Market Gains as Wall Street Reacts to New Treasury Secretary Nominee

.S&P 500 Index ($SPX) (SPY) is up +0.40%, Dow Jones Industrials Index ($DOWI) (DIA) climbs +0.87%, and Nasdaq 100 Index ($IUXX) (QQQ) rises +0.32%.

Signs of Optimism Fuel Stock Market Gains

Stocks are on an upward trend today, with both the S&P 500 and Dow Jones Industrials reaching all-time highs. The Nasdaq 100 has also climbed to a one-week peak. This rally is driven by the optimism surrounding President-elect Trump’s selection of Scott Bessent, a former hedge fund manager, as the new US Treasury Secretary. His ties to Wall Street and support for Trump’s policies ease fears about an inflationary agenda associated with reduced taxes and increased tariffs. Bessent’s previous stance as a fiscal hawk indicates a focus on economic stability and deficit reduction, further boosting confidence.

Energy Sector Struggles Amid Concerns

Despite the overall market gains, energy stocks are lagging today, primarily due to a drop of over -2% in the price of WTI crude oil. In addition, Nvidia’s -3% decline is impacting technology shares.

Economic Indicators Show Mixed Signals

Recent economic reports reflect a cautious landscape. The US October Chicago Fed national activity index decreased by -0.13 to a nine-month low of -0.40, falling short of the anticipated no change at -0.28. Meanwhile, the November Dallas Fed manufacturing outlook saw a slight rise of +0.3 to -2.7, still below the expected -1.8.

The week’s economic news is condensed due to the upcoming Thanksgiving holiday. On Tuesday, new home sales for October are expected to decrease by -1.8% month-over-month to 725,000 units. The Conference Board’s consumer confidence index for November is forecasted to rise by +3.1 points to 111.8. Also, the minutes from the November 6-7 FOMC meeting will be released. On Wednesday, key figures like the revised Q3 GDP and the core PCE price index for October will be disclosed; expectations are for no change in GDP at a 2.8% annualized rate and a +0.3% increase in the core PCE month-over-month.

Market consensus indicates a 56% chance of a -25 basis point rate cut at the FOMC meeting scheduled for December 17-18.

Global Market Overview Remains Uneven

International stock markets are experiencing mixed results today. The Euro Stoxx 50 has risen to a one-week high with an increase of +0.27%. In contrast, China’s Shanghai Composite Index has dipped to a five-week low, closing down by -0.11%. Japan’s Nikkei Stock 225 has seen an uptick, closing up +1.30%.

Interest Rates Show Positive Trends

In the bond market, December 10-year T-notes (ZNZ24) are up +25 ticks, causing the 10-year T-note yield to decrease by -11.2 basis points to 4.289%. Following the nomination of Scott Bessent, the bond market reacted positively, viewing him as a stabilizing influence focusing on deficits and economic health.

European government bonds have also seen a decline in yields. The 10-year German bund yield fell to a five-week low of 2.198%, while the UK gilt yield decreased to a three-and-a-half-week low of 4.316%.

Notably, the German IFO business climate index dropped by -0.8 to 85.7, underperforming against expectations of 86.0. An ECB governing council member has suggested the necessity for another interest rate cut in December given current European economic conditions.

Swaps show a solid 100% expectation of a -25 basis point rate cut by the ECB at its upcoming December 12 meeting, with a 35% chance of a more substantial -50 basis point cut.

Stock Highlights: Movers in the US Market

Homebuilding stocks are experiencing a boost today as falling 10-year T-note yields signal lower mortgage rates, thus supporting housing demand. Companies such as DR Horton (DHI), Toll Brothers (TOL), Builders FirstSource (BLDR), Lennar (LEN), and PulteGroup (PHM) have seen an increase of over +6%.

Super Micro Computer (SMCI) has surged more than +14%, following a significant -25% increase over the past two sessions after announcing a possible filing of delayed reports in compliance with Nasdaq regulations.

Moderna (MRNA) shares are up by more than +9% after reports suggested that the nomination of Robert F. Kennedy to the Department of Health and Human Services would unlikely result in the removal of COVID-19 vaccines.

Healthcare stocks have also risen after a federal court ruled that the Biden administration improperly downgraded UnitedHealth Group’s star ratings. Stocks including UnitedHealth Group (UNH), Humana (HUM), Centene (CNC), and Elevance Health (ELV) have all increased by over +1%.

Bath & Body Works (BBWI) climbed more than +17% following a positive Q3 earnings report, posting net sales of $1.61 billion, surpassing consensus expectations. The company also adjusted its 2025 sales forecast to a more manageable range.

Brown-Forman (BF/B) shares increased by more than +5% after BNP Paribas Exane initiated coverage with an outperform rating and a price target of $48.

EQT Corp (EQT) rose by more than +2% following reports of Blackstone’s agreement to purchase a $3.5 billion stake in interstate pipelines from EQT.

US Bancorp (USB) also saw a rise of over +2% after Citigroup upgraded the stock to a buy recommendation.

Sector Struggles and Stock Declines

On the downside, defense stocks are facing pressure amid reports of a cease-fire between Israel and Hezbollah, resulting in Lockheed Martin (LMT) declining by over -4%. Also, shares of Axon Enterprise (AXON) fell by more than -3%, and others like Northrop Grumman (NOC), L3Harris Technologies (LHX), and RTX Corp (RTX) are also down.

Energy stocks are sliding in tandem with the WTI crude oil price drop of over -2%. Companies such as ConocoPhillips (COP) and Diamondback Energy (FANG) are down as a result. Other energy firms like Baker Hughes (BKR), Devon Energy (DVN), and Occidental Petroleum (OXY) have reported declines of over -1%.

Macy’s (M) shares dropped by more than -3% after announcing a delay in releasing Q3 earnings amid a financial investigation.

Newmont (NEM) has also fallen more than -2%, paralleling the decline in gold prices by over -2% on the day. Despegar.com (DESP) shares decreased more than -3% following a double downgrade from TD Cowen.

Earnings Reports on the Horizon

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 hold any positions directly or indirectly in any of the securities mentioned in this article. All information is for informational purposes only. Please view the Barchart Disclosure Policy for more details.

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