Stocks Rise on Positive Economic Signals and Earnings Reports
The S&P 500 Index ($SPX) (SPY) gained +0.53% on Thursday, as the Dow Jones Industrials Index ($DOWI) (DIA) rose +1.06%. The Nasdaq 100 Index ($IUXX) (QQQ) saw an increase of +0.36%.
Market Recovery Amid Economic Optimism
Stocks closed Thursday’s trading on a positive note, bouncing back from a mixed start. The gains were driven by hope surrounding the Trump administration’s tax strategies and the promise of deregulation, which could enhance corporate profits. A rally among chip stocks contributed to market strength after Nvidia reported Q3 earnings that surpassed expectations. Although the company’s CEO, Jensen Huang, mentioned challenges with production costs for the new Blackwell AI chips, the overall sentiment remained optimistic. In addition, Snowflake’s stock surged by over +32% after it beat revenue expectations and raised its annual revenue outlook.
Fed Comments Boost Investor Confidence
Dovish remarks from Federal Reserve officials helped support the upward trend in stocks. New York Fed President John Williams acknowledged strong U.S. economic growth alongside a cooling labor market. He suggested that the current monetary policy is restrictive and hinted at future reductions to the fed-funds rate. Chicago Fed President Austan Goolsbee expressed confidence that inflation was trending towards the Fed’s targets, indicating potential for lower interest rates in the upcoming year.
Mixed Economic Indicators
Recent U.S. economic reports presented a mixed picture. Existing home sales for October increased by +3.4%, surpassing the anticipated 3.95 million units. Conversely, both the leading indicators and the Philadelphia Fed’s business outlook survey showed declines, with the latter dropping to -5.5, deviating sharply from the expected positive figure.
Market Response to Regulatory Challenges
Alphabet’s stock fell over -4% amid antitrust concerns. Federal regulators argued that Google should divest from its Chrome browser, claiming it reinforced the company’s market position. Additionally, escalating tensions from the ongoing Ukraine-Russia conflict weighed on market sentiment, particularly after Russia’s missile strikes in Dnipro.
Unemployment Claims Show Mixed Trends
Initial unemployment claims unexpectedly decreased by -6,000 to 213,000, a promising indicator of job market strength. Yet, continuing claims rose to a three-year high at 1.908 million, signaling a cooling in employment conditions.
Global Markets and Interest Rates
International stock markets presented a mixed outcome as well. The Euro Stoxx 50 climbed +0.55%, while Japan’s Nikkei Stock 225 fell -0.85%. In the bond market, December 10-year T-notes decreased by -6 ticks, with yields rising to 4.422%. Initial gains were reversed as a stock rally reduced demand for safe-haven assets. A weak Treasury auction further pressured T-note prices, reflecting a bid-to-cover ratio below the recent average.
In Europe, government bond yields declined. The 10-year German bund yield dropped -3.3 basis points to 2.318%, while the UK gilt yield fell -2.6 basis points to 4.443%.
US Stock Performers
On the stock front, software firms led the market with Snowflake (SNOW) enjoying a remarkable +32% jump after announcing a robust Q3 revenue of $942.1 million. MongoDB (MDB), Cloudflare (NET), and Datadog (DDOG) also had notable gains. Super Micro Computer (SMCI) soared +15% due to news of a compliance plan submitted to Nasdaq, signaling potential recovery from compliance issues.
In contrast, Alphabet (GOOGL) faced significant losses, along with PDD Holdings (PDD) and Amazon.com (AMZN), due to regulatory pressures and weaker-than-expected earnings.
Ahead, several companies, including AMMO Inc (POWW), B Riley Financial Inc (RILY), and Buckle Inc/The (BKE), are set to report earnings on November 22, 2024.
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 represent the author’s perspective and do not necessarily reflect those of Nasdaq, Inc.
