Wall Street Closes Mixed: Nasdaq Reaches New High Amid Interest Rate Concerns
The S&P 500 Index ($SPX) (SPY) closed flat on Friday, while the Dow Jones Industrials Index ($DOWI) (DIA) fell by 0.20%. The Nasdaq 100 Index ($IUXX) (QQQ) increased by 0.76%. December E-mini S&P futures (ESZ24) decreased by 0.20%, but December E-mini Nasdaq futures (NQZ24) rose by 0.52%.
Nasdaq Hits All-Time High as Dow Struggles
On Friday, stock indexes showed mixed results. The Nasdaq 100 reached a new all-time high, in contrast to the Dow Jones, which hit a three-week low. Technology stocks drove much of the activity, particularly chipmakers, with Broadcom seeing an impressive gain of over 24% following its announcement of a projected 65% surge in AI product sales for the upcoming fiscal quarter. Another bright spot came from RH, which saw its stock increase by over 17% after raising its 2025 revenue outlook.
Interest Rates and Inflation Pressure Stocks
Despite early gains, the S&P 500 turned lower as the yield on 10-year U.S. Treasury notes hit a three-week high. This rise in yields followed negative trends from European bond markets, and inflation news added pressure. The U.S. import price index for November—excluding petroleum—unexpectedly rose by 0.2%, while the 10-year breakeven inflation expectations rate reached a two-and-a-half-week high. Notably, Nvidia, a major player in technology, dropped by more than 2%, further influencing the sector negatively.
Global Market Recap
International markets closed mixed as well. The Euro Stoxx 50 slightly increased by 0.05%, while China’s Shanghai Composite Index fell by 2.01%, and Japan’s Nikkei Stock 225 decreased by 0.95%.
Interest Rate Developments
March 10-year Treasuries (ZNH25) closed lower by 16 ticks, with the yield rising by 7.1 basis points to 4.399%. The yield had peaked earlier at 4.405%, influenced by weakness in European government bonds. In addition, increasing inflation expectations contributed to this pressure, as seen in the rise of the 10-year breakeven rate to 2.354%. WTI crude oil’s 1% rally to a two-and-a-half-week high also carried bearish implications for Treasuries.
European Economic Indicators
European bond yields ascended as well. The 10-year German bund yield rose to a three-week high of 2.258%, while the UK gilt yield reached a high of 4.412%. Eurozone industrial production remained unchanged month-over-month, meeting analysts’ expectations, but German trade figures disappointed: October exports fell by 2.8%, marking the largest decline in ten months. In light of this, the Bundesbank revised its German 2024 GDP estimate downward to -0.2% from +0.3%, also adjusting its inflation forecast to 2.5% from 2.8%.
US Stock Highlights
Broadcom (AVGO) was a standout performer, closing up by over 24% after posting a Q4 adjusted EPS of $1.42, exceeding the consensus of $1.39. It also forecasted a 65% sales increase in AI products. Other gainers included Marvell Technology (MRVL), up over 10%, and Micron Technology (MU), gaining more than 4%. RH’s strong revenue forecast contributed to its 17% rise. Meanwhile, Lam Weston Holdings (LW) jumped more than 6% amid acquisition interest.
Stocks Facing Challenges
Some notable decliners included Nvidia (NVDA), down more than 2%, leading losses in the Dow. RingCentral (RNG) fell over 5% after a downgrade by Mizuho Securities, while Toll Brothers (TOL) dropped more than 3% after being downgraded by JPMorgan. Electronic Arts (EA) also struggled, closing down over 3% after downward revisions to its revenue estimates.
Upcoming Earnings Reports
Upcoming reports on December 16, 2024, will include earnings from Compass Minerals International (CMP), Mama’s Creations Inc (MAMA), Mitek Systems Inc (MITK), NANO Nuclear Energy Inc (NNE), Quipt Home Medical Corp (QIPT), RCI Hospitality Holdings Inc (RICK), and Value Line Inc (VALU).
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.
