Markets Take a Breather Ahead of Key Economic Data
The S&P 500 Index ($SPX) (SPY) closed down -0.30% on Tuesday, the Dow Jones Industrials Index ($DOWI) (DIA) dropped -0.35%, and the Nasdaq 100 Index ($IUXX) (QQQ) fell -0.34%.
Stocks Slip Amid Mixed Corporate News
On Tuesday, stocks fell after starting the day with gains, pushing the Dow Jones Industrials to a two-week low. Investors were selling positions ahead of the upcoming US consumer price report for November. Negative news from major companies contributed to the downturn; Oracle’s stock dropped over -6% due to its second-quarter revenue falling short of expectations, while Toll Brothers dropped more than -5% after projecting lower than anticipated home sales margins. Meanwhile, rising Treasury yields also pressured the stock market.
Positive Highlights From Big Tech
Despite the losses, some companies experienced gains. Alphabet’s stock climbed over +5% after announcing advancements in quantum computing with its new Willow chip. Alaska Air Group soared +13% after its positive forecast for 2025 adjusted earnings per share (EPS) that exceeded expectations.
Economic Indicators and Global Trade Concerns
Economic data released on Tuesday showed that the Q3 nonfarm productivity remained unchanged at +2.2%. However, Q3 unit labor costs were revised down from +1.9% to +0.8%, which was less than the anticipated +1.3% increase. In trade news, China’s November exports rose by only +6.7% year-over-year, falling short of the +8.7% expectation, while imports unexpectedly dropped -3.9% year-over-year—the largest decline in nine months—raising concerns about global economic growth.
Looking Ahead to Inflation Data
Markets are anxiously awaiting the consumer price report for November to inform Federal Reserve policy decisions. Forecasts predict a slight increase in the CPI to +2.7% year-over-year from +2.6% in October. Additionally, the CPI excluding food and energy is expected to remain stable at +3.3% year-over-year. Currently, there is an 86% likelihood of a -25 basis points rate cut at the FOMC meeting on December 17-18.
Global Market Overview
International markets showed mixed results today. The Euro Stoxx 50 declined by -0.43%, while China’s Shanghai Composite Index gained +0.59%, reaching a one-month high. Japan’s Nikkei Stock 225 rose by +0.53%.
Interest Rate Movements
March 10-year T-notes (ZNH25) ended the day down -5.5 ticks with the yield rising by +2.0 basis points to 4.221%. T-note prices faced pressure from previous declines in European government bonds and supply from a $58 billion auction of 3-year T-notes. However, weakness in stocks led to a slight recovery in demand for T-notes due to safe-haven buying. The auction had a solid bid-to-cover ratio of 2.58, aligning closely with the ten-auction average of 2.57.
European Bond Yields Trend Upward
In Europe, government bond yields were predominantly higher. The 10-year German bund yield reached a one-and-a-half week high of 2.143% but closed slightly lower at 2.122%. Similarly, the 10-year UK gilt yield increased to a one-and-a-half week high of 4.331%, finishing up +5.3 basis points at 4.323%.
Stock Movers on Tuesday
Moderna (MRNA) led the declines in the S&P 500 with a drop of over -9% following a downgrade from Bank of America Global Research. Oracle (ORCL) fell -6% after reporting Q2 adjusted revenue of $14.06 billion, below the $14.12 billion consensus. MongoDB (MDB) dropped -17%, the largest fall in the Nasdaq 100, after its CFO’s departure raised concerns.
Homebuilders faced pressure as well, with Toll Brothers predicting a Q1 adjusted home sales margin of 26.3%, lower than the 27.3% consensus. Toll Brothers (TOL) dropped over -6%, and other homebuilders like DR Horton (DHI), PulteGroup (PHM), and Lennar (LEN) fell more than -2% each.
Conversely, Walgreens Boots Alliance (WBA) rose more than +17% on reports of a potential acquisition by Sycamore Partners. Alphabet (GOOGL) also gained over +5% following its quantum computing announcement. Additionally, Boeing (BA) rose +5% after news of the resumption of production for the 737 Max Jet.
Thankful Earnings Reports Ahead
On the earnings front, several companies are expected to report results on December 11, 2024, including Adobe Inc (ADBE), Macy’s Inc (M), and Nordson Corp (NDSN).
On the date of publication, Rich Asplund did not hold positions in any securities mentioned. All information is for informational purposes only. For more details, please view the Barchart Disclosure Policy here.
The views expressed in this article are those of the author and do not necessarily reflect those of Nasdaq, Inc.
