bessent, who is viewed by the bond market as a fiscal hawk focused on economic stability and lower deficits. Additionally, T-note gains were bolstered by a drop in inflation expectations; today, the breakeven inflation rate fell to a two-and-a-half week low of 2.310%. The disappointing national activity index figures also contributed to a dovish sentiment regarding Fed policy.

In Europe, government bond yields declined today. The 10-year German bund yield fell to a five-week low of 2.207%, down -3.2 basis points to 2.210%. Meanwhile, the 10-year UK gilt yield dropped to a three-and-a-half week low of 4.319%, down -5.9 basis points to 4.327%.

The German November IFO business climate index fell -0.8 to 85.7, which was weaker than expectations of 86.0.

Comments from ECB Governing Council member Kazaks indicate that another interest rate cut is likely in December, reflecting concerns about the European economy.

Swaps are anticipating a 100% chance of a -25 basis point rate cut by the ECB at its meeting on December 12, with a 35% chance of a -50 basis point cut at the same time.

US Stock Movers

Homebuilding stocks saw gains today, driven by the drop in the 10-year T-note yield, which is expected to reduce mortgage rates and stimulate housing demand. Major beneficiaries included DR Horton (DHI), Toll Brothers (TOL), and Builders FirstSource (BLDR), each up more than +3%. Others like Lennar (LEN) and PulteGroup (PHM) also showed increases of over +2%.

Super Micro Computer (SMCI) climbed more than +9%, leading the S&P 500 and Nasdaq 100 after announcing it plans to file its delayed 10-K and 10-Q reports within Nasdaq deadlines. This follows a 25% surge over the last two days.

Moderna (MRNA) also rose over +9% as Jeffries reported that the nomination of Robert F. Kennedy to the Department of Health and Human Services is not likely to impact vaccine distribution.

Healthcare stocks experienced gains following a ruling that the Biden administration had incorrectly downgraded UnitedHealth Group’s 2025 star ratings. As a result, UnitedHealth Group (UNH), Humana (HUM), Centene (CNC), and Elevance Health (ELV) rose by over +1%.

Bath & Body Works (BBWI) soared more than +21% upon reporting Q3 net sales of $1.61 billion, exceeding analysts’ expectations of $1.58 billion. The company also revised its 2025 sales forecast to a smaller decline of -1.7% to -2.5% from a previous -2% to -4% estimate.

Rocket Lab USA (RKLB) enjoyed a more than +1% increase following the successful launch of its 56th Electron missile.

EQT Corp (EQT) gained over +4% as the Financial Times reported that Blackstone is set to purchase a $3.5 billion joint venture stake in interstate pipelines from EQT.

US Bancorp (USB) increased by more than +1% after Citigroup upgraded the stock from neutral to buy, setting a price target of $65.

Conversely, Nvidia (NVDA) fell over -3% to lead losses in the S&P 500, Dow Jones, and Nasdaq 100 after Amazon.com announced it’s developing its own AI chips.

Macy’s (M) dropped more than -3% after announcing a delay in releasing its Q3 earnings as part of an ongoing investigation related to hidden expenses.

Newmont (NEM) decreased over -2%, coinciding with sharp declines in gold prices today.

Despegar.com (DESP) fell more than -3% after TD Cowen downgraded the stock from buy to sell, setting a target price of $14.

Tenet Healthcare (THC) dropped over -1% following a downgrade by Wells Fargo Securities from overweight to equal weight.

Earnings Reports (11/25/2024)

Agilent Technologies Inc (A), Bath & Body Works Inc (BBWI), Blue Bird Corp (BLBD), Central Garden & Pet Co (CENT), Enanta Pharmaceuticals Inc (ENTA), Fluence Energy Inc (FLNC), Leslie’s Inc (LESL), New Jersey Resources Corp (NJR), Semtech Corp (SMTC), Woodward Inc (WWD), Zoom Video Communications Inc (ZM).

On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.