Market Update: Mixed Performance Amid Tariff Concerns
The S&P 500 Index ($SPX) (SPY) is up +0.25%, while the Dow Jones Industrials Index ($DOWI) (DIA) has dipped -0.40%. The Nasdaq 100 Index ($IUXX) (QQQ) shows an increase of +0.48%.
Corporate Earnings Boosts, But Tariff Fears Loom
Today, stocks are mixed. Positive corporate news has provided some lift to the broader market. Notably, JM Smucker saw its shares rise over +7% after beating expectations for Q2 adjusted EPS and raising its full-year adjusted EPS forecast. Analog Devices led the chip sector higher, climbing over +2% following a solid Q4 revenue report. Eli Lilly also gained over +3% after a proposed rule by the Biden administration would require Medicare and Medicaid to cover weight-loss drugs.
Political Developments Impact Market Sentiment
Despite positive earnings reports, market gains were constrained by concerns over new tariffs. Former President Trump announced on his Truth Social network plans to implement a 10% tariff on Chinese goods and a 25% tax on products from Mexico and Canada, promising an executive order on his first day back in office. Democrats have criticized these tariffs as a tax increase on consumers. Additionally, Amgen faced a significant drop of more than -9%, contributing to the decline of the Dow Jones Industrials.
Upcoming Economic Reports and Interest Rates
This week’s U.S. economic news is front-loaded due to the Thanksgiving holiday on Thursday. On Tuesday, new home sales for October are expected to show a decline of -1.8% month-over-month, totaling 725,000 sales. The Conference Board’s consumer confidence index is forecasted to rise by +3.1 to reach 111.8. Also, Tuesday will see the release of minutes from the November 6-7 Federal Open Market Committee meeting. On Wednesday, revised Q3 GDP numbers are expected to remain unchanged at 2.8% quarter-over-quarter annualized, alongside the core PCE price index, which is anticipated to increase by +0.3% month-over-month and +2.8% year-over-year.
Currently, markets rate the chance of a -25 basis point rate cut at the December 17-18 FOMC meeting at 59%.
International Markets Slip
Stock markets overseas are also showing declines today. The Euro Stoxx 50 dipped -0.18%. China’s Shanghai Composite closed down -0.12%, while Japan’s Nikkei Stock 225 fell by -0.87%.
Interest Rates Overview
December 10-year T-notes (ZNZ24) are down -5 ticks, with the 10-year T-note yield increasing by +2.3 basis points to reach 4.297%. The T-notes are under pressure following Trump’s tariff announcements, which could raise consumer prices and fuel inflation concerns. Supply issues are exerting additional pressure as the Treasury plans to auction $70 billion of reopened 5-year T-notes later today. However, today’s rise in 10-year German bunds to a five-week high has somewhat supported T-note prices.
European government bond yields today were mixed. The 10-year German bund yield fell to a five-week low of 2.195%, down by -0.8 basis points to 2.202%. Meanwhile, the 10-year UK gilt yield increased by +1.0 basis point to 4.353%.
ECB Vice President Guindos remarked, “If the ECB’s projections are confirmed, we will continue making our monetary policy stance less restrictive.” Market expectations indicate a 100% probability for a -25 basis point cut at the ECB’s December 12 policy meeting, with a 26% chance for a -50 basis point cut.
Notable Stock Movements in the U.S.
JM Smucker (SJM) is leading gainers in the S&P 500 with an increase of over +7%. The company reported a Q2 adjusted EPS of $2.75, exceeding the consensus of $2.51, and raised its full-year adjusted EPS forecast to between $9.70 and $10.10.
NRG Energy (NRG) rose more than +5% after Jeffries upgraded the stock to “buy” from “hold” with a price target set at $113. United Airlines Holdings (UAL) gained over +4% thanks to a UBS upgrade to “buy” from “neutral” and a new price target of $139. Eli Lilly (LLY) also rose more than +3% following the government’s proposed coverage for weight-loss drugs.
Analog Devices (ADI) gained over +2% after reporting Q4 revenue of $2.44 billion, surpassing the expectation of $2.41 billion. Nvidia (NVDA) was up more than +1%, along with Marvell Technology (MRVL) and Qualcomm (QCOM), both also enjoying slight gains.
Semtech (SMTC) experienced a substantial increase of over +14% after delivering a Q3 adjusted EPS of 26 cents, above the consensus of 23 cents, and offering a promising Q4 adjusted EPS forecast. Woodward (WWD) rose over +11% after reporting Q4 net sales of $854.5 million, which exceeded the consensus of $811.2 million, and anticipated 2025 net sales of $3.30 billion to $3.50 billion, higher than the consensus midpoint of $3.38 billion.
Sector Underperformance
In contrast, Amgen (AMGN) led the losses in the S&P 500, Dow Jones Industrials, and Nasdaq 100, dropping more than -9% after disappointing trial results regarding its experimental obesity medication. Best Buy (BBY) fell over -8% as Q3 comparative sales decreased -2.9%, worse than the projected -0.92%, and it lowered its sales forecast for the full year.
General Motors (GM) fell more than -7%, while Ford Motor (F) lost over -2% due to tariff concerns raised by Trump. Both companies source vehicles from China and operate plants in Canada and Mexico. Zoom Video Communications (ZM) also declined more than -5% even after posting better-than-expected Q3 results, which did not meet high expectations.
Kohl’s (KSS) saw a severe drop of more than -18% after reporting net sales of $3.51 billion in Q3, coming up short of the $3.67 billion consensus, and reducing its full-year comparable sales forecast. Burlington Stores (BURL) decreased over -3% as Q3 comparable sales rose only +1%, below the consensus of +2.19%, with a lowered forecast for 2025 sales. Southwest Airlines (LUV) was down more than -1% after receiving a downgrade from UBS, which adjusted the rating to “sell” from “buy” with a targeted price of $27.
Earnings Reports on 11/26/2024
Upcoming earnings include reports from Analog Devices Inc (ADI), Autodesk Inc (ADSK), Best Buy Co Inc (BBY), Burlington Stores Inc (BURL), Crowdstrike Holdings Inc (CRWD), Dell Technologies Inc (DELL), Dick’s Sporting Goods Inc (DKS), HP Inc (HPQ), JM Smucker Co/The (SJM), Kohl’s Corp (KSS), Nordstrom Inc (JWN), Nutanix Inc (NTNX), and Workday Inc (WDAY).
On the date of publication, Rich Asplund did not hold positions in any of the securities mentioned in this article. All information in this article is for informational purposes only. Please view the Barchart Disclosure Policy for more information.
The views expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
